The Korean Confederation of Trade Unions (KCTU) and the Korean Trades Union Congress (KTUC) demanded 11,500 won as the 'minimum wage per hour for next year' on the 11th. This is a 9% decrease from last year's demand of 12,600 won. It is uncommon for labor groups to lower their minimum wage requests, raising questions about the circumstances behind this decision, which ChosunBiz covered on the 12th.

On the morning of the 11th, members of the Minimum Wage Movement Headquarters hold a press conference on the stairs of the Sejong Center in Jongno-gu, Seoul, demanding a minimum wage of 11,500 won for next year and performing. The 11,500 won is an amount that represents a 14.7% increase compared to this year's minimum wage of 10,030 won. /Courtesy of News1

◇ The downward adjustment of the labor sector's minimum wage request occurred only 4 times during 'economic contraction'

The minimum wage has been implemented since 1988. Since then, labor groups have requested a lower minimum wage than the previous year only 4 times: ▲ 1,615 won from September 1998 to August 1999 (previously 1,616 won) ▲ 2,700 won from September 2002 to August 2003 (previously 2,837 won) ▲ 10,000 won in 2020 (previously 10,790 won) ▲ 11,500 won in 2026 (previously 12,600 won).

The commonality among these periods is 'economic contraction.' The IMF (International Monetary Fund) financial crisis struck the Korean economy from 1998 to 1999, and the credit card crisis hit between 2002 and 2003. Additionally, the economic growth rate in 2019 fell to 2.3%, the lowest level since 2009. This year's economic growth rate is also projected to be around 0% by the Bank of Korea and the Korea Development Institute (KDI).

On the 10th, the 4th plenary meeting of the Minimum Wage Committee, which will decide the minimum wage for next year, is held at the Government Sejong Center. /Courtesy of Yonhap News

◇ Economic growth rate expected to be around 0%... Experts say 'the labor sector chose a realistic figure'

This time, the amount demanded by the labor sector as the 2026 minimum wage of 11,500 won is 14.7% higher than the current minimum wage. However, it is 9% lower than last year's demand of 12,600 won. An expert noted, "Given the forecast of an economic growth rate around 0%, the labor sector acknowledged the difficulty in demanding an increase in the minimum wage."

Some experts explain this in connection with the inauguration of the progressive government under Lee Jae-myung. Oh Gye-taek, head of the Labor Relations Research Institute at the Korea Labor Institute, said, "In conservative administrations, there was a tendency to demand higher initially because the final decision amount would be significantly reduced anyway." He added, "This time, the labor sector seems to have adopted a strategy to insist on a more realistic figure under a progressive administration."

Previously, the Moon Jae-in administration raised the minimum wage by 16.4% in 2018 compared to earlier levels, the largest increase in 11 years, which resulted in various side effects. The burden of labor costs on small business owners surged, prompting the government to urgently inject a budget of 3 trillion won. Subsequently, the rate of minimum wage increases decreased to 10.9% in 2019, 2.87% in 2020, 1.5% in 2021, and 5.05% in 2022. An expert stated that "the economic contraction due to the COVID-19 pandemic during this period, coupled with the excessive increase in the minimum wage in 2018, left little room for further increases."

The legal deadline for the Minimum Wage Commission to complete the deliberation on next year's minimum wage is until the 29th. However, as there are no legal constraints or penalties, it is generally finalized in early to mid-July. The minimum wage must be announced by August 5 each year.

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