We Need a Minimum Wage for Everyone

Labor-management negotiations over next year’s minimum wage are once again running in parallel lines. The gap between labor and management proposals exceeds 1,000 won, and the consultations are losing institutional credibility amid the same annual cycle of confrontation. But the essence of this conflict is not the difference in amount. It lies in a lack of understanding of the system’s direction and of reality. The minimum wage is a key variable with ripple effects across the entire employment structure and industrial ecosystem.

A perception divorced from conditions on the ground distorts policy. Labor groups emphasize “a standard of living worthy of human dignity,” but in reality, the number of self-employed people earning less than part-time workers is increasing. Vacant storefronts in neighborhood commercial districts are rising, and closure rates have long been high. A policy that raises wages while ignoring the causes of the self-employment crisis undermines structural balance. The survival of small business owners, no less than the livelihoods of workers, must be placed at the center of policy.

The reversal between wages and earnings undermines confidence in policy. If the 2025 minimum wage rises to 11,260 won, monthly pay will exceed 2.35 million won. By contrast, the average monthly income of the self-employed is only about 2.08 million won. On top of that, when weekly holiday pay, the four major social insurance premiums, annual leave pay, and severance pay are included, the labor cost burden rises by another 400,000 to 500,000 won per month. It is hard to regard it as normal when the self-employed earn less while bearing only heavier labor costs.

A higher minimum wage deals a direct blow to industries with a high share of labor costs. In sectors such as lodging and restaurants and wholesale and retail, labor costs are rising faster than sales, adding to the burden of fixed costs. As a result, self-employed business owners are reducing staff and shortening business hours, which in turn leads to fewer jobs for workers.

It is an irony that a policy meant to protect everyone ends up threatening everyone.

The burden of the minimum wage is no temporary phenomenon; it has become a structural problem. The minimum wage has already exceeded the symbolic threshold of 10,000 won, and the effective hourly wage, including weekly holiday pay, is approaching the 12,000-won range. The ratio of the minimum wage to the median wage of workers stands at 63.4%, far above the G7 average of 50.1%. Over the past 10 years, the rate of increase has been 89.3%, greatly outpacing inflation (21.2%) and productivity growth (12.7%).

The question now should be not “how much should it be raised,” but “is this a structure we can sustain?” A uniform method of raising the minimum wage without reflecting the characteristics of the labor market and individual industries is no longer sustainable. An approach that attempts to define the realities of all industries and regions nationwide with a single figure can hardly achieve either effectiveness or fairness. It is time to enhance the system’s flexibility and its fit with reality.

Policy becomes persuasive when it reflects voices from the field. An approach that places the minimum wage issue solely on employers can hardly secure legitimacy, either morally or economically. Employment is sustained by finding practical solutions. What is needed now is not a simple increase, but a structural redesign aimed at the sustainability of employment and the restoration of businesses’ capacity to operate.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: ‘모두를 위한 최저임금’이 필요하다

Author: Sung-no Choi

Date: 2025-07-09

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=27875