Minimum Wage Hike Approved
Lora Park, July 17, 2017, 9:33 a.m.
The government on Saturday approved a record 16.4 percent hike in the minimum wage next year or an increase of W1,060 to W7,530 (US$1=W1,136). This is the first time ever that the minimum wage has risen by more than W1,000 over a year.
Korea introduced a minimum wage in 1988, and the biggest hike so far was in 2000, shortly after the 1998 Asian financial crisis, when it rose by W265. The fresh increase is part of President Moon Jae-in's plan to raise the minimum wage to W10,000 an hour by 2020.
The Minimum Wage Commission, which consists of labor and management representatives and members of the public, reached the decision at a meeting on Saturday. Approval was won by a relatively narrow majority of 15 out of the commission's 27 members. Workers earning between W6,470 to W7,520 an hour will benefit the most.
On a monthly basis, the minimum wage translates into a full-time salary of W1.57 million, up W221,000 compared to the present level. The government estimates that they account for a whopping 23.6 percent of all wage earners. It decided to spend around W3 trillion to help smaller businesses offset their increase in labor costs.
The Small and Medium Business Administration in a statement following the decision said, "Small and mid-sized businesses and other private traders will have to shoulder an additional W15.2 trillion in labor costs next year, so they will have to either reduce staff or close their operations."