Minimum wage in South Korea

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Minimum wage in South Korea with terms of presidents Minimum wage in South Korea.svg
Minimum wage in South Korea with terms of presidents

The South Korean government enacted the Minimum Wage Act on December 31, 1986. The Minimum Wage System began on January 1, 1988. At this time the economy was booming, [1] and the minimum wage set by the government was less than 30 percent of that of real workers. The Minister of Employment and Labor in Korea asks the Minimum Wage Commission to review the minimum wage by March 31 every year. The Minimum Wage Commission must submit the minimum wage bill within 90 days after the request has been received by the 27 committee members. If there is no objection, the new minimum wage will then take effect from January 1. The minimum wage committee decided to raise the minimum wage in 2018 by 16.4% from the previous year to 7,530 won (US$7.03) per hour. This is the largest increase since 2001 when it was increased by 16.8%.

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However, the government officially admitted that the policy of raising the minimum wage to 10,000 won by 2020, which had been the initial target but which the government had been forced to forego, had also caused a great burden on self-employed businesses and deteriorated the job market. [2] In addition, there are opinions from various media that the minimum wage law is not properly applied in Korea. [3] [4]

Korean law about minimum wage

Article 32 (1) of the Constitution of the Republic of Korea reads: Every citizen has the right to work. The country should make efforts to enhance the employment of its workers and ensure proper wages in social and economic ways, and implement the minimum wage system as provided under the law. [5]

South Korea has guaranteed its workers a minimum wage through the Minimum Wage Act.

Article 1 of the Minimum Wage Act(Objective) aims to ensure the minimum level of wages for workers so as to contribute to the sound development of the national economy by promoting the stabilization of their livelihood and the qualitative improvement of their workforce. [6]

Minimum wage deliberation and decision

The minimum wage in the Republic of Korea is determined by the Minimum Wage Commission under the Ministry of Employment and Labor. [7] The Minimum Wage Commission consists of 27 employees, nine of whom are employee commissioners, user committee members and public interest committee members. The Minimum Wage Commission reviews and decides the minimum wage level each year, deliberates and reviews the minimum wage, deliberates on the classification of the minimum wage application, and studies and suggests ideas for the development of the minimum wage system. Other important matters concerning the minimum wage are the functions of the Minister of Employment and Labor to review matters to be held at the meeting. [8]

The purpose of the Minimum Wage Commission is to contribute to the sound development of the national economy by ensuring the level of wages for workers and thereby improving the quality of workers. [8]

The Minister of Employment and Labor in Korea requests the Minimum Wage Commission to review the minimum wage by March 31 of each year. The Minimum Wage Commission shall submit the minimum wage bill within 90 days (June 29) of the day after the request has been received by the 27 committee members. When the minister of employment and labor receives the minimum wage bill, it shall notify it. At this time, the person representing the employee and the person representing the employer may file a complaint with the Minister of Employment and Labor within 10 days from the date of notification. If there is no objection, the minimum wage will be announced and the minimum wage will be determined by August 5 every year. The new minimum wage will take effect from January 1. [9]

History of the Minimum Wage in Korea

The South Korean government enacted the Minimum Wage Act on December 31, 1986, and implemented the Minimum Wage System beginning on January 1, 1988. [10] However, in 1988, when the economy was booming, the minimum wage set by the government was less than 30 percent of that of actual workers. [11] The minimum annual wages announced by the Ministry of Employment and Labor are as follows, and include the main holiday allowance paid by working more than 15 hours a week(Article 55 of the Labor Standards Act). [12]

