The full-fledged tug-of-war between labor and management to set next year's minimum wage increase has begun. The Minimum Wage Commission held its eighth plenary session Monday and began deliberations on the 2027 minimum wage level. Labor groups demanded an hourly wage of 12,000 won, a 16.3% increase from this year, calling it "an era of livelihood crisis brought on by polarization in the labor market." Management argued for a freeze in consideration of the hardships facing the self-employed, saying "the elevated minimum wage level is significantly undermining acceptance on the ground."
Labor's demand is sharply at odds with the reality of the self-employed, who are already struggling. According to the "2026 Survey on Self-Employed Business Environment Perceptions" released Monday by the Federation of Korean Industries, 59.2% of the self-employed said they "already have no room to hire." In addition, 57.0% said their business conditions this year had worsened from last year, and one in three self-employed people (34%) responded that their average monthly income falls short of even the minimum wage. As the burden of labor costs grows due to the rapid increase in the minimum wage, the number of self-employed people caught in a marginal situation of borrowing to repay debt is also surging. According to Korea Credit Data, overdue principal and interest payments by small business owners increased by 1.6 trillion won (12%) in the first quarter of this year amid declining sales.
An excessive minimum wage increase also takes away jobs even from low-wage workers. According to the Korea Institute of Public Finance, while the minimum wage rose nearly 30% through two increases in 2018 and 2019, 6.4% of jobs in the below-minimum-wage segment disappeared. The result was a "paradox of good intentions," in which the rapid minimum wage increase, pushed through under the banner of protecting the vulnerable, instead ended up reducing jobs. An analysis by the Paichai Research Institute also estimated that if next year's minimum wage rises 16.3%, 443,000 jobs would disappear annually.
Under the adverse conditions in which the industry-specific differential application long sought by the self-employed and small business owners has fallen through again this year, a reasonable decision must be made that squarely faces the reality of the self-employed. Since a uniform minimum wage must be applied across the board, a mutually beneficial solution is needed to maintain the ecosystem of the self-employed and small business owners. The reason 44.6% of the self-employed pleaded for a freeze and 13.0% for a reduction in the FKI survey must be taken seriously. Only if the self-employed and small business owners survive can low-wage jobs be protected.
