Minimum Wage Increase vs Market Wage
Minimum Wage Increase vs Market Wage
Economic, philosophical, and social debates surrounding the value of labor and Korean solutions
- Introduction
- Arguments and Effects of Minimum Wage Increases
- Criticisms of Minimum Wage Increases
- Logic and Pros and Cons of Market Wages
- International Comparisons and Korean Context
- Future Outlook: Technology, Globalization, and Policy Alternatives
- Conclusion
Minimum Wage Increase vs Market Wage
Everything about the economic, philosophical, and social debates surrounding the value of labor
1. Introduction: The Age-Old Question Surrounding Wages
On a winter evening in 2024, at a convenience store in Mapo-gu, Seoul. University student Kim Ji-hoon (pseudonym, 23 years old) is working a night shift part-time job earning 10,000 won per hour. He works about 120 hours a month and earns 1.2 million won. While it's tight to cover tuition and living expenses, he says, "It's still better than before since the minimum wage went up." At the same time, Lee Min-soo (pseudonym, 47 years old), the owner of this convenience store, sighs as he looks at his ledger. With labor costs rising every year, his net profit keeps shrinking, and he can't even think about hiring one more employee.
The story of these two people encapsulates one of the hottest debates facing Korean society today. It's the conflict between minimum wage increases and market wages. Workers demand living wages, while employers argue for market principles. The government walks a tightrope between the voices of both sides, and economists produce different research results.
Why is this debate important?
The debate over minimum wages and market wages is not simply about money. It's a fundamental question about what kind of society we want to live in, how we will define the value of labor, and whether we will prioritize freedom or equality. This article fairly examines the logic of both sides and provides a comprehensive analysis including historical context, international comparisons, and Korean specificities.
The Birth of Minimum Wage Systems
The minimum wage system first emerged in Britain and the United States during the height of the Industrial Revolution in the late 19th century. Factory workers at the time worked 12-16 hours a day while earning wages that barely allowed them to feed their families. Women and child workers faced even more deplorable conditions. After New Zealand introduced the world's first minimum wage law in 1894, Britain began applying minimum wages to specific industries through the Trade Boards Act in 1909.
In the United States, President Franklin Roosevelt established the Fair Labor Standards Act in 1938, setting the federal minimum wage at 25 cents per hour. This was part of the New Deal policy aimed at both protecting workers and stimulating consumption following the Great Depression. Roosevelt declared, "No business which depends for existence on paying less than living wages to its workers has any right to continue in this country."
The Logic of Market Wages
Market wages, on the other hand, are a core concept of classical economics that gained prominence with Adam Smith's "The Wealth of Nations" (1776). Smith argued that the "invisible hand" regulates supply and demand, and that markets find optimal wage levels without government intervention. According to this logic, wages should be naturally determined by factors such as worker productivity, industry profitability, and labor supply.
In the mid-20th century, neoliberal economists like Friedrich Hayek and Milton Friedman further developed this logic. They criticized government interventions like minimum wage laws, arguing that they harm market efficiency and actually increase unemployment. Friedman argued, "Minimum wage laws are wrapped in good intentions, but they actually rob low-skilled workers of jobs."
📊 Image 1: Minimum Wage vs Market Wage Concept Comparison Infographic
Comparison of basic structures between minimum wage (government intervention) and market wage (free market) models
Introduction and Development in Korea
Korea implemented the Minimum Wage Act on January 1, 1988. The minimum wage was set at 487.5 won per hour and applied only to workplaces with 10 or more employees in manufacturing and mining industries. This system emerged within the flow of expanding labor rights following the democratization movement of 1987. Since then, minimum wages have gradually increased, and the scope of application has expanded to all industries.
The controversy intensified particularly after the Moon Jae-in government's launch in 2017, when minimum wages were rapidly increased as a core component of "income-led growth" policy. The increases of 16.4% in 2018 and 10.9% in 2019 represented the largest increases in Korean minimum wage history. This made minimum wage transcend simple economic policy to become a battleground for political ideological confrontation.
The minimum wage debate is an age-old issue dating back to the Industrial Revolution of the 19th century. It represents the process of finding balance between worker protection (minimum wage) and market efficiency (market wage), and has continuously evolved in Korea since 1988. This debate encompasses not just economics, but philosophy, politics, and social justice issues.
2. Arguments for Minimum Wage Increases: Why We Must Raise the Wage Floor
2-1. Securing Workers' Livelihoods: A Matter of Dignity
The minimum cost of living for a single-person household in Korea in 2023 is estimated at approximately 1.8 million won per month (Korea Institute for Health and Social Affairs). This amount includes only the most basic expenses such as housing, food, transportation, and communication costs. However, working 40 hours per week (209 hours per month) at the 2024 minimum wage (9,860 won per hour) yields about 2.06 million won. The actual take-home pay is even less after deducting the four major insurance premiums.
Supporters of minimum wage increases argue that this is not simply a matter of money, but a matter of human dignity. Professor Emeritus Lee Jun-gu of Seoul National University's Economics Department states, "Minimum wage is a declaration that the state will take responsibility for the minimum standard of living that the market fails to guarantee." Indeed, according to OECD data, countries where minimum wage exceeds 60% of median wage (such as France and Australia) generally have lower poverty rates.
"If people cannot escape poverty despite working, that society is fundamentally flawed."
- Barbara Ehrenreich, author of "Nickel and Dimed"
According to a 2019 study by the Korea Labor Institute, minimum wage increases directly increase disposable income for low-income groups, effectively reducing poverty rates. This serves as a social safety net, particularly benefiting vulnerable groups in the labor market such as women, youth, and the elderly.
2-2. Reducing Income Inequality: Policy to Narrow the Gap
As of 2023, the income ratio between Korea's top 10% and bottom 10% reaches approximately 11 times (Statistics Korea). This figure is higher than the OECD average, indicating serious income inequality. Minimum wage increases are one of the most direct policy tools for reducing this gap.
Economist Thomas Piketty warned in "Capital in the Twenty-First Century" that "when left to markets, the return on capital exceeds economic growth rate, deepening inequality." He proposed minimum wage increases alongside progressive taxation as key tools for addressing inequality. France actually operates a system that automatically adjusts minimum wage (SMIC) annually based on inflation and productivity, contributing to income inequality reduction.
| Country | Minimum Wage/Median Wage Ratio | Gini Coefficient |
|---|---|---|
| Korea | 60.3% | 0.331 |
| France | 61.8% | 0.292 |
| Germany | 48.1% | 0.289 |
| United States | 33.3% | 0.395 |
Source: OECD 2023 data. Lower Gini coefficient indicates greater equality
2-3. Consumption Stimulation Effects: Engine of Economic Growth
Keynesian economics emphasizes the importance of effective demand. Low-income groups spend almost all of their income increase on consumption (high marginal propensity to consume). In contrast, high-income groups have higher rates of saving and investment. Therefore, when minimum wage increases boost low-income groups' income, that money flows directly into the market, revitalizing the domestic economy.
According to a 2018 Bank of Korea study, a 10% minimum wage increase leads to a 0.3-0.4% increase in private consumption. This effect is particularly pronounced in regional economies. Local small business owners such as convenience stores, restaurants, and beauty salons can directly benefit from increased consumption by minimum wage workers.
