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Sunday, July 1, 2012

Minimum Wage for 2013 in South Korea

Source: OECD Minimum Wage Database
The Minimum Wage Act was implemented in 1988 and has applied to all workers since November 2000 except family businesses that hire only family members, domestic workers and seamen. There is one unified national statutory minimum wage. For security guards and other intermittent workers, a sub-minimum rate of 90% is applied. This figure is adjusted annually. 

In Korea the minimum wage is determined by the Ministry of Employment and Labour (MOEL) based on recommendations from the Minimum Wage Council, an institution set up to deliberate on the minimum wage. The council is a kind of tripartite body which is composed of representatives from labour, management and public interest (mainly academics). 

The minimum hourly wage for 2012 is 4,580 won, about 4 US dollars. Yonhap, the official news agency in Korea reported that a trilateral council on Saturday agreed to raise the country's minimum wage by 6.1 percent to 4,860 won ($4.24) per hour next year.

Representatives of the Minimum Wage Council reached the deal in a 10-8 vote with 9 abstentions at the end of overnight negotiations, the council said.

The decision will increase the monthly salary of those who work 40 hours a week to 1.02 million won ($889), according to the council. It is expected to benefit roughly 2.58 million workers in the country struggling with low income, it added.

Initially, the labor circle demanded a 22.3 percent increase from this year's 4,580 won, while the management proposed a 3.4 percent hike.

Eight of the council's nine members representing employers abstained from voting after the government representatives of the 27-member council proposed a hike of minimum 5.5 percent and maximum 6.7 percent.

Employers quickly expressed their dismay with the decision.

"We cannot help but express grave concerns over the decision, which lacks any consideration for the country's small and medium-sized businesses that are struggling against worsening economic conditions and rising costs," the Korea Employers Federation said in a released statement.

The employers' group claimed the minimum wage hike will cost an additional 1.4 trillion won a year for all businesses with more than 30 employees.

"Such a steep rise of the minimum wage despite worsening economic conditions will hamper business activities by small and medium-sized enterprises, which in turn will seriously threaten job opportunities for the poor," it said.

The Ministry of Employment and Labor is scheduled to fix the minimum wage by Aug. 5 after announcing details of the agreement next week. (Yonhap)

It is said that  19,518 cases of violation of the Minimum Wage Act were found in 2011, only 11 cases were brought into legal proceedings. Most of them were concluded with minor, if not symbolic, punitive measures such as the administrative request for ‘correction measures’. The penalty is so low that violating the law is often cheaper than compliance.

Source: Korea Times and Yonhap