Minimum wage increased by 2.75%

The minimum wage in Korea will be raised by 2.75 percent next year, the smallest wage increase in 11 years.

The Minimum Wage Council Republic of Korea, a three-party group involving corporate management, labor unions and the government, reached a compromise yesterday after marathon overnight talks.

From the beginning of next year, the minimum wage for corporate workers will be 4,110 won ($3.23) per hour, the amount guaranteed by law, 110 won higher than the amount they receive this year.

In terms of monthly salary, employees working a 40-hour week will earn 858,990 won. Those on a 44-hour week will make 927,860 won.

The average monthly salary of all workers in Korea stands at 2.15 million won per month, based on 40 hours a week.

The government estimates the minimum wage will apply to 2.57 million employees.

The committee submitted the wage plan to Labor Minister Lee Young-hee yesterday, and he will make a final notification on Aug. 8, after giving labor unions and management a period for filing opposition.

The wage decision was finalized yesterday morning, a day after its legal deadline, which is June 29, following a 10-hour round of negotiations.

Negotiations have been stalled for the past month mainly due to disagreements between management and labor unions over the size of the wage hike.

Corporate managers had proposed a 5.8 percent cut to the minimum wage of 3,770 won, and labor unions wanted an increase of 28.7 percent to 5,150 won, a 34.5 percent difference.

Management has not offered a wage cut since the financial crisis in 1998. That year, the minimum wage edged up 2.7 percent, the lowest level since Korea adopted the minimum wage system in 1988.

The Korea Confederation of Trade Unions, one of the two umbrella labor unions, said in a statement that the 2.75 percent increase is no better than a reduction, given that consumer prices in May posted a year-on-year increase of 3.6 percent.

กฐWe are hugely disappointed that the amount is unreasonably low for the livelihood of low-income laborers,กฑ said the union.

The Federation of Korean Trade Unions, the other umbrella group, said, กฐForcing workers earning the least to sacrifice in the name of helping economic recovery and strengthening corporate competitiveness is extremely antisocial and inhumane.กฑ

On the other hand, the Korea Federation of Small Business, a lobby group representing smaller firms, said the wage increase rate is still กฐburdensome,กฑ given the harsh economic conditions.

The corporate sector has claimed that should the minimum wage climb, firms have no choice but to lay off more workers.