South Korea raised its minimum wage for 2027 by 3.7% to 10,700 won an hour on July 14, as small businesses warned that higher labor costs could intensify financial strain amid weak consumer spending, elevated prices and slowing economic growth.
The increase of 380 won per hour lifts the monthly minimum wage to approximately $1,520 based on a 40-hour workweek and 209 working hours per month, including paid weekly holiday allowances.
The new wage marks the second minimum wage decision under President Lee Jae-myung’s administration. After a 5.0% increase in 2023, annual minimum wage growth remained in the 1% to 2% range before exceeding 3% for the first time in three years.
The Minimum Wage Commission approved the increase during its 14th plenary session after labor and business representatives failed to reach an agreement despite extended negotiations.
Public interest commissioners proposed a negotiation range of 10,600 won to 10,860 won after both sides submitted competing proposals. Additional discussions failed to narrow the remaining 130-won gap.
The commission then offered a compromise proposal of 10,720 won, but labor representatives rejected the offer, leading to a final vote between the two sides’ last proposals.
Labor representatives sought a minimum wage of 10,730 won, a 4.0% increase, while business representatives proposed 10,700 won, a 3.7% increase.
The final vote produced 15 votes in favor of the business proposal, 11 votes for the labor proposal and one invalid ballot, setting the 2027 minimum wage at 10,700 won.
Small business owners have warned that the increase could worsen pressure on companies already struggling with higher operating expenses, weak domestic demand and a slowing economy.
Business groups said many small companies are facing unprecedented challenges and that additional labor costs could lead to reduced hiring, shorter business hours or higher prices for consumers.
