S. Korea’s monthly minimum wage to top $890 next year

South Korea’s minimum wage will rise to 4,860 won ($4.26) per hour next year, a 6.1 percent (280 won) rise from this year’s 4,580 won, according to an announcement made by the trilateral (government, labor, management) Minimum Wage Council Saturday. This will raise the monthly wage to 1.02 million won ($890.10) based on assumptions of 40 hour work weeks – and will signal the first time the figure crosses the one million won mark.

The council came to a final agreement on the minimum wages Saturday, two days after the initial deadline set for settling the issue (June 28). The latest decision will help increase the income for more than 2.58 million low-income laborers, said the council.

Critics believe the decision may have been politically motivated due to the upcoming presidential elections. Only last week, the government agreed on a 9.9 percent increase in wages for truckers. Following such move with the steepest rise in minimum wage in four years warrant some suspicion, they say.

Meanwhile, the business sector is complaining loudly of the extra burden imposed by the measure. For smaller businesses that employ less than 30 people, the new minimum wage will add 1.4 trillion won in extra wage-related expenditures.

“The inflation risk is noticeably lower this year, while the business climate has become more challenging. The decision to raise the minimum wage at a steeper rate than last year shows no consideration to the harsher environment and burden of the smaller businesses,” said the Korea Employers Federation.

Korea’s minimum wage adjusted for purchasing power parity (PPP) scored $4.49 (as of 2010), which is almost half of the wages in France ($8.88). The PPP-adjusted minimum wage was $8 for the UK, $6.49 for the US, and $5.53 for Japan.

The Minister of Employment and Labor (MOEL) will be making a final announcement of the new wage changes by August 5.