YearMinimum wage (in South Korean won ₩)Remarks
HourlyDaily
(8-hour day)		WeeklyMonthly
40-hour week44-hour week40-hour week44-hour week
1988(Group 1) 462.5
(Group 2) 487.5		(Group 1) 3,700
(Group 2) 3,900		(Group 1) 111,000
(Group 2) 117,000		Manufacturing
(more than 10 employees)
19896004,800144,000Manufacturing, Mining, Construction
(More than 10 regular workers)
1990690
1991820
1992925
19931,005
1994.1—1994.81,085
1994.9—1995.81,170
1995.9—1996.81,275
1996.9—1997.81,400
1997.9—1998.81,48511,880
1998.9—1999.81,52512,200
1999.9—2000.81,60012,800
2000.9—2001.81,86514,920
2001.9—2002.82,10016,800
2002.9—2003.82,27518,200All industries (all company)
2003.9—2004.82,51020,080
2004.9—2005.82,84022,720
2005.9—2006.123,10024,800
20073,48027,840727,320786,480
20083,77030,160150,800165,880787,930852,020
20094,00032,000160,000176,000836,000904,000
20104,11032,880164,400180,840858,990928,860
20114,32034,560172,800190,080902,880976,320
20124,58036,640183,200201,520957,2201,035,080
20134,86038,880194,400213,8401,015,7401,098,360
20145,21041,680208,400229,2401,088,8901,177,460
20155,58044,640223,200245,5201,166,2201,261,080
20166,03048,240241,200265,3201,260,2701,362,780
20176,47051,760258,800284,6801,352,2301,462,220
20187,53060,240301,200331,3201,573,7701,701,780
20198,35066,800334,0001,745,1501,963,085
20208,59068,720343,6001,795,3102,019,509
20218,72069,760348.8001,822,4802,050,072
20229,16073,280366,4001,914,4402,070,160estimate
20239,62076,960384,8002,010,5802,174,120estimate
20249,86078,880394,4002,060,7402,228,360

Penalty for violating minimum wage laws

Employers should not lower their existing wage levels because of the minimum wage under the Labor Standards Act. The Minimum Wage Law provides the following for penalties for minimum wage violations.

Article 28 (penalty)

Article 30 (billionable regulation)

Minimum wage violation counseling and reporting

A case of minimum wage violations can be reported at the Civil Affairs Center of the Ministry of Employment and Labor(1350). However, only counseling, and not reporting, is possible in 1350. If an employee wants to receive a report, they can report it on 'Civil Service 24' website that integrates and provides government services, complaints, policies and information. If the employee wishes to receive a petition for the relief of their rights due to the understudy of minimum wage, they may visit the local employment office of the plant or file a petition via the Internet.

Punishment status

In 2016, the Ministry of Employment and Labor presided over a total of 1,278 minimum wage violation cases. However, only 17 cases led to actual judicial proceeding, meaning less than two percent of cases warranted legal proceedings. About 98 percent of the cases were demarcated for 'corrective action'. Employers who violated the minimum wage law have been able to avoid charges or legal proceedings by taking corrective action. As a result of the lack of legal enforcement, according to the Bank of Korea's analysis report on the latest minimum wage trend and evaluation in 2016, the number of workers receiving less than the minimum wage continues to soar.[ citation needed ]

Opinions of journalists and scholars

In 2018, the minimum wage committee decided to raise the minimum wage in 2018 by 16.4% from the previous year to 7,530 won ($6.65 USD) an hour. This is the largest increase (1060 won) since 2001 (16.8 percent). [13]

The effectiveness and feasibility of minimum wage increases are greatly debated topics. Both conservative newspapers and liberal pundits across South Korea were quick to denounce the new minimum wage measures. The Chosun Ilbo reported on the day after the 2018 minimum wage increase was announced that SMEs and small business owners were opposed to raising the minimum wage. They said, "The minimum wage increase is a measure that does not take into account the imminent reality of small and medium sized companies suffering from sluggish sales." [14] The Dong-A Ilbo also criticized the government's minimum wage increase on the same day, reporting on the criticism of the Small Business Federation and the Korea Employers Federation. [15] The JoongAng Ilbo reported on the support measures for small businesses and small businesses, which amount to four trillion won, and criticized it as "unpopular populism all over the world". [16] In addition, the Dong-A Ilbo reported on companies that decided to move their factories overseas because of a minimum wage increase. [17] Ju Jin-hyung, who has served as general affairs policy committee chairman of the Democratic Party, pointed out through a Facebook post that the promise of the "minimum wage 10,000 won" promise and ambiguity, and lack of standard and impression standards.[ clarification needed ] [18]

