Kwon Soon-won, head of the Minimum Wage Commission, speaks during the 14th plenary session on July 14.YONHAP
Next year's hourly minimum wage has been set at 10,700 won ($7.20) per hour, up by 380 won, or 3.7 percent, from this year's 10,320 won.
The Minimum Wage Commission finalized the rate during its 14th plenary session on Tuesday. Based on a 40-hour workweek, or 209 working hours per month, the minimum wage amounts to a monthly salary of 2.24 million won.
The commission will submit the approved minimum wage proposal to the Minister of Employment and Labor. After completing procedures for objections, the ministry is expected to officially announce the new rate by Aug. 5, with the new rate taking effect on Jan. 1, 2027.
Labor representatives initially demanded a minimum wage of 12,000 won per hour, a 16.3 percent increase from this year, while business representatives called for the rate to remain frozen at 10,320 won. The gap between the two sides stood at 1,680 won, with the labor side arguing for higher pay to offset soaring living costs for low-wage workers, while the business side cited rising labor costs for small business owners.
After 10 rounds of negotiations, the gap was narrowed to 600 won, and public interest representatives proposed a mediation range — between 10,600 won, a 2.7 percent increase, and 10,860 won, a 5.25 percent increase — after progress appeared unlikely. Labor and business sides were required to submit final offers within that range before reaching a decision through either consensus or a vote.
The two sides submitted two additional revised proposals, reducing the gap to 130 won, but still failed to reach an agreement. A public interest representative then presented 10,720 won as the final recommended compromise, but labor insisted on 10,730 won while business held to 10,700 won, sending the issue to a vote.
Labor representatives speak to reporters after the 2027 minimum wage was set at 10,700 won per hour on July 14.NEWS1
The Minimum Wage Commission appeared poised to reach a three-way agreement among labor, business and public interest representatives for the second consecutive year, but the sides ultimately failed to bridge the remaining 30-won gap.
"It is regrettable that we had to decide through a vote over a difference of 30 won," said Kwon Soon-won, head of the commission. "However, I believe it is meaningful in itself because this was the closest final proposal ever presented by the labor and business sides."
Hourly minimum wage was set through consensus only eight times since 1988, when the minimum wage system was introduced. Last year — the first year of the Lee Jae Myung administration — marked the first consensus-based decision in 17 years since 2008.
While next year's hourly minimum wage is now set at 10,700 won, the decision has left both sides dissatisfied.
Labor groups argue that even with the increase, the new minimum wage falls well short of the 2.82 million won they estimate as the monthly cost of living after taking this year's inflation into account. The 3.7 percent increase is also the eighth-lowest on record. The lowest increase was 1.5 percent in 2021, followed by 1.7 percent in 2025, 2.5 percent in 2024, 2.75 percent in 2010, 2.7 percent in 1998, 2.87 percent in 2020 and 2.9 percent in 2026.
A labor representative stands beside a board displaying the vote results for next year's minimum wage proposal on July 14.YONHAP
Business groups maintain that the minimum wage was already at a high level and warn that many employers have little capacity left to absorb additional labor costs. During the commission's 13th meeting, two business representatives from the Korea Federation of Micro Enterprise left the meeting, saying they could not accept an increase of more than 2 percent.
The commission also recommended that the government make further progress on discussing the application of the minimum wage to contract-based workers, including delivery drivers and parcel couriers, and prepare broader reforms to the minimum wage system.
"Similar discussions are repeated every year without meaningful progress during minimum wage deliberations, and institutional reform is needed to improve the situation," the commission said. "The Ministry of Employment and Labor should establish a task force in the second half of this year to review and study the current minimum wage system, including the scope of coverage and the criteria used to determine the minimum wage, and prepare a reform plan."
Applying the minimum wage to contract-based workers was placed on the commission's formal agenda for the first time this year. However, the proposal failed to reach a consensus because of opposition from business representatives and was rejected in a vote. Under the Minimum Wage Act, the minimum wage applies to workers covered by the Labor Standards Act, and the key issue was determining which contract-based workers should qualify under that definition. Observers say discussions could regain momentum if the government introduces reforms in line with the commission's recommendation.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
