A plan to differentiate the minimum wage by industry, a long-cherished goal of the self-employed, has fallen through once again. On Friday, the Minimum Wage Commission rejected a proposal to introduce differentiated application on a trial basis for some restaurant sectors, with 14 votes against, 11 in favor and one invalid. The employers' side appealed to the difficult realities facing the self-employed, who are bearing the brunt of the economic downturn, but the workers' side pushed back, calling it "discrimination against workers." Differentiated application of the minimum wage has a clear legal basis, as Article 4, Paragraph 1 of the Minimum Wage Act stipulates that "the minimum wage may be set differently by type of business." Nevertheless, it is deplorable that the related system has not been implemented for 37 years since 1989, blocked by opposition from labor circles and some public interest members.
Korea's minimum wage system is excessively rigid compared with major advanced countries. Among the 26 member states of the Organization for Economic Cooperation and Development (OECD) that operate a minimum wage system, as many as 21 implement differentiation in various ways. In the United States, the minimum wage differs by state and city, and Japan reflects regional and industry gaps. Korea, however, remains trapped in a structure that applies uniform standards regardless of industry, region or age.
The problem is that the side effects have already exceeded their limits. Based on this year's minimum wage (10,320 won per hour), a worker's monthly pay for a five-day workweek, including weekly holiday allowance, is about 2.15 million won, while the average monthly income of the self-employed in Korea last year was just 1.91 million won. In other words, the distorted phenomenon of "the boss earning less than the employee" is becoming entrenched. This is also why self-employed people pushed to the edge are switching to family-run operations or introducing unmanned equipment such as kiosks and serving robots to cut employment.
The structural limitations of the Minimum Wage Commission, composed of nine members each from workers, employers and public interest representatives, must also be overcome. Going forward, the commission will begin deliberations on the rate of increase to set next year's minimum wage level, and labor circles have already demanded 12,000 won, up 16.3% from this year. In the end, there is a strong likelihood that, as in previous years, labor and management will run on parallel lines before public interest members hold the casting vote and reach a last-minute conclusion in a disrupted process. Only by rationally improving the wasteful decision-making structure of the Minimum Wage Commission can the original purpose of the minimum wage — "stabilizing the livelihoods of low-wage workers" — be restored. The vicious cycle, in which excessive minimum wage hikes push the self-employed, already suffering from worsening sales, further to the brink and cause employment to decline, must no longer be repeated.
