The Federation of Korean Trade Unions and the Korean Confederation of Trade Unions demanded an hourly minimum wage of 12,000 won for next year, 16.3% higher than this year's level, at a press conference Sunday. On a monthly basis (based on 40 hours per week and 209 hours per month), this amounts to 2,508,000 won. The business community is expected to propose a freeze or a low increase, taking into account the difficulties facing self-employed business owners and small merchants. With labor unions again presenting an outrageous bill from their opening demand this year, the minimum wage deliberations are expected to face considerable turmoil.
It is nothing new for labor to present unrealistic opening demands. According to the Minimum Wage Commission, over the 16 years from 2011 to this year, there were as many as 14 cases in which labor demanded an increase rate of more than 20%. In 2016 and 2017, labor even called for increase rates of 79.2% and 65.8%, respectively. The average increase rate in opening demands over the past three years also reached 23.1%. No matter how much these may be cards aimed at gaining the upper hand at the negotiating table, labor is effectively repeating unreasonable demands every year that simply cannot be accepted.
Labor's demands overlook the reality faced by self-employed business owners and small merchants. According to the Korea Enterprises Federation, the minimum wage has surged by a staggering 437.8% since 2001. That is 5.7 times the inflation rate (77.4%) and 2.5 times the rate of nominal wage growth (174.7%) over the same period. Moreover, "K-shaped polarization" growth has deepened the domestic demand slump, pushing the management difficulties of small self-employed business owners and small merchants to their limit. In particular, the ability to pay the minimum wage in some sectors, such as lodging and food service, has already hit rock bottom. This is why employers who cannot bear labor costs are letting workers go and switching to kiosks or unmanned stores.
Labor must withdraw its excessive demand for an increase and approach the minimum wage negotiations at a level everyone can bear. Applying a uniform standard even to vulnerable sectors that lack the ability to pay distorts the market and harms both employers and workers. In particular, this year the business community's long-standing call for sector-specific differentiation should be accepted. Already, 21 of the 26 member countries of the Organization for Economic Cooperation and Development (OECD) apply differentiated minimum wages by sector, region, or age. As members of the community, labor too must squarely face the suffering of self-employed business owners and small merchants.
