The Minimum Wage Commission (“MWC”) held a plenary session on July 19, 2023 and decided that the minimum wage for 2024 would be KRW 9,860 per hour and KRW 2,060,740 per month (based on a total of 209 hours per month, which includes the number of paid weekly holiday hours pursuant to Article 55 (1) of the Labor Standards Act, “LSA”). The MWC had been attempting to reach an agreement, having conducted 15 plenary sessions to no avail. However, on July 19, 2023, the MWC voted between (i) the employee members’ final proposal (KRW 10,000 (3.95% increase)) and (ii) the employer members’ final proposal (KRW 9,860 (2.5% increase)), resulting in the adoption of the employer members’ final proposal.
The minimum wage for 2024 presents an increase of KRW 240 (or 2.5%) from the current minimum wage of KRW 9,620 per hour or KRW 2,010,580 per month, which is the second-lowest rate of increase following a 1.5% increase in 2021 when the COVID-19 virus was rampant. For reference, after sharp increases in 2018 (16.4%) and 2019 (10.9%), the minimum wage increased by 2.8% in 2020, 1.5% in 2021, 5.1% in 2022 and 5.0% in 2023.
According to Statistics Korea’s supplementary survey of the economically active population, it is estimated that approximately 3,347,000 workers, whose current wage is lower than the next year’s minimum wage, will be directly affected by the minimum wage increase, accounting for about 15.4% of all wage earners. Although the rate of increase is relatively low at 2.5%, the number of impacted workers is substantial. Accordingly, it would be necessary to check whether there are any employees affected by the minimum wage increase for all types of employees, including regular workers, non-regular workers, part-time workers, and foreign workers. An employer who fails to pay the minimum wage would be subject to criminal punishment (imprisonment of up to three years and/or a fine of up to KRW 20 million and joint penal provision).
The minimum wage includes wages paid regularly at least once a month, but excludes overtime, nighttime, and holiday work allowances or any additional allowances. In addition, the total amount of monthly bonuses and fringe benefits paid in cash will be included in the minimum wage starting from 2024.
