South Korea’s Minimum Wage Battle: Can Industry-Specific Pay Save Small Businesses?
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Minimum Wage Commission Holds Second Full Meeting in Sejong on the 26th
“Distinctions should be applied starting with vulnerable sectors”
“Apply the wage to all workers across the board”
Labor and business clashed over the scope of minimum wage coverage and proposals for industry-specific differentials at the commission’s second plenary meeting to set the 2027 minimum wage.
On the afternoon of the 26th, the Minimum Wage Commission convened its second full session at the Government Sejong Complex to begin deliberations on the 2027 minimum wage.
Business representatives argued that weak domestic demand and mounting difficulties for small business owners warrant differentiated treatment by sector.
Ryu Gi-jeong, executive director of the Korea Employers Federation and an employers’ representative, noted that while overall industrial production rose 1.7% in the first quarter of 2026 from the previous quarter, production in the hospitality and food service sector—sensitive to domestic demand—fell 1.3%. He said this was the largest decline since the third quarter of 2024.
Ryu added that the hourly minimum wage has already exceeded 10,000 KRW (≈$7.50) and, when weekly holiday pay is included, effective pay tops 12,000 KRW (≈$9.00). “At minimum, distinctions should be applied beginning with vulnerable sectors,” he argued.
Yang Ok-seok, head of manpower policy at the Korea Federation of SMEs, warned of a small-business crisis. Citing a survey by the Ministry of SMEs and Startups and the Small Enterprise and Market Service, he said respondents reported an average annual operating profit decline of over 40%. He added that last year’s closure payout from the Yellow Umbrella mutual aid totaled 1.485 trillion KRW (≈$1.11 billion)—a record and a 64% increase over five years.
Yang relayed reports from the field that a family running two convenience stores, working 16 hours a day throughout the month, still takes home only about 2.5 million KRW (≈$1,875). He urged the commission to safeguard jobs in small and medium-sized enterprises and among small-business workers, who account for 80.4% of total employment.
By contrast, labor representatives demanded full minimum wage coverage for contract workers and a substantial wage increase.
Ryu Gi-seop, secretary-general of the Federation of Korean Trade Unions (FKTU), referenced the recent controversy over Samsung bonuses and argued that compensation gaps—where bonuses exceed decades of a minimum-wage worker’s salary—cannot be explained by differences in entry path or luck.
He noted that over the past five years real economic growth was around 12%, while real wage growth was only about 2% and real minimum wage growth barely 0.1%. “Contracted workers—including special employment types, platform workers, and freelancers—must be covered by the constitutionally guaranteed protections of the minimum wage,” he said.
Lee Mi-seon, deputy chair of the Korean Confederation of Trade Unions (KCTU), criticized the government for failing to submit results of the contracted-worker survey to the expert committee.
Lee said the commission had agreed last year to conduct the survey but has shown a passive, complacent stance—citing concerns about social fallout ahead of the meeting—rather than acting decisively.
She urged the commission not to let the minimum wage remain merely a number on paper, calling for a fair increase to protect the livelihoods of low-wage workers and for full application of the minimum wage to all workers.
Seong Jae-min, representing the public-interest committee members, called for calm, responsible deliberation based on objective data and sound reasoning, noting that both workers’ cost-of-living pressures and the operational strains on micro-business owners are rising.
Before moving to substantive rate discussions at its next plenary meeting, the commission plans to continue debating the scope of coverage for contracted workers.
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