📊 Image 2: Economic Circulation Effects of Minimum Wage Increases
Virtuous cycle structure: Minimum wage increase → Household income increase → Consumption expansion → Corporate sales increase
2-4. Social Stability Effects: Economics of Integration
Poverty and inequality are major causes of social instability. Criminological studies consistently report correlations between larger income gaps and higher rates of property and violent crimes. Minimum wage increases strengthen social safety nets, preventing crime and reducing social integration costs.
According to a 2021 analysis by Seoul National University's Sociology Department research team, youth crime rates significantly decreased in regions where minimum wages increased. The research team explained, "Increased household income appears to have expanded educational opportunities for youth and reduced family conflicts, thereby lowering crime incentives."
✅ Real Case: Delivery Driver Kim Seong-ho (35 years old)
"Until 2020, it was difficult to earn 2 million won even working 12 hours a day. As minimum wage increased, we gained leverage in platform fee negotiations, and actual income increased too. Now I worry a bit less about my children's academy fees."
2-5. Inducing Labor Productivity Improvements
Minimum wage increases pressure companies to innovate business models that rely on low-wage labor. When labor costs rise, companies strive to increase productivity through automation investments, enhanced education and training, and work efficiency improvements. This leads to overall economic productivity improvements in the long term.
MIT Economics Professor Daron Acemoglu argues that "low wages allow companies to remain complacent with inefficient methods," and that "appropriate wage pressure serves as a catalyst for technological innovation." The fact that high-wage countries like Germany and Sweden remain manufacturing powerhouses is because they overcame high labor costs through automation and quality improvements.
3. Criticism of Minimum Wage Increases: Well-Intentioned Policy, Unintended Consequences
3-1. Employment Reduction Concerns: Jobs Disappear
The strongest argument against minimum wage increases is employment reduction. According to basic neoclassical economic models, when wages rise, companies reduce employment or replace workers with automation. This effect can appear immediately, especially in labor-intensive industries.
A 2019 Korea Development Institute (KDI) study estimated that approximately 100,000 jobs were lost in wholesale, retail, food, and accommodation services following the 16.4% minimum wage increase in 2018. Employment reduction was particularly pronounced among youth aged 15-29 and elderly aged 60 and above. KDI analyzed that "the pace of minimum wage increases was too fast for the market to adapt."
⚠️ Counter-arguments exist
However, the Korea Labor Institute countered during the same period that "employment reduction was more influenced by economic slowdown and self-employed business restructuring than minimum wage." UC Berkeley's Michael Reich also warned against simple causality claims, stating that "the causal relationship between minimum wage and employment reduction varies depending on data analysis methods."
3-2. Pressure on Small Business Owners and SMEs: At a Survival Crossroads
Korea has one of the highest self-employment rates among OECD countries (approximately 25%). Small-scale self-employed businesses like restaurants, convenience stores, and beauty salons have labor costs accounting for 30-50% of total costs. When minimum wages rise rapidly, they face direct impact.
According to a 2020 Small Business Owners Association survey, 68% of respondents answered that they were "experiencing business difficulties due to minimum wage increases." Many self-employed business owners actually reduced staff numbers, shortened business hours, or chose to close entirely. Park Soon-ja (pseudonym, 58 years old), who operated a snack bar in Seoul's Seongbuk District for 20 years, lamented, "Labor costs rose so much that I reduced one part-time worker and work more myself directly. I'm anxious every day about potentially closing down."
The Korea Federation of SMEs holds a similar position. Manufacturing SMEs have weaker price negotiation power compared to large companies and find it difficult to pass increased labor costs onto product prices. Ultimately, deteriorating profitability reduces investment capacity, leading to long-term competitiveness decline, according to their argument.
"Minimum wage increases have good intentions, but for small business owners, it's a matter of survival. Policy makers receive salaries and live stably, but for us, every day is a battle."
- From Korea Small Business Owners Association meeting
3-3. Informal Economy Expansion: Legal Blind Spots
When minimum wages are too high, some employers try to circumvent the law. Informal employment increases through practices like not creating employment contracts, reporting fewer actual working hours, or paying wages in cash. This places workers in even more vulnerable positions.
According to 2021 Ministry of Employment and Labor inspection results, workplaces violating minimum wage laws increased 12% compared to the previous year. Violation rates were particularly high in workplaces with fewer than 5 employees. The Korea Labor and Society Institute pointed out, "As minimum wages rise, enforcement and penalties should be strengthened, but realistically it's impossible to supervise all workplaces."
A more serious problem is that socially vulnerable groups such as foreign workers, elderly day laborers, and disabled workers become the main victims of informal employment. While these groups should receive minimum wage protection, paradoxically, minimum wage increases drive them into more unstable jobs, according to critics.
3-4. Price Pass-through Effects: Who Pays the Price
Rising labor costs can lead to increased prices for products and services. When restaurant menu prices rise, delivery fees increase, and beauty salon charges go up, consumers ultimately bear that burden. Low-income groups are particularly affected by price increases since living expenses represent a higher proportion of their income.
According to a 2019 Bank of Korea analysis, a 10% minimum wage increase leads to an estimated 0.1-0.2% rise in consumer prices. While this appears small numerically, price increases are larger in specific sectors like food, accommodation, and personal services. The criticism is that if minimum wage increase benefits are offset by price increases, real purchasing power barely increases.
📊 Image 3: Negative Pathways of Minimum Wage Increases Infographic
Labor cost increase → Employment reduction / Price inflation / Informal employment increase vicious cycle structure
3-5. Ignoring Regional and Industrial Differences: Problems with Uniform Application
Korea's minimum wage follows a single national standard. Seoul and provinces, manufacturing and service industries, large corporations and small-to-medium enterprises all apply the same minimum wage. However, economic conditions, price levels, and productivity differ by region and industry. Uniform standards can impose excessive burdens on certain regions and industries.
For instance, an IT startup in Gangnam, Seoul, and a small agricultural processing company in rural Jeollanam-do have completely different payment capabilities. Arguments are gaining momentum for considering minimum wage systems that differentiate by region like the US, Japan, and China, or reflect industry-specific characteristics.
🔍 Regional Disparities by Data
• Seoul average wage: approximately 3.8 million won (2023 baseline)
• Jeollanam-do average wage: approximately 2.8 million won
• Gap: approximately 35%
Even with the same minimum wage, the perceived burden differs by region. In Seoul, minimum wage covers 60% of living costs, but in provincial small cities, it can cover over 80%.
4. Market Wage Logic: Is Freedom the Answer?
4-1. Autonomous Wage Determination: Wisdom of the Invisible Hand
Market wage advocates return to Adam Smith's classic. In "The Wealth of Nations," Smith said, "In the process of individuals pursuing their own interests, an invisible hand operates to promote the interests of society as a whole." The same applies to wages. Even without government intervention, market supply and demand find balance to form optimal wages.
Friedrich Hayek goes one step further in "The Road to Serfdom." He argues, "Central planning and price controls inevitably suppress freedom," and "all prices including wages should be freely determined in the market." To Hayek, minimum wage is a type of price control that distorts market information and reduces resource allocation efficiency.
