Labor-management talks for 2020 minimum wage hit impasse in Korea

2019.07.04 15:15:12 | 2019.07.04 15:39:01

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Discussions over next year’s minimum wage have reached a stalemate in South Korea, with management seeking to trim the hourly wages and laborers unwilling to budge from the government-stated goal of 10,000 won ($8.55).

The Minimum Wage Commission, a state-mandated tripartite panel representing the government, employers and workers, convened Wednesday for its first round of negotiations on minimum wages for 2020. The nine-hour meeting adjourned after midnight, with the main parties unable to overcome their differences.

Management called for the minimum hourly wage to be lowered 4.2 percent from the previous year to 8,000 won. Laborers stuck to their original commitment of 10,000 won, also a campaign promise of President Moon Jae-in.

The minimum wage has surged nearly 30 percent since Moon took office in May 2017, driven by the liberal president’s vision to boost economic growth by fattening the wallets of average Koreans. The country raised the minimum wage by 16.4 percent to 7,530 won in 2018 and another 10.9 percent to 8,350 won in 2019.

Labor representatives argued that the 10,000-won minimum wage is a promise to society and that the wage hikes are starting to make a positive impact, like supporting the poorest citizens and helping to ease income disparity. They also denounced the management calls for a wage cut, saying that such proposals were not even raised at the height of the 1997 Asian financial crisis.

Business representatives countered that the current wage hikes have gone well beyond the corporate sector’s ability to pay, and that the increased costs have dampened the job market and the overall economy.

Asia’s fourth-largest economy unexpectedly shrunk 0.4 percent in the first quarter, its worst performance in a decade, prompting the government to cut its 2019 growth forecast to 2.4-2.5 percent from 2.7 percent.

The committee chair ordered the two sides to come up with a revised proposal by July 9. The deadline for the 2020 minimum wage announcement is August 5. As the administrative process takes about 20 days, the parties would need to reach an agreement by mid-July for the new wages to take effect next year.

By Yoon Jin-ho and Kim Hyo-jin

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