Unions seek 16.3% hike as employers call for lower pay floors in restaurants, hotels, taxi services
South Korean labor and business groups clashed Tuesday as the state wage-setting panel opened talks on industry-specific pay floors, a contentious proposal backed by employers and fiercely opposed by unions.
The talks came a day after labor groups proposed raising the 2027 minimum wage by 16.3 percent to 12,000 won ($7.93) an hour.
The sixth plenary meeting of the Minimum Wage Commission in Sejong focused on differentiated rates, one of the most divisive issues in this year’s negotiations.
Labor representatives unveiled their initial proposal Monday, arguing that the current minimum wage of 10,320 won per hour fails to keep pace with rising living costs. The proposed 12,000 won would represent a larger increase than labor groups sought during last year’s negotiations.
The country’s two largest labor federations said the current minimum wage translates to a monthly income of about 2.15 million won, well below what they described as the Minimum Wage Commission’s 2025 standard monthly living cost of 2.754 million won.
“The current minimum wage does not adequately reflect the cost of living,” labor groups said, adding that 12,000 won an hour would amount to roughly 87 percent of what they consider a realistic living wage for 2027.
Business groups have not yet submitted a formal wage proposal, but are expected to seek either a freeze or a significantly smaller increase.
Employers argue that many small businesses, particularly in labor-intensive service sectors, are already struggling under current wage levels.
Employer organizations have repeatedly called for lower pay floors in sectors such as restaurants, hotels and taxi services, arguing that large gaps in productivity and profitability across industries make a single nationwide rate increasingly difficult to sustain.
According to a recent report by the Korea Employers Federation, value added per worker in the accommodation and food-service sector totaled 28.5 million won last year, compared with 175.6 million won in the finance and insurance industry.
“Applying the same minimum wage across all industries fails to reflect economic realities,” Ha Sang-woo, head of economic research at the Korea Employers Federation, said in a recent statement. “For sectors that are clearly unable to absorb the current minimum wage, differentiated rates would improve acceptance of the system.”
Labor groups rejected the argument, saying industry-specific wages would undermine the purpose of the minimum wage system and deepen inequality among low-income workers.
“Lowering wages in accommodation and food services will not solve productivity problems in those industries,” said Park Jung-hoon, vice chair of the Korean Public Service and Transport Workers’ Union.
Although the Minimum Wage Act allows different rates by industry, the provision has been used only once, when the system was first introduced in 1988. Since then, South Korea has maintained a single nationwide minimum wage.
Many observers expect the proposal to face long odds.
Last year, the commission rejected industry-specific wages by a vote of 15 to 11, with public-interest members siding with labor representatives. Because this year’s commission composition has changed little, observers say the outcome is unlikely to differ significantly.
The debate over industry-specific wages follows another contentious dispute earlier in this year’s talks over extending minimum wage protections to gig workers and independent contractors such as delivery riders and courier drivers.
The proposal was rejected last week after employers argued that such workers are not legally classified as employees under labor law.
Once the commission decides whether to adopt industry-specific rates, negotiations are expected to shift toward the size of the overall increase, with labor’s 12,000 won proposal likely serving as the starting point for bargaining.
Supporters argue that stronger wage growth is needed to support household consumption and improve living standards for low-income workers. Critics warn that double-digit increases could accelerate automation, reduce hiring and place additional strain on small businesses already facing weak domestic demand.
The commission is legally required to complete its deliberations on next year’s minimum wage by mid-July.
jychoi@heraldcorp.com