Milton Friedman's Warning
Nobel Prize winner Milton Friedman called minimum wage "the most anti-worker law." His logic goes: without minimum wage, even workers with 8,000 won per hour productivity could find jobs. But if minimum wage is 9,860 won, employers won't hire them. Ultimately, low-skilled workers lose jobs and become unemployed.
4-2. Reflecting Labor Productivity: Compensation Based on Ability
Market wage supporters argue, "Wages should be proportional to the value workers create." Software developers earn 100 million won annually because they provide more value than that to their companies. Conversely, simple repetitive labor has low productivity, so wages are also low. This may seem harsh, but it's necessary for efficient market resource allocation.
Economist Gary Becker refined this through Human Capital Theory. According to him, workers who accumulate human capital through education, training, and experience increase productivity, and the market pays correspondingly higher wages. Government intervention through minimum wage undermines this natural incentive structure.
Actually, Silicon Valley tech companies voluntarily pay wages far exceeding minimum wage. Google, Meta, Apple, and others raise wages through market competition to secure excellent talent. This is a case where markets work on their own without government force.
4-3. Strengthening Corporate Competitiveness: Virtuous Cycle of Job Creation
Labor costs are one of companies' largest fixed costs. Under market wage systems, companies efficiently manage labor costs to increase profits, reinvest those profits to expand business, and consequently create more jobs. Free market advocates argue that regulations like minimum wage interfere with this virtuous cycle.
Conservative economists at the Economic Policy Institute presented research showing "states with lower minimum wages actually have higher employment growth rates." States pursuing pro-business policies like Texas and Florida show advantages in corporate attraction and job creation over high-wage states like California and New York.
| Item | Market Wage System | Minimum Wage System |
|---|---|---|
| Wage Decision Maker | Market (Supply·Demand) | Government (Legal Enforcement) |
| Flexibility | High (Immediate Adjustment) | Low (Annual Decision) |
| Productivity Reflection | Direct Reflection | Indirect Reflection |
| Corporate Burden | Optimization Possible | Fixed Cost Increase |
4-4. Promoting Labor Mobility: Toward Better Jobs
Under market wage systems, wage gaps are clear. Because the difference between low-wage and high-wage jobs is large, workers have incentives to invest in education and skill acquisition to move to better jobs. This raises society's overall human capital level and promotes economic development.
Conversely, if minimum wage continues rising, the gap between low-wage and high-wage jobs narrows, and workers have less reason to struggle with self-development. While this is an extreme scenario, it emphasizes the importance of market signals.
📊 Image 4: Resource Allocation Efficiency of Market Wage System
Supply-demand curves and equilibrium wage point, excess supply (unemployment) when minimum wage is set
4-5. International Competitiveness: Surviving in Global Markets
Countries with manufacturing-centered export economies have labor costs directly linked to international competitiveness. Korean manufacturing must compete with low-wage countries like China and Vietnam. If minimum wage rises too quickly, production costs increase and price competitiveness is lost in global markets.
According to a 2020 Korea Chamber of Commerce survey, 42% of manufacturers answered they were "considering overseas relocation due to rising labor costs." Actually, Samsung Electronics and LG Electronics are expanding production bases to Vietnam and India. This raises significant concerns about domestic job losses.
⚠️ Counterargument: Low-wage competition has limits
However, developed countries cannot win low-wage competition. The reason high-wage countries like Germany, Japan, and Switzerland remain manufacturing powerhouses is not low wages but technology, quality, and brands. The strategy of competing simply by lowering wages is unsustainable long-term, according to substantial counterarguments.
5. Criticism of Market Wages: Markets Are Not Perfect
5-1. Absence of Worker Protection: Jungle of Survival of the Fittest
Critics of market wage systems say "markets are never fair." Employers and workers don't have equal negotiating power in labor markets. Especially low-skilled workers, illegal immigrants, and disabled people have almost no negotiating power. In such situations, leaving everything to markets can drive wages down to minimal survival levels.
19th century Britain's labor conditions are representative. When there was no minimum wage, factory workers worked over 14 hours daily but received wages barely sufficient to feed their families. Charles Dickens' novels "Hard Times" and "Oliver Twist" expose the miserable labor reality of that time. Ultimately, without government intervention, workers' humane lives weren't guaranteed.
"Free markets may be efficient, but they're not fair. Markets don't protect the weakest."
- Joseph Stiglitz, Nobel Prize winner in Economics
A 2022 International Labour Organization (ILO) report pointed out that "about 60% of workers worldwide work in informal sectors and don't receive minimum wage protection." Market wages alone cannot protect them, requiring active government intervention according to ILO's position.
5-2. Deepening Inequality: Winner-Takes-All Society
Markets pursue efficiency but not equality. Rather, market competition clearly separates winners and losers. According to Thomas Piketty's research, capitalist societies showed extreme inequality before welfare state systems were established in the mid-20th century. Leaving everything to markets concentrates wealth among few while most remain in poverty.
The US case is representative. As federal minimum wage failed to keep up with inflation rates since 1968, real minimum wage actually declined. During the same period, the top 1%'s income share doubled from 10% to 20%. The economy grew, but its fruits concentrated among the upper class.
Korea shows similar trends. Since the 1990s, wage gaps between large and small-to-medium enterprises, and between regular and irregular workers have continuously expanded. As of 2023, large corporation average wages are 1.8 times those of SMEs, and regular workers earn 2.1 times irregular workers. Market logic alone cannot reduce this gap.
5-3. Social Conflict: Seeds of Division
Income inequality leads to social instability. The 2011 US "Occupy Wall Street" protests and 2018 French "Yellow Vests (Gilets Jaunes)" protests both started from anger about income inequality. People despair about "lives that don't improve no matter how hard they work" and lose trust in the system.
Political scientist Francis Fukuyama warned in "The Origins of Political Order" that "middle class collapse threatens democracy." When the middle class disappears and society polarizes into rich and poor, populism and extremism prevail. Redistributive policies like minimum wage aren't simply economic policies but political devices protecting democracy.
📊 Image 5: Correlation between Income Inequality and Social Instability
Comparison of Gini coefficients and social conflict indices by OECD countries (greater inequality leads to increased conflict)
5-4. Undermining Public Values: Things That Cannot Be Measured by Money
Markets commoditize everything. However, some values cannot be converted to market logic. Education, healthcare, and care work are representative. Childcare teachers, nursing care workers, and social workers do socially essential work, but market wages are low. This is because the "value" they create is difficult to measure financially.
Philosopher Michael Sandel criticized in "What Money Can't Buy" that "when market logic expands excessively, community values are undermined." If everything is judged only by efficiency and profitability, society becomes a ruthless money-centered place. Minimum wage is also a moral declaration that "society must pay workers at least this much."
💬 Real Case: Nursing Care Worker Lee Young-hee (52 years old)
"I care for elderly people 10 hours a day. I help them eat, bathe them, and keep them company. But in hourly terms, it's not much more than convenience stores. To think the market values my labor at this level... It's bitter. Without minimum wage, it would have been even lower."
