The parliamentary move to revise the labor act to expand the scope of the minimum wage marks a rare legislative step that works against the interests of waged workers in the country.



Under an agreement reached last week by lawmakers on the parliamentary labor committee, monthly bonuses and lodging and transportation expenses will be gradually incorporated into minimum wage calculations by 2024.



Next year, monthly bonuses that exceed 25 percent of the minimum wage and lodging and transportation expenses above 7 percent of it will be counted toward total pay when calculating the minimum owed.



Some workers had been considered to be on the minimum wage regardless of whether they also received regular monthly bonuses and allowances. This entitled them to increases in pay when the minimum wage was raised, even when their bonuses meant that their total income was actually much higher than the statutory minimum wage.



The new move would factor in total pay rather than just the hourly rate when calculating the statutory minimum. That would effectively reduce bonus-receiving workers’ right to claim higher hourly rates.



The proposed change will be put into practice starting next year, as the National Assembly passed the amendment to the labor law Monday.



The legislative action can be seen as paying heed to demands from the business community that the minimum wage include all bonuses and allowances as well as basic pay.





(Yonhap)

Labor circles, which have vehemently opposed the idea, are threatening to go on strike to protest the passage of the labor act revision.



In a statement Friday, the Federation of Korean Trade Unions, one of the two major umbrella labor groups in the country, described the parliamentary move as a “death sentence to the minimum wage system” and a “declaration to scrap the government’s income-led growth policy.”



Expectations have been raised that the proposed change to the way the minimum wage is applied could help reduce employment costs to some degree.



But many experts note the move would increase the chances of a sharp increase in the minimum wage for next year, similar to the 16.4 percent hike this year, as workers seek a bigger increase to offset any losses from the new calculations. It might also do little to narrow the wage gap between high- and low-paid workers.



The country’s minimum wage rose at single digits ranging from 5.1 percent to 8.1 percent in the seven years since 2011 before this year’s double-digit increase, according to data from the Ministry of Employment and Labor.



During his election campaign last year, President Moon Jae-in vowed to raise the wage floor to 10,000 won per hour by 2020. To meet that pledge, the 7,530 won minimum wage will have to increase about 16 percent in 2019 and 2020 each.



“The planned expansion of the scope of the minimum wage will likely lead to a stronger attempt to raise next year’s wage at double digits,” said Choi Young-ki, a visiting professor at Hallym University.



Labor circles estimate the measure will pare 2.5 to 3 percentage points off a 10 percent rise in the minimum wage.