Many scholars, however, welcomed and endorsed the minimum wage increase. Jeong Tae-in, an economist and chief of the Karl Polanyi Center for Socio-Economic Studies, wrote a column in the progressive journal Kyunghyang Shinmun . He argued in the column that the minimum wage increase does not affect employment: first, college students and young people who work part-time will reduce labor hours if the minimum wage goes up. Second, if the self-employed are concerned about the minimum wage increase, it is likely that it is due to the pressures of a franchise headquarters. Third, he argues reducing business hours to eight hours a day would not reduce the sales of consumer goods by one-third, as some insist. If the minimum wage increase is the policy priority, shortening the operating hours will be a policy to compensate. The government only has to assure convenience stores, franchisees, and manufacturing subcontractors the right to organize 'Eul(을)'. [19]

Kim Chang-hwan, a professor of sociology at the University of Kansas, USA, also objected to Ju Jin-hyung's argument. In his blog he wrote, "The effect of the minimum hourly rate on the labor market is not established academically. The theory of economics suggests that if the minimum hourly rate is increased, the employment rate decreases. But the reality is that the minimum rate is cleaner than the theory." He also pointed out that there is a disagreement about whether it is bad for employment to decline by raising the minimum wage, and that high wages have the effect of promoting structural reforms and forcing productivity improvements. He said, "If businesses and self-employed people who can not afford the minimum wage are closed, the capital is absorbed into capital that can give more than the minimum wage, rather than being publicly decomposed. In this case, the productivity of the economy as a whole is improved and structural upgrading is forced." Professor Kim also pointed out that the conservative press, which is promoting the 'minimization of employment by the minimum wage', is using the 'minimum wage increase' as a means of ideological struggle even though the new minimum wage is not applied yet. And he criticized Ju Jin-hyung, "If the minimum wage increase was a big problem, you should criticize the increase by 9% over 1989 and 12 times over 30 years. Until now, you have been quiet, but once the minimum wage raised the 16%, you can not criticize the minimum wage increase policy. If the Korean economy was ruined because the minimum wage was high, it would have been ruined." [18] [20]

Related Research Articles

A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Because minimum wages increase the cost of labor, companies often try to avoid minimum wage laws by using gig workers, by moving labor to locations with lower or nonexistent minimum wages, or by automating job functions. Minimum wage policies can vary significantly between countries or even within a country, with different regions, sectors, or age groups having their own minimum wage rates. These variations are often influenced by factors such as the cost of living, regional economic conditions, and industry-specific factors.

<span class="mw-page-title-main">Living wage</span> Minimum income to meet a workers basic needs

A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a minimum wage tracking labor productivity. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment without government subsidies. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.

<span class="mw-page-title-main">Salary</span> Form of periodic payment from an employer to an employee

A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. Salary can also be considered as the cost of hiring and keeping human resources for corporate operations, and is hence referred to as personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.

The term sheltered workshop refers to an organization or environment that employs people with disabilities separately from others, usually with exemptions from labor standards, including but not limited to the absence of minimum wage requirements.

The Labor Code of the Philippines is the legal code governing employment practices and labor relations in the Philippines. It was enacted through Presidential Decree No. 442 on Labor day, May 1, 1974, by President Ferdinand Marcos in the exercise of his then extant legislative powers.

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation.

<span class="mw-page-title-main">Minimum wage in the United States</span>

In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional. In 1938, the Fair Labor Standards Act established it at 25¢ an hour. Its purchasing power peaked in 1968, at $1.60. In 2009, Congress increased it to $7.25 per hour with the Fair Minimum Wage Act of 2007.

In United States government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. This is usually the union wage.

The New York State Department of Labor is the department of the New York state government that enforces labor law and administers unemployment benefits.