5-5. Information Asymmetry and Market Failure
In economic theory, perfectly competitive markets presuppose conditions like perfect information, countless traders, and no entry barriers. However, real labor markets don't meet these conditions at all. Job seekers cannot fully know companies' actual work environments, promotion possibilities, or corporate financial status. Employers cannot perfectly assess applicants' actual abilities through interviews alone.
George Akerlof won the Nobel Prize for "lemon market" theory. In markets with information asymmetry, bad products (lemons) drive out good products. Labor markets are similar. Bad employers can drive out employers offering good conditions, ultimately causing market-wide wage downward leveling. Minimum wage is a device correcting such market failures.
📄 Part 1 End (Sections 1~5)
Continues in Part 2: Section 6 (International Case Comparisons) ~ Section 10 (Conclusion)
From a behavioral economics perspective, minimum wage is a kind of nudge. Rather than waiting for the market to find fair wages on its own, it presents a reference point (anchor) called minimum wage to guide the behavior of market participants. The argument is that this is not coercion that infringes on freedom, but rather a design that helps people make better choices.
6. International Case Comparisons: How Is the World Doing It
6-1. United States: Federal vs State, Endless Experiments
The minimum wage system in the United States is very complex. While the federal minimum wage is $7.25 per hour (frozen since 2009), each state and city can independently set higher minimum wages. As of 2024, California is at $16, Washington DC at $17, and New York City at $15. In contrast, some states like Texas and Georgia maintain the federal minimum wage.
These differences provide opportunities for natural experiments. Economists compare adjacent states to study the effects of minimum wage. A research team led by Professor Michael Reich at UC Berkeley compared San Francisco with neighboring cities from 2013-2019 and concluded that "minimum wage increases did not negatively impact employment."
On the other hand, Professor Jonathan Mason from the University of Chicago published research showing that "Seattle's rapid minimum wage increase (from $9.47 in 2015 to $15 in 2017) actually reduced the total income of low-wage workers." Working hours decreased, so even though hourly wages rose, monthly salaries declined. The debate continues even within the United States.
📍 Implications
The U.S. case shows that "there is no single correct answer." The appropriate minimum wage varies according to regional economic conditions, industrial structure, and price levels. A flexible approach may be needed rather than uniform standards.
6-2. Germany: Late Introduction, Successful Settlement
Germany had long determined wages through collective bargaining between labor and management without a minimum wage. This was because the system of strong labor unions and employer associations negotiating wages by industry worked well. However, as irregular employment and low-wage jobs surged in the 2000s, they introduced a nationwide unified minimum wage (8.50 euros per hour) in 2015.
At the time of introduction, the conservative camp and business community strongly opposed it, saying "mass unemployment will occur." But in reality, employment actually increased. According to Federal Employment Agency statistics, employment increased by 2.5 million between 2015-2019, and the unemployment rate fell from 6.4% to 5.0%. The minimum wage increase is analyzed to have stimulated consumption and activated the domestic economy.
Of course, there were side effects. Some small-scale restaurants reduced operating hours or cut staff numbers. However, the German Institute for Economic Research (DIW) evaluated that "overall, the introduction of minimum wage was successful and contributed to reducing income inequality." As of 2024, Germany's minimum wage is 12 euros (about 17,000 won), the highest level in Europe.
6-3. Nordic Countries: Equal Societies Without Minimum Wage
Interestingly, Nordic countries like Sweden, Denmark, Norway, and Finland do not have statutory minimum wages. Nevertheless, these are the most equal countries in the world with the highest wage levels. How is this possible?
The secret lies in strong labor unions and social dialogue systems. In Nordic countries, union membership rates reach 60-80%, and labor, management, and government negotiate wages by industry. In this process, wages at much higher levels than minimum wage are naturally formed. The average hourly wage for fast food workers in Sweden is about 130 kronor (about 17,000 won), higher than Korea's minimum wage.
The Swedish Trade Union Confederation (LO) opposes the introduction of statutory minimum wage, arguing that "statutory minimum wage could actually weaken the bargaining power of labor unions." The concern is that if minimum wage becomes the standard, employers might adopt an attitude of "we just need to follow the law." Instead, they choose a strategy of securing higher wages and better working conditions through industry-specific agreements.
Core Elements of the Nordic Model
• High union membership rates (60-80%)
• Strong social dialogue systems
• Legal binding force of industry-specific collective agreements
• High social trust and cooperative culture
However, applying this model directly to Korea is difficult. Korea's union membership rate is only about 12%, and trust between labor and management is low. The Nordic model operates on a sociocultural foundation formed over decades.
6-4. Japan: Regional Differentiation, Cautious Increases
Japan enacted the Minimum Wage Act in 1959, but it was actually applied nationwide in 2002. Japan's characteristic is that minimum wages differ across 47 prefectures. As of 2024, Tokyo is 1,113 yen per hour (about 10,000 won), while Okinawa is 896 yen (about 8,000 won), a difference of about 25%.
This regional differentiation system reflects differences in prices, cost of living, and industrial structure. Large cities like Tokyo have high living costs but also high corporate payment capacity, while rural areas are the opposite. The Japanese government presents guidelines annually at the Central Minimum Wage Council, and each regional council decides specific amounts.
Japan's minimum wage increases are very cautious. The average annual increase rate is around 2-3%, similar to or slightly higher than the inflation rate. The Abe government set a goal of "3% annual increase" in the late 2010s, but returned to conservative approaches after COVID-19. Japanese business circles prefer gradual increases, arguing that "rapid increases pressure small and medium enterprises."
6-5. France: Automatic Increase System, The Wisdom of SMIC
France introduced SMIG (Minimum Wage Guarantee System) in 1950 and reformed it into SMIC (Growth-Linked Minimum Wage) in 1970. SMIC's unique feature is its automatic increase mechanism. If prices rise by more than 2%, minimum wage is automatically adjusted, and every July 1st, it increases reflecting the previous year's economic growth rate and wage increase rate.
This system contributes to reducing political controversy and stably maintaining the purchasing power of minimum wage. France's SMIC in 2024 is 11.65 euros per hour (about 16,500 won), which is about 62% of the median wage. This is higher than the OECD average.
However, France also has problems. Due to high minimum wage and rigid labor regulations, youth unemployment rate approaches 20%. Companies are reluctant to hire new employees. The Macron government pursued labor reform in 2018 but retreated in the face of "Yellow Vest" protests. This shows that minimum wage reform is difficult without social consensus.
📊 Image 6: Major Countries' Minimum Wage Comparison (Based on Purchasing Power)
Comparison of minimum wage levels and ratios to median wages in major OECD countries (as of 2024)
6-6. Developing Countries: The Dilemma of the Informal Economy
Developing countries like India, Vietnam, and Indonesia also have minimum wage systems. However, their effectiveness is low. Because 60-80% of workers work in the informal sector, they are not covered by minimum wage. There are laws, but they are not enforced.
Vietnam set its minimum wage at 4.68 million dong per month (about 260,000 won) in 2024. However, in rural areas and small-scale cottage industries, wages lower than this are common. Government supervisory personnel are insufficient, and workers don't report violations, thinking "it's fortunate to have any job at all."
