The Minimum Wage Commission (the “MWC”) held a plenary meeting on July 12, 2021 to discuss the minimum wage to be applied in 2022. Although a clash over the minimum wage between labor and management was more severe than ever due to the government’s earlier promise of a “KRW 10,000 minimum wage” and the continued difficulties being experienced by small business owners due to the pandemic, the MWC approved a bill proposed by the public interest commissioners on the panel reflecting the economic growth rate, inflation rate, and employment growth rate, thereby setting the minimum wage for 2022 at KRW 9,160 per hour. Unless the Minister of Employment and Labor requests a re-deliberation of the minimum wage, the hourly minimum wage of KRW 9,160 is expected to be announced on August 5, 2021.
The minimum wage to be applied in 2022 is an increase of KRW 440 or 5.1% from the current minimum wage of KRW 8,720 per hour, or KRW 1,914,440 per month (based on 40 hours per week, 209 hours per month). While it is somewhat higher than the 1.5% increase (KRW 130) in 2021, it remains lower than a hike of 16.4% (KRW 1,060) in 2018 and 10.9 % (KRW 820) in 2019.
According to the Economically Active Population Survey conducted by Statistics Korea, it is estimated that approximately 3.55 million workers will be directly affected by the minimum wage increase, a high figure accounting for around 17% of all wage earners. Thus, it would be necessary to check once again whether all workers under the Labor Standards Act (the “LSA”) in the workplace except for workers in their probationary period (not exceeding three months) will receive more than the minimum wage, including regular workers, non-regular workers, part-timer workers, and foreign workers.
Meanwhile, the minimum wage includes wages regularly paid at least once a month as wages under the LSA. In addition, the amended Minimum Wage Act, which aims to gradually include bonuses and certain wages granted for welfare purposes (and that are paid in currency) in the minimum wage calculation, came into effect from 2019. Accordingly, in 2022, an amount exceeding 10% of the minimum wage per month, (KRW 191,444 as of 2022) among the monthly bonuses calculated based on a wage payment cycle exceeding one month, will be included in the minimum wage. Companies should note that among the wages paid in currency for welfare purposes, an amount exceeding 2% of the minimum wage per month (KRW 38,289 as of 2022) is also included in the minimum wage calculation.
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