Korea raised the minimum hourly wage for 2024 by 2.5 percent to 9,860 won ($7.8) amid weak economic growth.

The Minimum Wage Commission made the decision following an overnight marathon debate and a record 110 days of discussion since Minister of Employment and Labor Lee Jung-sik officially requested the commission’s review of the wage on March 31.

The minimum wage was rumored to hit 9,920 won as the meeting drew to a close, according to local media reports. The meeting kicked off at 3 p.m. on Tuesday and ended at 6 a.m. the following day.

The commission, made up of nine representatives each from government, business and labor, determined the amount in a vote.

The labor representatives initially proposed next year’s wage be set at 12,210 won, up 26.9 percent from this year, citing steep inflation. Meanwhile, the management side proposed the wage remain steady.

The Bank of Korea forecast the country’s inflation to grow 3.5 percent this year. It revised Korea’s economic outlook down to 1.4 percent in May from the previous forecast of 1.6 percent made last December.

The new minimum wage did not break the 10,000-won threshold, although businesses say the raise will be challenging for small and mid-sized businesses in particular amid weak exports. Exports in June were down 6 percent from a year earlier to $54.23 billion, according to Statistics Korea.

The minimum wage saw its smallest jump since 2021 when it was upped by a record low of 1.5 percent amid the Covid-19 pandemic. The minimum wage last year rose 5.05 percent in 2022 and 5.0 percent this year.

Topping 10,000 won was a pledge made by the former Moon Jae-in administration, which had vowed to raise the hourly minimum wage to that level by 2020. The wage was 6,470 won in 2017, Moon’s first year as president.

“The minimum was set at a rate that doesn’t even take economic growth and inflation into account,” Ryu Ki-seob, secretary general at the Federation of Korean Trade Unions, one of Korea’s two largest umbrella unions, said. “That is practically a cut in real wages.”

The union’s management strongly disagrees.

The Federation of Korean Industries said the decision on the minimum wage is “concerning” considering Korea’s weak projected growth this year amid a global recession.

“Myriads of businesses and the self-employed are suffering considerably from weak sales and piling stocks due to weak domestic demand,” it said. “Negative impacts will trickle down to vulnerable social groups, such as the youth and low-income groups that are particularly susceptible to the minimum wage.”

Some management representatives also claim that the minimum hourly wage has already surpassed 10,000 won if holiday pay is taken into account.

The new wage will come into effect on Jan. 1, 2024, after it is approved by Lee. Both labor and management can object to the decided wage, but a reevaluation has not happened since the minimum wage system was introduced in 1988.

BY JIN MIN-JI [jin.minji@joongang.co.kr]