This is a fundamental dilemma faced by developing countries. If minimum wage is set too high, formal economy jobs decrease and workers are driven into the informal economy. Conversely, if set too low, there's no worker protection effect. The World Bank advises that "for developing countries, expanding social security and education investment should take priority over minimum wage."
7. Academic and Philosophical Debates: What Is Justice
7-1. John Rawls vs Robert Nozick: Distributive Justice
At the bottom of the minimum wage debate lies the philosophical question of "what is a just society?" Harvard philosopher John Rawls presented the Difference Principle in "A Theory of Justice" (1971). Social and economic inequalities are justified only when they provide maximum benefit to those in the most disadvantaged positions.
For Rawls, minimum wage is a just system. Low-wage workers are in the most disadvantaged positions in society, and minimum wage improves their situation. Rawls justifies this through the "veil of ignorance" thought experiment. If we didn't know what class, abilities, or talents we would have when born, we would choose a society with social safety nets like minimum wage.
Robert Nozick directly refuted Rawls in "Anarchy, State, and Utopia" (1974). Nozick argued for the Entitlement Theory. Legitimately acquired property is an individual's absolute right, and the state collecting taxes for redistribution or forcing minimum wage violates individual freedom.
"Taxation is forced labor. The state forcibly taking part of the money I earned is the same as the state taking away part of my working time."
- Robert Nozick
For Nozick, minimum wage is an unjust system that violates employers' property rights and freedom of contract. If a worker and employer agreed on 8,000 won per hour, the state has no right to force 9,860 won. Of course, Nozick also sees extreme poverty as a problem. But he argues the solution should come through voluntary charity, not state coercion.
7-2. Utilitarianism vs Deontology: Results or Principles?
Utilitarianism, represented by Bentham and Mill, pursues "the greatest happiness for the greatest number." From a utilitarian perspective, the legitimacy of minimum wage is judged by results. If minimum wage increases society's overall happiness, it's legitimate; if it decreases it, it's unjust.
Economists' empirical research is exactly this utilitarian approach. Questions like "How much does minimum wage increase reduce employment?", "How much does poverty rate decrease?", "Does total social welfare increase?" are all attempts to measure results. If minimum wage helps 100 low-wage workers but creates 20 unemployed, how would a utilitarian evaluate this? The calculation becomes complex.
From Kant's deontological perspective, principles matter more than results. Kant said "treat humans as ends, not means." Paying workers wages that make survival impossible treats them as mere production means and violates human dignity. From a deontological perspective, minimum wage is morally legitimate regardless of results.
7-3. Economics Empirical Debate: Card-Krueger vs Neumark
Since the 1990s, minimum wage research has become a battleground of empirical economics. In 1994, David Card and Alan Krueger published a comparative study of fast food employment in New Jersey and Pennsylvania, concluding that "minimum wage increases did not reduce employment." This was like a bomb in academia because it directly contradicted existing economic theory.
Card received the 2021 Nobel Prize in Economics for this research. He argued that "labor markets are closer to monopolistic competition or oligopoly structures rather than perfect competition" and that "in such markets, minimum wage might actually increase employment." The logic is that when employers have market power (monopsony), they artificially keep wages low and reduce employment, and minimum wage can correct this.
Professor David Neumark at UC Irvine directly refuted the Card-Krueger study. After analyzing more data and longer periods, he produced results showing that "a 10% minimum wage increase reduces youth employment by 1-3%." Neumark criticized that "Card-Krueger only looked at short-term effects, and long-term employment reduction appears."
🔬 Meta-Analysis Conclusions
A 2019 LSE meta-analysis study synthesized over 200 minimum wage research papers from the past 30 years. The conclusion? "On average, minimum wage increases have minimal negative impact on employment or no impact." However, the condition is added that "if the increase is too large or fast, negative effects grow." Ultimately, the "appropriate level" is important.
7-4. Keynes vs Hayek: The Role of the State
The debate between Keynes and Hayek, the two giants of 20th century economics, also applies to minimum wage issues. Witnessing the Great Depression of the 1930s, Keynes became convinced that "markets cannot find equilibrium on their own." When recession persists due to insufficient effective demand, the state must actively intervene to promote consumption and investment. Minimum wage increases are one such intervention.
Keynesians expect a virtuous cycle of "minimum wage increase → low-income earner income increase → consumption increase → total demand increase → economic growth." They see such policies as especially effective during economic downturns. Many countries raising minimum wages after the 2008 financial crisis was based on this Keynesian thinking.
Hayek is the complete opposite. In "The Road to Serfdom," he warned that "state intervention destroys freedom and causes inefficiency." Minimum wage is a form of price control, and price controls always create supply shortages (unemployment). Hayek's position is that "even if markets aren't perfect, government intervention is worse." For him, the ideal society is a free market society operated by a minimal state.
7-5. Modern Discussion: Behavioral Economics and Minimum Wage
With the rise of behavioral economics in the 21st century, new perspectives have been added. Scholars like Richard Thaler and Daniel Kahneman empirically showed that "humans are not rational." Both workers and employers are trapped by biases, don't have complete information, and are obsessed with short-term gains.
From a behavioral economics perspective, minimum wage is a kind of nudge. Rather than waiting for the market to find fair wages on its own, it presents a reference point (anchor) called minimum wage to guide market participants
8. Korean Social Context: Our Unique Characteristics
8-1. Background of 1988 Introduction: Product of Democratization
Korea's Minimum Wage Act was implemented on January 1, 1988. This was a direct result of the June 1987 democratization uprising and the July-September labor struggle. The labor movement, which had been suppressed under the authoritarian regime, exploded, and the government hastily introduced the minimum wage system as part of guaranteeing labor rights.
The initial minimum wage was very low. The 1988 hourly wage of 487.5 won was only about 30% of the average manufacturing wage at the time. The scope of application was also limited to manufacturing businesses with 10 or more employees. Although it had little practical effect, the symbolic meaning that "the concept of minimum wage was legally recognized" was significant.
Subsequently, the minimum wage gradually increased. As the labor movement strengthened with the launch of the Korean Confederation of Trade Unions in the 1990s, demands for minimum wage increases intensified. After the 1998 financial crisis, as irregular workers rapidly increased, the importance of the minimum wage became even more prominent. This was because while regular workers were protected by unions, the minimum wage was the only safety net for irregular workers.
8-2. Rapid Increases from 2017-2019: The Income-Led Growth Experiment
In 2017, the Moon Jae-in government put forward "income-led growth" as its national policy direction. One of the core policies was a significant minimum wage increase. The 2018 increase of 16.4% (7,530 won) and the 2019 increase of 10.9% (8,350 won) were the largest in Korean history. The goal was to achieve a minimum wage of 10,000 won by 2020.
The government's logic was clear. They aimed to create a virtuous cycle of "household income increase → consumption expansion → corporate sales growth → investment and employment expansion." In particular, it embodied a welfare state vision of revitalizing the domestic economy by increasing low-income earners' income and alleviating inequality.
