By Sang Wook Cho,Soojung Lee, Firm: Yulchon LLC
On 15 August 2019, the Ministry of Employment and Labor (‘MOEL’) announced the minimum wage for 2020 as KRW 8,590 (approximately USD 7) per hour, which represents a 2.9% increase from this year’s KRW 8,350.
Consequently, in 2020, for an employee who works 40 hours per week, the minimum monthly salary will be KRW 1,795,310 (approximately USD 1,482), which is an increase from KRW 1,745,150 in 2019.
This falls short of President Moon’s campaign promise to raise the minimum wage to at least KRW 10,000 by 2020, intended to stimulate the Korean economy. There has been heavy criticism of the rapid increases in the minimum wage over the past couple of years, with some arguing that the rapid increases have actually hurt the economy. The last two years each saw double-digit percentage increases in pursuit of the KRW 10,000 goal by 2020, and a further double-digit percentage increase would have been required to reach KRW 10,000 by 2020.
This minimum wage increase for 2020 may not appear to be substantial. However, the proper calculation of the minimum wage can be complex under Korean law. Therefore, we recommend that employers review their current wage schemes to ensure compliance with the updated minimum wage requirement.