|Members of the Minimum Wage Commission decided to raise the minimum wage for next year by 2.9 percent at the government complex in Sejong, Friday. Yonhap|
South Korea decided Friday to raise the minimum wage for next year by 2.9 percent, the slowest growth in a decade, as it took into account an economic slowdown and sluggish job growth.
The Minimum Wage Commission, involving labor and business representatives and experts, set the minimum wage at 8,590 won (US$7.32) per hour for next year, compared with 8,350 won for this year.
The growth rate sharply slowed from a 10.9 percent rise for 2019 and is the slowest gain since the minimum wage for 2010 rose 2.8 percent.
The minimum wage is the lowest possible hourly pay a local worker is lawfully entitled to receive.
A single-digit increase was widely anticipated as President Moon Jae-in has signaled at flexibility amid heightened economic uncertainty at home and abroad.
In his election pledges, Moon vowed to raise the minimum wage to 10,000 won by 2020.
For 2018, the hourly pay rose 16.4 percent on-year to 7,530 won per hour, the steepest rise in 17 years. The hourly pay rose by 29.1 percent in 2018 and 2019 since Moon took office in May 2017.
But the steep hikes have invited strong backlash from smaller firms and mom-and-pop stores over mounting labor costs.
The minimum wage hike is intended to increase income and consumption, and prop up the economic growth under Moon's signature income-driven growth policy.
But smaller firms and mom-and-pop stores responded to the steep hikes by dismissing part-time workers, thereby hampering job growth.
Park Joon-shik, head of the wage council, said the panel mainly took into account difficult economic conditions for the wage decision.
"The decision reflects the consensus for the need to flexibly respond to (the current economic) situation," Park told a press briefing in the administrative capital of Sejong.
"The Korean economy faces headwinds. In the process to pursue an economic and social goal that we are seeking to achieve, the current situation desperately needs an adjustment of pace or direction," he said.
The Friday decision is expected to invite strong protest from the labor sector, which has pressed for the need to keep Moon's election pledge.
"A minimum wage debacle has occurred," the Federation of Korean Trade Unions, a major umbrella labor group, said in a statement.
The group said Moon's pledge to build a society that cares about workers and to increase the minimum wage to 10,000 won has become a "hollow slogan."
"If things go this way, it will be difficult to keep the 10,000 won promise even during Moon's five-year term," it said.
The labor sector, which once vehemently supported the Moon government, has turned its back, claiming Moon is not keeping his labor-friendly election pledges. The wage decision may further strain the government's relationship with labor.
The labor and business sectors held tough wage negotiations this year as they so previously did.
Initially, the labor sector proposed 10,000 won for next year, which represents a 19.8 percent increase from this year's minimum wage.
But the business circle proposed a 4.2 percent cut to 8,000 won, inviting an angry reaction from the labor sector.
It was the first time that the business circle demanded a cut in the minimum wage since 2009, when it proposed a 5.8 percent decrease to cope with the global financial crisis. (Yonhap)