Last Minute Tug-of-War over Korean Minimum Wage

Article from Yonhap: [July 7, 2015]

Last Minute Tug-of-War over Minimum Wage… Projected at 6,000 Won

Although negotiations over next year’s minimum wage have reached the final stages, the gap between laborers and managers’ positions indicates stormy waters are still ahead.

Spectators predict that the decision will go to the Public Interest Committee, which will most likely adopt a wage around 6,000 won an hour [around 5.29 US dollars].

The Minimum Wage Council held its 11th meeting on July 7th, where it began negotiating a compromise between the proposals of labor and employer representatives.

At this meeting, the second round of suggested minimum wage modifications was submitted by both parties, following the initial submittals on July 3rd.

The labor representatives bargained down to 8,200 won at the July 7th meeting, 200 won lower than their July 3rd proposal and 1,800 won lower than their original goal of 10,000 won.

Employer representatives originally asserted that the minimum wage should be frozen at 5,580 won an hour for another year before raising their proposal 30 won to 5,610 won in the first round of negotiations. During the July 7th meeting, they suggested a further increase to 5,645 won.

Although regulations dictate that negotiations must end by the morning of July 8th, analysts predict that the decision will go to a vote of the Public Interest Committee like it did last year because the gap between labor and employer demands is still so large.

Last year’s negotiations also encountered difficulties, with labor representatives demanding a 28.5% increase to 6,700 won while employer representatives held fast to their stance of freezing the wage at 5,210 won.

In the final round of Minimum Wage Council negotiations a consensus couldn’t be reached. It came down to the Public Interest Committee sending a proposed wage of 5,580 won to vote, which passed but not without employer representatives staging a walkout in defiance.

Popular opinion holds that the Public Interest Committee will raise the wage by 8 to 10 percent, slightly higher than the 7.1% increase that was seen last year, putting next year’s minimum wage somewhere around 6,000 won.

A larger increase than last year seems likely, given how widespread support is. Taking into account the worldwide recession, however, analysts are convinced that the new wage will wind up around 6,000 won.

The Minimum Wage Council can pass a proposal if a majority of registered members are present and vote affirmatively. Following the vote, representatives will have a 20 day period to formally object, and then the Secretary of the Ministry of Employment and Labor will have until August 5th to veto or approve the bill.

Comments from Naver:

yang****

Our minimum monthly wage has risen by 1,160,000 won [1,023 US Dollars] over the past 15 years. Look around the job search sites. There’s a lot of open positions. But take out the medium and large companies and all that’s left are positions that give 1,300,000-1,400,000 won a month [1147-1235 US Dollars]. Although the minimum wage itself is low, companies in the service and subcontracting sectors reel in personnel expenses to get work from large companies by paying only the minimum wage since it’s seen as acceptable. I’m at a loss for words. Almost all the leverage lies with the large companies here, maybe a little with the service businesses, but I myself have no power. A more realistic minimum wage please :( Do you really think I’m gonna get a bonus from an employer who only pays minimum wage? My salary: 15,000,000 won [13,234 US Dollars]. I’m not trying to be frugal, I really just don’t have any money to spend.

kdy1****

I’d like to think that 7,000 won is appropriate if you consider market prices and various tax hikes…

cola****

If they’re expecting somewhere slightly above 6,000 won then it oughta be around 6,010 or 6,030 won. If that’s the case what’s the fucking point of all this negotiation? That’s about how much it usually increases each year, this time we need an increase of at least 1,000 won.

expl****

We need 7,000 won you bastards

ttma****

Screw it all! This fucking country! They’re blatantly ignoring us! Pieces of shit

2699****

Is the legal work week really 40 hours? If you raise the wage by 30 won, then you earn 240 won more in an 8 hour day. What am I supposed to do with that? Didn’t public transportation fares go up this time? They increased by 200 won, so really 400 won round trip. A 30 won increase doesn’t even cover that! If it’s not obvious by daily earnings should I break it down by week? 1,200 won more each week. This also looks a little…insufficient so let’s look at a by month. Work about 22 days in a month and you’ll earn 5,240 won more than last year. Warning: Earnings shown do not include tax deductions.

peni****

Just pass a law so that minimum wage automatically increases by the same percentage as prices did the previous year… What’s the purpose of a minimum wage that doesn’t even keep up with the rate of price hikes?

kou7****

By hourly wage, we have a lower standard of living than Mexico.