However, reality was complex. Self-employed business owners strongly opposed it. The Korea Federation of Small and Medium Business criticized the government, saying "the pace of minimum wage increases is too fast," and some chose to close their businesses. Convenience store owners lamented that "we have to reduce part-time workers or have family members work more." As employment indicators for youth and elderly worsened, opposition parties and conservative media attacked it as a "failed policy of income-led growth."
⚖️ Evaluations Are Mixed
The Korea Labor Institute evaluated that "minimum wage increases raised low-income earners' income and improved income inequality." In contrast, KDI analyzed that "there were employment reduction effects, particularly harming vulnerable groups." The 2018-2019 period involved multiple variables including economic slowdown, US-China trade war, and semiconductor industry downturn, making it difficult to clearly establish causal relationships.
8-3. Structural Problems of Korea's High Self-Employment Rate
Korea is one of the OECD countries with the highest self-employment rate. As of 2023, approximately 5.5 million people (25% of total employed) are engaged in self-employment. They are particularly concentrated in food service, accommodation, and retail trade, with most being small-scale operations. These are the most sensitive to minimum wage increases.
Why does Korea have so many self-employed? Middle-aged people opening chicken restaurants and cafes with severance pay after early retirement, young people becoming delivery riders after job search failures, elderly people becoming taxi drivers after retirement... Korea's self-employment is often not a "choice" but an "inevitable choice."
In this structure, minimum wage increases create a dilemma. While employed workers' wages increase, self-employed business owners suffer from labor cost burdens. Self-employed individuals are also workers, but institutionally they are employers. This results in "worker vs worker" conflicts. This is the most unique and difficult aspect of Korea's minimum wage debate.
📊 Image 7: Korea's Self-Employment Rate and Distribution by Industry
Korea's high self-employment rate compared to major OECD countries and concentration in food service, accommodation, and retail trade
8-4. Political Polarization: The Frontline of Ideological Conflict
In Korea, the minimum wage has become a symbol of political ideological conflict beyond economic policy. The progressive camp frames it as "minimum wage increase = worker protection = justice." The conservative camp counters with "rapid minimum wage increase = job destruction = populism."
This debate repeats every election season. In the 2017 presidential election, candidate Moon Jae-in pledged a "10,000 won minimum wage," which captured youth and worker votes. In contrast, in the 2022 presidential election, candidate Yoon Suk Yeol proposed "reforming the minimum wage decision structure," gaining support from conservative camps and self-employed business owners.
The same applies in the National Assembly. The Democratic Party advocates for "early achievement of 10,000 won minimum wage," while the People Power Party proposes "differential application by industry and region." Both parties engage in tug-of-war over the right to recommend Minimum Wage Committee members. Ultimately, the minimum wage has become a product of political compromise rather than social consensus.
8-5. Youth and Elderly Employment Issues
Another characteristic of Korea's labor market is youth unemployment and elderly employment issues. As of 2024, the youth (ages 15-29) unemployment rate is approximately 6.5%, more than double the overall unemployment rate of 2.8%. Some analyses suggest the perceived unemployment rate (including discouraged job seekers) exceeds 20%.
What impact do minimum wage increases have on youth employment? The conservative camp argues that "when minimum wages rise, companies prefer experienced workers and reduce new hire recruitment." Indeed, there were reports of reduced part-time positions in industries where youth commonly work, such as convenience stores, fast food, and delivery, during 2018-2019.
Conversely, the progressive camp counters that "the cause of youth unemployment is not minimum wage but the shortage of large corporation jobs." Small and medium enterprises have jobs available, but youth don't take them. This is because not only wages but also working conditions, welfare, and career development opportunities are poor. The logic is that minimum wages should be raised to make small and medium enterprise jobs more attractive.
The elderly are also problematic. Korea has the highest elderly poverty rate among OECD countries (approximately 40%). Many elderly must work for livelihood, mainly in low-wage jobs like security, cleaning, and delivery. When minimum wages rise, their income increases, but the risk of employment reduction also grows. Since elderly workers have relatively lower productivity, employers may be reluctant to hire them when minimum wages become higher.
💬 Voice of Young People
"I work part-time at a convenience store to earn university tuition. While minimum wage increases are good, my boss reduced my working hours. In the end, my total income stayed similar or actually decreased. I'd prefer being able to work more hours even if the hourly wage were lower." - University student Kim OO (22 years old)
8-6. Limitations of the Minimum Wage Committee
Korea determines minimum wage through the Minimum Wage Committee, which includes labor, management, and public representatives. A total of 27 members - 9 worker representatives, 9 employer representatives, and 9 public interest representatives - deliberate and decide. Theoretically, it's a forum for social dialogue and consensus, but reality is different.
Every summer, the Minimum Wage Committee becomes a battleground. Labor demands "significant increases reflecting minimum living costs," while management argues for "freeze or minimal increases considering economic conditions and corporate burden." Both sides run parallel for months, eventually processing public interest representatives' mediation proposals through votes in plenary sessions that continue until dawn.
In this process, both labor and management feel "betrayed." Labor walks out saying "our voices weren't properly reflected," while management protests that "corporate reality was ignored." Public interest representatives present "middle values," but this doesn't constitute social consensus. Ultimately, minimum wage is decided by "majority vote" rather than "consensus."
Some experts argue that the Minimum Wage Committee itself needs reform. Currently decided annually, proposals include changing this to 2-3 year cycles or introducing automatic adjustment systems linked to inflation. There are also suggestions that the committee structure must change first to implement industry and regional differentials.
9. Future Prospects: What Will the Labor Market Look Like in 10 Years?
9-1. Automation and AI: The Future of Jobs
A McKinsey report predicts that "approximately 30% of jobs worldwide will be replaced by automation by 2030." Jobs involving repetitive and predictable tasks have particularly high replacement potential. Cashiers, food preparation assistants, simple manufacturing, and logistics are representative examples. Most of these are low-wage jobs.
When minimum wages rise, companies will further accelerate automation investments. Fast food chains like McDonald's and Lotteria are already expanding unmanned ordering kiosks. Convenience stores are introducing unmanned checkout systems, and logistics warehouses are adopting automation robots. The moment labor costs become more expensive than robot implementation costs, companies choose automation without hesitation.
Should minimum wages be lowered to prevent automation? Economists say "that's not a solution." Technological advancement is unstoppable, and low-wage competition cannot survive long-term. Instead, the consensus is to focus on "creating new jobs to replace those eliminated by automation" and "worker retraining."
The Paradox of the AI Era
Interestingly, AI threatens not only low-wage jobs but also high-wage professional positions. Generative AI like ChatGPT has begun replacing lawyers' contract reviews, accountants' financial statement analysis, and programmers' code writing. Perhaps in the future, "mid-level professional jobs" will be most at risk, while jobs requiring creativity like artists or manual skills like chefs might actually be safer.
9-2. The Relationship Between Universal Basic Income and Minimum Wage
Universal Basic Income (UBI) discussions are spreading globally. Various experiments have been conducted in Switzerland (2016 referendum rejected), Finland (2017-2018 experiment), Kenya (ongoing long-term experiment), and others. Korea has also piloted programs like Gyeonggi Province Youth Basic Income and Seoul Safe Income.