<span class="mw-page-title-main">Fair Labor Standards Act of 1938</span> United States wage law

The Fair Labor Standards Act of 1938 29 U.S.C. § 203 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of minors in "oppressive child labor". It applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce, unless the employer can claim an exemption from coverage. The Act was enacted by the 75th Congress and signed into law by President Franklin D. Roosevelt in 1938.

<span class="mw-page-title-main">California Labor Code</span> Collection of Californian civil law statutes

The California Labor Code, more formally known as "the Labor Code", is a collection of civil law statutes for the State of California. The code is made up of statutes which govern the general obligations and rights of persons within the jurisdiction of the State of California. The stated goal of the Department of Industrial Relations is to promote and develop the welfare of the wage earners of California, to improve their working conditions and to advance their opportunities for profitable employment."

<span class="mw-page-title-main">Wage and Hour Division</span> Federal office in the United States

The Wage and Hour Division (WHD) of the United States Department of Labor is the federal office responsible for enforcing federal labor laws. The Division was formed with the enactment of the Fair Labor Standards Act of 1938. The Wage and Hour mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the Nation's workforce. WHD protects over 144 million workers in more than 9.8 million establishments throughout the United States and its territories. The Wage and Hour Division enforces over 13 laws, most notably the Fair Labor Standards Act and the Family Medical Leave Act. In FY18, WHD recovered $304,000,000 in back wages for over 240,000 workers and followed up FY19, with a record-breaking $322,000,000 for over 300,000 workers.

The Labor policy in the Philippines is specified mainly by the country's Labor Code of the Philippines and through other labor laws. They cover 38 million Filipinos who belong to the labor force and to some extent, as well as overseas workers. They aim to address Filipino workers’ legal rights and their limitations with regard to the hiring process, working conditions, benefits, policymaking on labor within the company, activities, and relations with employees.

<span class="mw-page-title-main">Wage theft</span> Denial of wages or employee benefits rightfully owed to an employee

Wage theft is the failing to pay wages or provide employee benefits owed to an employee by contract or law. It can be conducted by employers in various ways, among them failing to pay overtime; violating minimum-wage laws; the misclassification of employees as independent contractors; illegal deductions in pay; forcing employees to work "off the clock"; not paying annual leave or holiday entitlements; or simply not paying an employee at all.

The Minimum Wages Act 1948 is an act of parliament concerning Indian labour law that sets the minimum wages that must be paid to skilled and unskilled workers.

The tipped wage is base wage paid to an employee in the United States who receives a substantial portion of their compensation from tips. According to a common labor law provision referred to as a "tip credit", the employee must earn at least the state's minimum wage when tips and wages are combined or the employer is required to increase the wage to fulfill that threshold. This ensures that all tipped employees earn at least the minimum wage: significantly more than the tipped minimum wage.

<span class="mw-page-title-main">Fight for $15</span> Political movement in the United States

The Fight for $15 is an American political movement advocating for the minimum wage to be raised to USD$15 per hour. The federal minimum wage was last set at $7.25 per hour in 2009. The movement has involved strikes by child care, home healthcare, airport, gas station, convenience store, and fast food workers for increased wages and the right to form a labor union. The "Fight for $15" movement started in 2012, in response to workers' inability to cover their costs on such a low salary, as well as the stressful work conditions of many of the service jobs which pay the minimum wage.

Passion Pay is a neologism used by young people of South Korea. The similar term in use in Japan is Yarigai sakushu where the translation would be closer to Job Satisfaction 'exploitation'.

<span class="mw-page-title-main">Part-time jobs in South Korea</span>

Part-time jobs in South Korea refers to a short-term or temporary employment in South Korea. Part-time employees are considered non-regular workers, and their employee rights are protected by South Korean law. Usually, students and homemakers take part-time jobs to earn income. Office workers can also take part-time jobs as temporary positions in addition to their regular jobs. While part-time jobs are considered as supplementary income with minimal commitment, a recent survey found that many part-time workers in Korea work for more than 40 hours per week, and that part-time jobs are a primary source of income.

