[Op-Ed] Minimum Wage: We Should Debate How to Reform It, Not How Much to Raise It

Labor, reflecting inflation, says it must be raised, while management says higher labor costs reduce employment / Applying a single minimum wage without considering regional and industry differences makes it urgent to redesign the system based on reality / A uniform structure bundles different regions and industries together, creating distortions

This year again, the minimum wage debate has begun. The government has requested deliberations on the 2027 minimum wage, and labor and management are confronting each other over the scale of the increase. The argument that it should be raised to reflect inflation and the argument that higher labor costs reduce employment clash every year. But the issue is not “how much”; it is the identical, “uniform” structure imposed on everyone.

Wages are determined by the supply and demand of labor. Prices and productivity differ by region, and added value and labor intensity differ by industry. Nevertheless, the current system ties all of these differences into a single number. The reason the minimum wage exists is to correct the problem of low pay and guarantee workers a minimum livelihood. But the current method fails to fulfill that corrective role.

The gaps in reality are by no means small. Prices in Seoul are about 5–10% higher than the national average, and housing costs are about twice the level of those in non-capital regions. Monthly living expenses for single-person households also show a 20–30% gap, with Seoul at about 1.3–1.5 million won and non-capital regions at about 1.0–1.2 million won.

When differences between industries are taken into account, the gap becomes even larger. Even among sectors receiving the same minimum wage, cafés, convenience stores, delivery services, and lodging businesses differ greatly in labor intensity, job difficulty, and the burden of working particular hours, such as nights and peak periods. Even the same one hour of labor is hard to regard as the same work, because physical exertion, work density, and the degree of emotional labor differ.

This structure causes an imbalance in burdens. The 2026 minimum wage impact rate is about 13%, affecting roughly 2.9 million workers, and is concentrated especially in small businesses and low-productivity industries. It is the same standard, but in some places the minimum wage functions as a basic protective device, while in others it acts as pressure to reduce hiring and increase unemployment. This distorts the functioning of the labor market itself.

Applying a single minimum wage while erasing all regional and industry differences is no different from forcing different realities to conform to a single standard. This structure creates an imbalance in real purchasing power for workers and imposes cost burdens on employers that are disconnected from their ability to pay.

What is needed is a redesign that reflects reality. By region, a buffered differentiated system should be introduced that reflects only a certain proportion of differences in prices and living costs, and by industry, wage bands should be set in consideration of productivity and added value. This would reflect only 40–60% of price gaps to ease sudden shocks while still creating meaningful differences, while applying more relaxed standards to industries with lower labor intensity.

The essence of the minimum wage is not a superficially identical number. The current uniform structure ties together different regions and industries, creating distortions. Beyond the annual debate over “how much” to raise it, the time has come to discuss “how” to change it.

Jinsu Park, Intern Researcher, Center for Free Enterprise (CFE)

---

Original title: [칼럼] 최저임금, '얼마 인상할지' 아닌 '어떻게 바꿀지' 논의해야

Author: Jin-su Park

Date: 2026-05-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=1&idx=28899