The Minimum Wage Commission decided Saturday to raise next year’s minimum wage by 10.9 percent to 8,530 won per hour after an overnight meeting. This is another double-digit increase of the country’s minimum wage following the hike of 16.4 percent this year. Under the Minimum Wage Act, if a representative of workers or employers does not raise an objection, the Ministry of Employment and Labor should publish the minimum wage by August 5 and it enters into force beginning on January 1 next year. Both labor groups and businesses are strongly opposing the proposal in an unprecedented manner because they question the commission’s legitimacy itself in determining the minimum wage.
The Minimum Wage Commission is comprised of 27 members, nine from each of the three parties of labor, management and government. Yet, all nine members representing the management community as well as four members of the labor side recommended by the Korean Confederation of Trade Unions boycotted the meeting. Thus, only five members from the Federation of Korean Trade Unions and nine members from the general public side attended the meeting to vote. Management members refused to sit at the table, claiming that the government side is composed of labor-friendly members, making it an uneven playing field in the first place. The Korean Confederation of Trade Unions had boycotted the meeting in an opposition to the fact that the decision about the calculation of the minimum wage in May was made not by the commission but by the National Assembly.
In the end, the government side whose members are recommended by the Minister of Employment and Labor achieved what they want in the commission’s decision this year. On the surface, it appears as if an outside commission has made a decision, but the reality points to that it was practically the Ministry of Employment and Labor that determined the minimum wage to fit it into President Moon’s campaign pledge to raise the minimum wage to at least 10,000 won by 2020. Even the head of the commission Eo Soo-bong pointed out several times last year that the increase rate seemed excessive, the minimum wage rose as wanted by the labor ministry.
Eventually, it is 6.5 million small business owners and the self-employed, not the government, who should bear the burden brought with the increased minimum wage. Considering the great impacts of the sharp increase of the minimum wage on the country’s economy, the minimum wage, just like tax rate issues, should be decided at the National Assembly. As the inclusion of the bonus and non-duty allowance into the minimum wage was decided at the National Assembly, it should also make a decision on the minimum wage’s increase rate to accord with the principles of a democracy in which lawmakers have an authority to represent the will of the people.
The National Assembly should consider making amendments to the Minimum Wage Act as immediately as possible. If revising the law is deemed impracticable, they should at least consider making the Minimum Wage Commission independent from the presidential office Cheong Wa Dae and the government, like the Monetary Policy Board of the Bank of Korea. Unless changes are made, economic shocks and social conflicts due to the minimum wage hike will continue to snowball.
Thus, now is the time to fundamentally reexamine the composition and operation method of the Minimum Wage Commission under the Moon administration.