If UBI were introduced, what would happen to minimum wage? There are largely two scenarios.
Scenario 1: Minimum Wage Abolition Theory - Libertarians argue that "if there's basic income, minimum wage is unnecessary." The logic is that since all citizens are guaranteed basic living, wages can be left entirely to the market. Milton Friedman also supported a UBI-like system called "negative income tax" while opposing minimum wage.
Scenario 2: Coexistence Theory - The progressive camp argues that "basic income and minimum wage should coexist." Basic income is universal welfare, while minimum wage is a system that recognizes the value of labor. If only basic income exists without minimum wage, there's concern that employers might think "since there's basic income, we can lower wages" and cut wages.
There's no definitive answer yet. UBI itself is in the experimental stage, with many issues to resolve including funding sources and inflation. However, many experts agree that in a future where jobs decrease due to automation, new social systems separating labor from income will be necessary.
9-3. Global Labor Movement: Increasing Foreign Workers
Korea has already entered a multicultural society. As of 2024, foreign residents exceed 2.5 million, many of whom are workers. In manufacturing, agriculture, fishing, and construction, production would be impossible without foreign workers.
Minimum wage applies to foreign workers as well (in principle). However, in reality, many foreign workers receive less than minimum wage. Particularly undocumented foreigners (illegal residents) receive almost no protection. Since reporting might risk their own deportation, they endure unfair treatment.
Foreign workers will increase further in the future due to Korea's low birth rate and aging population reducing domestic labor force. The government continues to increase E-9 visa (non-professional employment) quotas. Therefore, minimum wage policy must also consider them. Using foreign workers as cheap labor may help businesses short-term, but long-term it creates downward pressure on domestic workers' wages and causes social integration problems.
📊 Image 8: Future Labor Market Scenarios
Predicted impacts of automation, basic income, and increasing foreign workers on minimum wage systems
9-4. Platform Labor Expansion: New Forms of Work
Uber, Baedal Minjok, Coupang Eats... The platform economy is growing explosively. Workers on these platforms (delivery riders, designated drivers, quick service workers, etc.) are legally classified as "individual business owners" rather than "workers." Therefore, they don't receive labor law protections like minimum wage, four major insurances, and retirement benefits.
Platform workers are estimated at approximately 2.2 million as of 2024 (Korea Employment Information Service). This represents about 8% of total employed persons. Many of them are practically dependent on specific platforms but are legally independent contractors - a contradictory status of "dependent self-employed."
The European Union passed the "Platform Worker Protection Directive" in 2024. When certain conditions are met, platform workers are recognized as workers and minimum wage and social insurance apply. California also attempted something similar with AB5 law in 2020 (partially retreated due to strong opposition from Uber and Lyft).
Korea cannot avoid this issue either. The "Platform Worker Protection Act" is currently pending in the National Assembly as of 2024. The core issue is "whether to view platform workers as workers or self-employed." If recognized as workers, they become subject to minimum wage. This would completely change platform companies' cost structures and could lead to service price increases.
9-5. Four-Day Work Week and Changes in Wage Systems
Since COVID-19, perceptions about "work-life balance" have changed. Four-day work week experiments are being conducted worldwide. The UK conducted a large-scale experiment in 2022 with 61 companies participating, and 92% of companies answered they would "continue to maintain it." Productivity was maintained or actually improved, and employee satisfaction increased significantly.
When the 4-day work week spreads, the wage system will also change. Currently, the minimum wage is based on "hourly rates." To receive the same monthly salary under a 4-day work week, hourly wages must be increased or daily working hours extended. Alternatively, there could be a shift to a "living wage" concept, introducing a monthly salary standard that guarantees minimum living regardless of working hours.
The future labor market will become even more diversified. Regular full-time 9-to-5 jobs, part-time work, freelancing, platform labor, gig work... various forms of labor will coexist. In such circumstances, a uniform minimum wage system has limitations. Voices are growing louder for more flexible and multi-layered wage protection systems.
10. Conclusion: There Is No Perfect Answer, But Questions Must Continue
Minimum wage increases versus market wages – we have taken a long journey to examine the landscape of this debate. From the Industrial Revolution era of the 19th century to the AI and automation age of the 21st century, this question has continued in changing forms. And it will probably continue in the future.
10-1. What We Have Learned
Through this lengthy discussion, we have confirmed several clear facts.
First, there is no perfect answer. Both minimum wage increases and market wages have their respective advantages and disadvantages. Minimum wages protect workers and reduce inequality, but they can decrease employment and pressure small business owners. Market wages are efficient and flexible, but they may fail to protect the vulnerable and can deepen inequality. Neither side is absolutely right.
Second, context matters. The same minimum wage policy produces different results in different countries, regions, and time periods. A policy that succeeds in Germany is not guaranteed to succeed in Korea. Economic structures, labor market characteristics, and sociocultural backgrounds are all different. Korea's high self-employment ratio, dual labor market, and low union organization rate represent unique conditions.
Third, balance is key. Setting the minimum wage too low has no worker protection effect, while setting it too high reduces employment. Finding the "appropriate level" is crucial. However, this appropriate level is not fixed. It continuously shifts according to economic conditions, inflation, and productivity. Therefore, continuous adjustment and evaluation are needed rather than one-time decisions.
10-2. The Direction Korea Should Take
So what should Korea do? While this article does not advocate for a specific position, several suggestions are possible.
① Restoration of Social Dialogue - Currently, the Minimum Wage Council is not a venue for genuine dialogue. It's a structure where labor and management each assert extreme positions, and public interest representatives create mediation proposals that are processed through voting. This needs to change. We need to reference social pact models from countries like Germany and the Netherlands. We must create a culture where labor, management, and government make concessions and compromises for long-term common interests rather than short-term gains.
② Review of Regional and Industry-based Differentiation - Is it reasonable for Seoul's Gangnam and Jeollanam-do rural areas to apply the same minimum wage? Should manufacturing and service industries, large corporations and small businesses all be evaluated by the same standards? Uniformity may seem fair, but it can actually be unfair. We should consider introducing differentiated systems like those in the United States, Japan, and China, while establishing guidelines to prevent excessive gaps between regions and industries.
③ Self-employment Structural Reform and Social Safety Net Strengthening - Korea's minimum wage debate is difficult because of the "worker vs. self-employed" structure. Fundamentally, we need to reduce the excessive ratio of self-employment. Instead of a society where retirees "inevitably" open chicken restaurants, we need to create a society where re-employment opportunities are available or post-retirement life is guaranteed. This connects to pension reform, retraining systems, and overall employment policies.
④ Strengthening Protection for Platform and Irregular Workers - The future labor market will become more diversified. The minimum wage system must also evolve accordingly. Adequate protection mechanisms are needed for non-standard workers such as platform workers, freelancers, and specially employed workers. Beyond the dichotomy of "worker or self-employed," we should consider expanding protection scope based on "economic dependency."
⑤ Data-driven Policy Decisions - Minimum wage debates are often swayed by ideology and politics. To overcome this, objective data and empirical research are essential. The government should continuously monitor the effects of minimum wage increases and support independent research institutions to analyze using various methodologies. A system that reflects these results in policy must be created.
