Minimum Wage Negotiations Stalled: Labor Demands 12,000 Won, Employers Call for Freeze

Negotiations between labor and management over next year's minimum wage remain at an impasse. Labor representatives continue to emphasize the necessity of raising the hourly wage to 12,000 won, while management insists that a freeze is essential due to the financial constraints faced by small and medium-sized enterprises (SMEs) and self-employed individuals.

The Minimum Wage Commission convened its 9th plenary meeting on the 25th at the Government Sejong Center to continue discussions on the minimum wage level for the upcoming year.

During the previous meeting on the 23rd, both sides submitted their initial proposals for next year's minimum wage. Labor proposed an increase of 16.3% to an hourly wage of 12,000 won, while management suggested maintaining the current rate of 10,320 won.

On this day, labor representatives reiterated the growing gap between living costs and the minimum wage, stressing the need for an increase.

Ryu Gi-seop, secretary-general of the Korean Confederation of Trade Unions, stated, "Employer representatives have repeatedly called for freezes or cuts for over 20 years. To ensure the livelihood of low-wage workers, an increase reflecting their living expenses is necessary."

He added, "In 2025, the living expenses for single workers without partners were 2.75 million won, which is about 650,000 won less than this year's minimum wage when converted to a monthly amount. The projected living expenses for 2026, accounting for inflation, are 2.82 million won, widening the gap with the minimum wage further."

He emphasized, "Households in the lowest income bracket are spending more on essential living costs than their disposable income. Before discussing the minimum wage level, we must first examine the realities faced by low-wage workers."

Im Mi-sun, vice-chairperson of the Korean Confederation of Trade Unions, also remarked, "The 12,000 won minimum wage is not for luxury or savings, but rather the survival cost for a minimally decent life. Raising the minimum wage is not just for workers; it can stimulate consumption and benefit small businesses and self-employed individuals, fostering mutual growth."

She noted, "After Spain significantly raised its minimum wage, the income of low-wage workers increased, leading to expanded consumption and economic growth. We should consider how raising the minimum wage can create a virtuous cycle for domestic demand."

Conversely, management representatives highlighted the dire conditions faced by SMEs and self-employed individuals, reiterating the need for a wage freeze.

Ryu Ki-jeong, executive director of the Korea Employers Federation, stated, "As of last year, 56.8% of SMEs could not cover interest expenses with their operating profits, and the outstanding loans for self-employed individuals are at an all-time high. High minimum wages are one of the main causes of the operational difficulties faced by small businesses."

He added, "Surveys conducted by the Korea Federation of Small and Medium Businesses and the Korea Self-Employed Federation, as well as the Minimum Wage Commission, show that the majority of respondents are calling for a freeze or reduction in the minimum wage. In a situation where payment capabilities are at their limit, any further increase could jeopardize the survival and employment of small businesses."

Yang Ok-seok, head of the Human Resources Policy Division at the Korea Federation of Small and Medium Businesses, stated, "77.6% of responding companies feel burdened by the current minimum wage level, and 62.6% believe that next year's minimum wage should be frozen or reduced. If an increase beyond their capacity occurs, nearly half of the companies indicated they would consider reducing new hires or downsizing their workforce."

Public interest committee members urged both labor and management to narrow their differences based on the legal decision criteria.

Sung Jae-min, secretary of the public interest committee, stated, "Today is a crucial time to closely examine and understand each other's reasoning based on the decision criteria set by the Minimum Wage Act. Given the challenging circumstances for both workers and employers, I hope discussions will move closer to a socially acceptable and reasonable conclusion."

The legal deadline for deliberating the minimum wage is set for the 29th, 90 days after the Minister of Employment and Labor requested the review. However, this deadline is a guideline and not mandatory.

The Minimum Wage Commission plans to hold several more plenary meetings to receive revised proposals from both sides and work towards closing the gap. Last year, the decision on the minimum wage exceeded the legal deadline, and a similar intense negotiation is expected to continue until the last minute this year.