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S. Korea raises minimum wage to 6,030 won (US$5.31) to boost economy

July 9, 2015
A protester rallies in front of the Korea Employers Federation building in Seoul on June 22, 2015, demanding the federation withdraw its decision to freeze the minimum wage for next year. The minimum wage for this year was set at 5,580 won per hour, a 7.1 percent rise from 2014. (Yonhap)

A protester rallies in front of the Korea Employers Federation building in Seoul on June 22, 2015, demanding the federation withdraw its decision to freeze the minimum wage for next year. The minimum wage for this year was set at 5,580 won per hour, a 7.1 percent rise from 2014. (Yonhap)

South Korea’s minimum wage was set at 6,030 won (US$5.31) per hour for next year, up 8.1 percent from 5,580 won (US$4.93) for this year, said Kim Sang-bum, an official handling the issue at the Minimum Wage Council.

The new minimum wage — roughly the cost of a Starbucks’ grande-sized Caramel Macchiato — translates to 48,240 won (US$42.63) a day for those who work eight hours and 1.26 million won (US$1,113.42 a month for those who work 209 hours.

The government said the pay raise will affect an estimated 3.42 million people in the nation, while the labor claimed the number will reach up to 7 million workers in the country.

Still, labor and management showed discontent over the compromise.

The labor circle had demanded 10,000 won per hour for next year, up 72.2 percent from this year’s minimum wage, while management proposed a freeze.

The labor circle complains that 6,030 won per hour is still not enough to narrow the widening wage gap in the country and stabilize the lives of low-income workers.

“The government said it would revitalize the domestic market by raising the minimum wage, but the rate of increase is way too low,” said Kang Hun-jung, a spokesman for the Federation of Korean Trade Unions.

The management says an 8.1 percent raise will put too much of a burden on smaller companies with tough economic conditions in the aftermath of the Middle East Respiratory Syndrome outbreak and the Greek debt crisis.

“The increased minimum wage goes over what small and medium-sized enterprises can afford, which could result in a reduction of new employment,” said Lim Young-ju, an official of the federation that speaks for small and medium-sized companies.

The Ministry of Employment and Labor, which oversees the council, is set to formally announce the minimum wage for next year on Aug. 5, after a 20-day objection period for both labor and management.