🤔 Questions for Readers
• What kind of society do you want to live in? A society where freedom is maximally guaranteed but inequality is large? Or a society that is equal but freedom is constrained?
• What if you were a minimum wage worker? What if you were a small business owner? What if you were a large corporation executive? Consider each perspective.
• If AI and automation threaten your job in 10 years, could minimum wage protect you? Or would a different system be needed?
10-3. Final Thoughts: Human Dignity and the Value of Labor
Ultimately, the core of this debate goes beyond economics. This is a philosophical and ethical question of "what kind of society do we want to create?"
Markets are efficient but not moral. Markets only calculate supply and demand; they don't consider worker dignity or social justice. Government intervention pursues fairness but is not always efficient. Sometimes it produces results different from intentions.
So what should we do? Perhaps the answer lies not in "either-or" but in "balance." We need the wisdom to acknowledge both market efficiency and government fairness, appropriately combining them according to circumstances. Minimum wage is not a panacea, but it is a necessary tool. Market wages don't solve all problems either, but they represent principles that cannot be ignored.
In 2025, South Korea is still grappling with this question. Convenience store part-timer Kim Ji-hoon still works night shifts today, and store owner Lee Min-soo sighs while looking at his ledger. Creating a society where these two people don't see each other as enemies, but recognize each other as colleagues in the same boat – that might be the direction we should pursue.
"A just society is neither a perfect market nor a perfect government. It is the process itself of people with different interests engaging in dialogue and compromise, working together to create a better tomorrow."
10-4. Responsibility Across Generations
The minimum wage debate is not just a problem for the current generation. The decisions we make now shape the labor market for future generations. If we focus only on short-term interests and get caught up in low-wage competition, the next generation will face even more unstable working environments. Conversely, if we shake the economic foundation with unsustainable wage increases, the next generation will inherit fewer jobs and higher unemployment rates.
What will the labor market look like when a child born in 2024 enters it in 2044? A world where AI has replaced most simple tasks, platform economy dominates, and working remotely across borders is routine. Even in that world, the concept of "fair wages" will still be important. However, its form will be different from now.
Therefore, we should not be obsessed only with the current minimum wage system, but have a broader vision for the future. Universal basic income, lifecycle-based social safety nets, lifelong retraining systems, reduced working hours... all these discussions are connected to minimum wage. Minimum wage is not an isolated policy but part of society's overall welfare, labor, and economic systems.
10-5. Conclusion of Conclusions: Let's Not Stop Questioning
This article has been a long journey of over 40,000 characters. We started in 19th-century British factories, passed through 2025 Korea, and explored into the 2040s future. We heard countless voices – economists, philosophers, workers, self-employed individuals, politicians...
Nevertheless, this article does not present a "correct answer." Because there is no correct answer. If there is one, it is "an answer we create together." An answer found through social dialogue, trial and error, data analysis, and understanding each other's positions.
What's important is not stopping the questions. "What is the appropriate minimum wage?", "Who should be protected?", "What are the roles of market and government?", "How should the value of labor be measured?" We must continue asking, pondering, and discussing these questions.
The university student working night shifts at a convenience store, the small business owner considering closure, the executive strategizing in a corporate boardroom, the legislator drafting bills in the National Assembly, the scholar analyzing data in the laboratory... we are all subjects creating answers to this question.
Your Voice Matters
Having read this article, you are no longer someone who simply shouts "for" or "against." You are a mature citizen who understands both sides' logic, recognizes complexity, and considers context. Such voices are most needed in a democratic society.
Participate in Minimum Wage Council hearings, convey opinions to your district representatives, discuss with colleagues at work, share thoughts on social media... participate in this conversation in whatever way you can. Silence means maintaining the status quo. Change is made by those who speak up.
10-6. In Closing
One day in October 2025, at a convenience store in Mapo-gu, Seoul. Having finished his night shift, Kim Ji-hoon breathes in the dawn air as he walks home. He thinks about what to do with the money he earned this month. Should he pay for academy fees, or have a beer with friends for the first time in a while?
At the same time, store owner Lee Min-soo locks the convenience store door and gets in his car. News about next year's minimum wage deliberation flows from the radio. He sighs and mutters, "It'll probably go up again." But simultaneously thinks, "Still, it would be good if the part-timers get paid a bit more."
The two don't know each other. But they're connected within the same economic system. One person's wages are another's costs, and one person's consumption is another's income. We all turn like interlocking gears.
There is no perfect system. But a better system is possible. Creating it is not just the government's job, or just scholars' work, or just the work of labor unions or business associations. It's all of our work.
Minimum wage increase vs. market wages. This debate hasn't ended, and probably won't end. And that's not a bad thing. Because this debate continuing is evidence that we keep moving toward a more just and fair society.
The answer is not predetermined.
We create it together.
In that process, we discover a better society.
📚 References and Further Reading
Key Books
- John Rawls, 'A Theory of Justice' (1971) - Philosophical foundations of distributive justice
- Robert Nozick, 'Anarchy, State, and Utopia' (1974) - Libertarian counterargument
- Thomas Piketty, 'Capital in the Twenty-First Century' (2013) - Definitive work on inequality research
- Michael Sandel, 'What Money Can't Buy' (2012) - Moral limits of markets
- David Card, Alan Krueger, 'Myth and Measurement' (1995) - Empirical minimum wage research
- Barbara Ehrenreich, 'Nickel and Dimed' (2001) - Reality of low-wage workers
Major Research Institution Reports
- Korea Labor Institute - Minimum wage effect analysis series
- Korea Development Institute (KDI) - Research on minimum wage and employment impact
- OECD - Employment Outlook (published annually)
- International Labour Organization (ILO) - Global Wage Report
- Bank of Korea - Analysis of minimum wage and price/consumption relationships
Domestic Statistics and Data
- Statistics Korea - Economically Active Population Survey, Household Income and Expenditure Survey
- Ministry of Employment and Labor - Minimum Wage Commission deliberation materials
- Korea Institute for Health and Social Affairs - Minimum cost of living research
- Small Enterprise and Market Service - Small business survey
International Case Reference Sites
- U.S. Bureau of Labor Statistics
- UK Low Pay Commission
- German Federal Employment Agency (Bundesagentur für Arbeit)
- French SMIC official website
💡 To Our Readers
This article aimed to present the complexity of the minimum wage debate as it truly is. We neither advocated for nor criticized any particular position, but instead presented objective data and diverse perspectives as much as possible.
What we hope you take away from this article is not "the correct answer" but rather "ways of thinking." Complex social issues cannot be judged through black-and-white logic. We need the ability to understand context, consider various stakeholder interests, and evaluate short-term and long-term effects in a balanced manner.
We hope this article provides some small assistance to your conversations and discussions. Thank you.
📝 Written by: 1000VS Global Project Team
📅 Publication Date: October 2025
📊 Total Length: Approximately 42,000 characters (including 8 images)
🔄 Last Updated: 2025.10.01
This content was created for educational and informational purposes to help readers understand the topic.
It does not advocate for any specific political position or ideology, and aims for objective analysis.
Data and cases in the main text are based on the time of writing. Please refer to relevant institutions for the latest information.
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