References

  1. ↑ U.S. Library of Congress. "The Economy". Country Studies.
  2. ↑ "President Moon Jae-in apologizes for failing to keep the promise of a minimum wage of 10,000 won". Kyunghyang Newspaper. 2019. Retrieved 2019-07-14.
  3. ↑ "Korea's wage theft over 10 times higher than Japan's". Kyunghyang Newspaper. 2016. Retrieved 2016-09-04.
  4. ↑ "Increasing the amount of unpaid wages in Korea". edaily Newspaper. 2020. Retrieved 2020-01-25.
  5. ↑ "Article 32 of the Constitution of the Republic of Korea". National Legal Information Center. Retrieved 2018-05-01.
  6. ↑ "the Minimum Wage Act". National Legal Information Center. Retrieved 2018-05-01.
  7. ↑ "Minimum Wage Commission". minimumwage.go.kr. Retrieved 2018-12-20.
  8. 1 2 "최저임금위원회". minimumwage.go.kr (in Korean). Retrieved 2018-05-02.
  9. ↑ "최저임금위원회". minimumwage.go.kr (in Korean). Retrieved 2018-05-03.
  10. ↑ "최저임금위원회 - 최저임금제도 의의" [The Significance of Minimum Wage]. www.minimumwage.go.kr. Minimum Wage Council. Retrieved 2018-05-01.
  11. ↑ 김, 원섭 (2017-07-16). "임금불평등, 한국 사회에서 가장 중요한 사회문제" [Wage inequality, the most important social problem in Korean society]. 데일리서울 (in Korean). Retrieved 2018-05-01.
  12. ↑ "최저임금위원회". minimumwage.go.kr (in Korean). Retrieved 2018-05-01.
  13. ↑ Il-seon, Son (2018-03-30). "다시 불붙는 최저임금 논쟁 속도조절vs1만원 공약 달성" [Reignite minimum wage debate: Speed adjustment and a 10,000 won commitment]. Maeil Business News Korea (in Korean). Retrieved 2018-06-10.
  14. ↑ Sung-jin, Chae (2017-07-17). "편의점·치킨업주 "차라리 내가 다른 가게 알바 뛰는 게 낫지"" [Convenience store / chicken owner "I'd rather work part time at another store"]. The Chosun Ilbo (in Korean). Retrieved 2018-06-10.
  15. ↑ Hyun-soo Kim, Ye-yoon Kim, Hye-ryeong Choi (2017-07-17). ""알바월급 167만원, 사장은 186만원" 가게 접겠다는 업주들" ["Part-time job salary is 16.7 million won, the president is 1.86 million won", Owners who want to stop shop]. The Dong-a Ilbo (in Korean). Retrieved 2018-06-10.{{cite news}}: CS1 maint: multiple names: authors list (link)
  16. ↑ Nam-hyeon, Ha (2017-07-17). "국민 세금으로 메꾸는 최저임금 7530원" [Minimum wages and national taxes]. JoongAng Ilbo (in Korean). Retrieved 2018-06-10.
  17. ↑ Se-jin Jung, Do-young Kwak (2017-07-25). ""최저임금 너무 올라"… 한국 떠나는 기업들" ["Minimum wage too high" ... Companies leaving Korea]. The Dong-a Ilbo (in Korean). Retrieved 2018-06-10.
  18. 1 2 Da-hae, Park (2017-07-26). "최저임금 인상이 급격하다고? 찬반 논쟁 총정리" [The minimum wage increase is rapid? Pros and cons]. The Hankyoreh (in Korean). Retrieved 2018-06-10.
  19. ↑ Tae-in, Jeong. "[정태인의 경제시평]최저임금 타령" [[Economy of Chung Tae-in] Minimum wage]. Kyunghyang Shinmun (in Korean). Retrieved 2018-06-10.
  20. ↑ "최저임금: 어용지식인 벌써 다 죽었음?". sovidence.tistory.com. 22 July 2017. Retrieved 2018-12-20.
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