The Minimum Wage: Lifting Up Youth, Women, and Elderly
What do a 30-year-old friend, middle-aged aunt, and elderly uncle have in common? They all receive minimum wage, and the amount they receive each year is determined by a single body: the minimum wage committee. Recently on July 8, the committee voted to set the minimum wage for 2017 at 6,030 won an hour, about the cost of a Starbucks coffee and a cookie. The labor movement had been demanding a 10,000 won minimum wage.
Some 3.8 million people receive minimum wage; 7.4 million workers would benefit from a 10,000 won minimum wage.  Such an increase would have large repercussions throughout Korean society: it would lift up low-wage workers, mom-and-pop shops, small and medium-sized enterprises (SMEs) and challenge the dominance of Korea’s large corporations. However, victory will be achieved by a political fight fueled and driven from the bottom up. For this not only challenges the large companies that are starving the domestic economy with their accumulating internal reserves, but also a Cold War mentality that Korea has yet to cast off.
Since 1988,  the minimum wage has been annually set by the minimum wage committee. It has served as a safety net for unorganized workers with no recourse to collective bargaining – a large number of these are the country’s 6.3 to 10 million irregular workers.  Their precarious position means that only 2 percent are organized into unions. Yet, the problem with this minimum wage committee is that its majority pro-business. While equally divided between labor, employers, and the government, the government appointed members are pro-business, leading to wage votes that favor employers. Thus, despite promises by all the political parties - including the conservative party of the president - for a 9,000-10,000 won minimum wage, the minimum wage for the next year has ended up at 6,030 won. The ruling party washes itself off responsibility by shifting responsibility of the decision onto the “impartial” committee, despite the government’s great influence on the committee by appointing those members that effectively cast the deciding vote.
A 10,000 won minimum wage has the potential of drastically equalizing Korea’s economic structure by lifting up workers and SMEs and lowering large corporations. Lee Nam-sin likens the 10,000 won minimum wage to the first button on a shirt – if you put on the first button right, the rest will follow. That’s because the 10,000 won minimum wage will only be possible with a redistribution of the 700 trillion won that large corporations hold in internal reserves to everyone else: low-wage workers, the self-employed and SMEs. It would not only create a more equal society but a healthier economy. Increasing the minimum wage would limit and bridge the widening gap between the poorest and the wealthiest.
It would provide worthwhile job alternatives for those forced into self-employment by the meager minimum wage. Those who remain self-employed  would benefit from a smaller self-employed population. Currently, six million people are self-employed, creating fierce cut-throat competition that bankrupts businesses and depletes life savings. “The number of the self-employed has to go down to three to four million in order for them to survive,” Lee says. “Six million is just too high.”
Higher wages would also allow SMEs to claim a fairer share of the wealth that large corporations have been hoarding. That’s because the 700 trillion won in reserves comes from the exploitation of not just workers but also the SMEs connected to the large companies’ supply chain. “All the parts in a Hyundai car are made by SME subcontractors. Hyundai simply assembles the parts,” Lee explains. “If the SMEs get their fair share, than giving a higher minimum wage won’t be so burdensome.” In fact, it would help SMEs attract the kind of skilled and talented workers who currently flock to large corporations.
The Justice Party is fighting in the National Assembly to get a 10,000 won minimum wage by 2020. Choi-young, director of policy for the Justice Party, says his party has two bills that would change the composition and power of the minimum wage committee and establish a minimum wage floor. That minimum wage floor would be 60 percent of the average wage in workplaces of five or more people. The increasing minimum wage (starting at 7,500-8,000 won) would have a feedback effect driving up the average, with the minimum wage reaching slightly over 10,000 won by 2020. Only when a minimum wage higher than this 60 percent is being considered will the minimum wage committee be involved. It would be composed of equal parts labor and management. Their results would not be binding but would be reviewed and approved by the National Assembly. Choi confesses, “Effectively it would mean the 60 percent average wage would come into effect.”
Yet, while change may become law through the political fights in the National Assembly. The only thing that can pass the Justice Party’s bills and overcome the interventions and barriers enacted and erected by the large companies will be grassroots movement that swells into a tidal wave. Talking to my aunt, uncle, and friend, it is clear that their excitement for a 10,000 won minimum wage is tempered by corporatism, pessimism, and despair. “Only when the corporations do well will workers do well. For someone like me, a 10,000 won wage would be great, but what if it means fewer jobs?” says my 58-year-old aunt who earns just slightly above the minimum walking house to house checking for gas leaks.
“A 10,000 won wage would be great, but we are too weak to achieve it. There are many others eager to take my minimum wage security job. Old like me that can’t find a job anywhere else,” says my 70-year-old security guard uncle.
“A 10,000 won wage would have been great, but given our realities it seemed difficult,” says my 30 year-old friend who does accounting at a day care center.
It is clear that the first step to change will have to be a shift in the paradigm. This will not be easy in a country with a collective psyche mired in the Cold War. A large portion, many of whom are elderly and receive minimum wage, have a red-fear complex and believe joining a union is what communists do. As Lee who was also part of the minimum wage committee, explains, “The correct solution is not a minimum wage committee, but for workers to organize themselves and fight for their rights ‘cause there’s no such thing as a free lunch. But since we are not there, we rely on this committee.”
A minimum wage ordained from the top by a minimum wage committee and politicians can be realized only when people organize at the grassroots level and fight for it. The labor movement continues in its attempts to organize low-wage irregular workers. And civil society organizations stand in solidarity with their efforts. My friend recently joined the civil society organization Together Labor, which organizes people, shifts their thinking, and builds power.
“After joining, I started to be more interested in what is happening around me. I started to go to protests and to rallies on issues that before I only heard about in the news,” she says. The minimum wage was set for workers who are too weak to fight for their wages. Yet, winning a 10,0000 minimum wage through committee or by legislation, may only be possible when workers are strong enough to fight and take their lunch money back.
- Interview with Choi, Young, Policy Chair of the Seoul Branch of the Justice Party.
- The June Democratic Uprising in 1987 followed by great workers protests and union formation resulted in direct elections and the formation of unions all across Korea.
- The large variation in the number of estimated irregular workers is due to the varying definition of irregular workers between the government and the Irregular Worker Center. (From interview with Lee, Nam Sin Head of the Irregular Worker Center and member of the minimum wage committee.)
- There are about 6 million self-employed people in Korea. Many of these are workers that have been pushed out of their jobs in large corporations. (From interview with Bae, Jae Hong of the National Retail Merchants Association)