April 25, 2024

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The government has retracted its plan to consider employers’ ability to pay salaries in setting the minimum wage, officials said on Feb. 27.

The Ministry of Employment and Labor announced a final revision to the criteria and procedures of setting the rate after reviewing expert feedback on a draft plan announced last month. The first version had called for consideration of employment levels, economic growth rates and businesses‘ ability to pay wages.

“We have excluded a company’s pay ability as a basis for setting the minimum pay rate while supplementing the criteria with the rate’s possible impact on employment and economic conditions,” Vice Labor Minister Lim Seo-jeong told a press conference.

Lim said that some labor experts pointed out that it is difficult to index such an ability. The labor community also objected to the proposal, saying it is tantamount to an employer shifting to employees the responsibility for financial difficulties resulting from the employer’s incompetence.

Under the new plan, the Minimum Wage Committee -- a trilateral panel of business and labor representatives and outside experts -- will have two subcommittees tasked with setting the legal upper and lower thresholds and deciding on the actual rate, respectively.

The subcommittee on the actual rate will be composed of 21 members comprising seven people each from the labor community, employers and labor experts. Out of the seven experts, three are recommended by the government and the remaining four by parliament.

Under the plan, the labor community, business community and the government, separately, can recommend five representatives for the formation of the subcommittee on the legal upper and lower thresholds, with the labor and business communities to each choose three of the 15 recommended people to exclude in order to make the subcommittee run with nine members.

By Ram Garikipati and newswires (ram@heraldcorp.com)