'16% Hike' Demanded for First Time in 8 Years: A Look at Next Year's Minimum Wage Proposal

[Anchor]

Joining us for Tuesday's "Friendly Economics" is reporter Han Ji-yeon. Reporter Han, I understand that labor groups have asked for a fairly large increase in next year's minimum wage?

[Reporter]

Labor groups have demanded an hourly minimum wage of 12,000 won for next year.

This is a 16.3 percent increase from this year.

The hourly rate of 12,000 won is 1,680 won higher than the current minimum wage of 10,320 won.

Calculated as a monthly salary, it comes to 2,508,000 won, which is about 350,000 won more than the current monthly salary of just under 2,157,000 won.

If we look back to see if there has been a similar 16.3 percent increase in the past,

there was a 16.4 percent increase recorded in 2018.

At that time, the rate rose from 6,470 won in 2017 to 7,530 won.

While a 16.3 percent increase is a substantial demand compared to the trend of recent years, it is not an unprecedented or completely unrealistic rate.

However, this 12,000 won figure is the demand announced by labor groups at a press conference, and is not yet the first official proposal submitted to the Minimum Wage Commission.

Full-scale negotiations are expected to proceed based on the official proposals presented by both labor and management in the future. 

The Minimum Wage Commission is required to complete its deliberations by June 29, but since there is a wide gap between labor and management, they are likely to miss the legal deadline this year as well.

[Anchor]

Please continue.

[Reporter]

Labor groups argue that the minimum wage does not reflect inflation and the cost of living.

They are also calling for the elimination of blind spots in the minimum wage system.

Labor groups explained that the average minimum wage increase rate over the past three years was 2.37 percent per year.

This is lower than the average inflation rate of 2.66 percent over the same period.

It is not just prices that have gone up; stock prices and housing prices have also risen significantly, leading to complaints that the value of money earned through hard work is not what it used to be.

Labor groups are also emphasizing this point.

In particular, they argue that because the minimum wage increase rate fell below the inflation rate, the real wages of low-income workers have decreased.

In addition, they point out the gap between the minimum wage and the cost of living as a problem.

The cost of living standard set by the Minimum Wage Commission is 2,754,000 won per month, but the monthly equivalent of this year's minimum wage is around 2.15 million won.

With a difference of over 600,000 won, the minimum wage only covers 78.3 percent of the cost of living.

Labor groups explain that even the hourly wage of 12,000 won is a minimum demand that does not even reach 90 percent of the household cost of living.

They argue that the minimum wage should not only be based on a company's ability to pay, but should also serve as a standard to guarantee the livelihood of a worker's household.

Simply put, they are saying we should look at what workers need to survive, not just what employers can afford to pay.

Labor groups also believe there are areas within the minimum wage system that need to be reformed.

They called for improving regulations regarding probationary workers within three months of hiring and some disabled workers, and reducing blind spots in the minimum wage for special employment, platform, and freelance workers.

However, to reduce the burden on small business owners and micro-enterprises, they also proposed support measures such as the reintroduction of the Job Stabilization Fund and reductions in various fees.

[Anchor]

Lastly, you have some news about housing prices.

[Reporter]

That's right. The average transaction price of housing in Seoul has surpassed 1 billion won for the first time in history, reaching 1,010,070,000 won.

In May of last year, the average housing price in Seoul was 897 million won, but it rose by over 100 million won in just one year, breaking the 1 billion won mark for the first time.

Looking at the average price by housing type, apartments were in the 1.3 billion won range, detached houses in the 1.2 billion won range, and row houses in the high 300 million won range.

Compared to a year ago, the average price of apartments rose by over 150 million won, detached houses by over 50 million won, and row houses by over 30 million won.

While non-apartment markets also rose along with apartments, it was apartments that led the upward trend.

In particular, Seoul apartment prices rose by more than 1 percent last month, recording a growth rate in the 1 percent range again after four months.

Experts believe that since housing demand in key areas of Seoul remains strong, it is important not only to suppress demand but also to expand supply in a way that actual buyers can feel.
※ Please note: This article was translated by AI and may contain errors.