nkjl****

Public transportation and cigarettes both got more expensive. Forget whether or not we use them more or less, common sense dictates that given the price change, public utilities need to fall or the minimum wage needs to increase. “We raised the wage by this much last year, so now let’s increase by about…” – this kind of ignorant logic makes no sense. A logical approach would be cause and effect, consider the change in market prices when proposing a new wage. Although this isn’t a country where one can expect logic haha it’s just full of jokes

limi****

This f$%&ing country. Happiness index? You’re fucking kidding me… We’re gonna end up doing nothing but working overtime until we die in this shitty country

sung****

I manage accounts and receipts for a small 15-person company. We pay a minimum wage of 7,000 won. It’s possible if you just let go of your greed like our CEO does.

do30****

What rubbish seriously we should get at least 7,000 won

puet****

You can raise the wage, but you need to lower credit card processing fees for small business owners! And don’t blame wages for everything.

zool****

Congressmen, government employees, why don’t you guys try working on an hourly wage? I bet you’d raise the minimum wage without any hesitation then.

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  • Adam

    Get good education people, if you want to stay above the minimum wage.

    • irufus

      They have the best education in the world.

      • takasar1

        unfortunately they lack a corporate structure which can fully utilise it…

  • chucky3176

    If they had raised it to 7000W, people would still be screaming that they didn’t get 8000W. It’s really never enough. Raising minimum wages only raises the living costs. The businesses will just pass their added costs to the consumers. Raising minimum wages by 28%,15%,10%, each year does nothing to raise living standards when national economy only grows at 3% a year.

    What the government should be doing is instead of raising minimum wages each year, they should be cracking down hard on those businesses that don’t give their employees, the legal minimum wages. Many businesses don’t comply with minimum wage standards, especially against those who are students and part timers. The government should also crack down hard on businesses to pay overtime for those people who work beyond the regular 40 working hours. The government should also deem that after hour drinking and meal sessions should also quality for overtime work pay. These steps alone will do so much to cut down on free work given by employees, help to raise productivity, and forces companies change their working culture – to work smarter, and frees up so many Korean employees to have more free time with their family. Earning more pay while living costs go up in conjunction to the pay, isn’t going to solve the labour problems.

    • ytuque

      If you didn’t notice, workers making low wages have to be subsidized by charities and the government which means your taxes increase.

  • HaydenG

    Its amazing people think the minimum wage does anything to help people.
    You cannot just create money out of thin air. Its fantasy. Companies are not just going to give up undeserved money for no reason. They will take it from somewhere else, Raising prices or cutting the number of employees. Abolish the minimum wage.

    • chucky3176

      This should raise the government’s inflation target though. With virtually 0% inflation rate, many experts in Korean economy fears S.Korea is facing a cycle of never ending deflation.

      • takasar1

        personally, i rubbish such a notion. prolonged deflation, arising from overcapacity and crumbling demand, lasting decades may be a disaster. but short-term price drops due to technological improvements or plunging oil prices, don’t look too bad to me. looking across the pond for evidence doesn’t help either, deflation was a consequence of japan’s malaise, not really a cause.

    • oster

      Lots of studies show that minimum wage, set up to 50% of median wage do not result in significant job losses. Of course, raise it beyond this point and you’ll start to see effects. That is to say, up to a point, a minimum wage does not actually cut numbers of employees.

      Secondly, it may indeed raise prices. That is the tradeoff! For some price rises, we make sure that large sections of society have enough to live on, reducing the handicap they have in achieving social mobility. It is society paying the costs together to help a part of society.

      That’s what policies are: tradeoffs. You can’t just fixate on the cost of policies and reject them on that basis alone – all policies have costs!

      Finally, of course, there are plenty of nations doing well even with a minimum wage. The UK is currently the fastest-growing OECD country and it has a minimum wage.

  • Dan

    Ouch! $5 minimum wage? Dang, here in my state, it’s around $8.50 I think. And I hear NYC has a lot going on with McDonalds workers wanting $15 or so.

    What is the cost of living in Korea that allows $5 an hour??

    • John Smith

      Well, I hear Japan has their min. wage around $6, not a whole lot different than Korea’s $5.50 or so and lower than the average US min. wage which has been stuck at $7.25 for a decade+… It does cost a lot more to live in Japan with such minimum wage. I’m speculating with the part time job (min. wage ones) in Korea You could probably afford an one bed apartment rent utilities internet cell phone service with a little bit of monthly luxury left if you don’t go out and have to eat fancy stuffs all the time.

  • bumfromkorea

    There’s no point in raising the minimum wage when the employers in Korea don’t even respect it in the first place. There’s minimal enforcement, and the business owners collude to blackball any employee that has the galls to report them to the authorities for not paying minimum wage.

    Yeoljung-pay, indeed…

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