Should the minimum wage rate be applied equally to both local and foreign workers? This topic has become a hot debate topic in South Korea. Seoul recently launched a pilot program to employ 100 Filipino caregivers to address the country’s low birthrate problem. But some locals have criticized that hiring these helpers is “too expensive” as they are subject to the same minimum wages as locals.
The debate has now entered the political arena. At an event hosted by the ruling People Power Party on August 21, participants suggested that foreign workers should be subject to different minimum wage rates. You Hye-mi, the senior secretary for low birthrates at the presidential office, also mentioned that the government needs to explore ways to reduce the costs related to Filipino caregivers.
A “differentiated minimum wage system” refers to applying multiple minimum wage rates to workers by sector of activity, occupation, or geographical region. As of last year, 22 out of 41 major countries, including the U.S. and Germany, apply this system. Korea has only one minimum wage applied uniformly to all employees because labor groups oppose a differentiated minimum wage system. Even in countries implementing differentiated wages, the methods vary depending on local circumstances. For instance, the UK adjusts wages based on age, paying teenagers less, while Switzerland applies different wage rates in sectors like agriculture and floriculture.
The Chosunilbo narrowed down five key questions regarding this topic.
1. Why is applying different minimum wages for local and foreign workers suddenly an issue?
The higher-than-expected cost of employing Filipino caregivers has sparked this debate. The monthly salary of a Filipino caregiver under Seoul’s pilot program is estimated to be around 2.38 million won ($1800), which accounts for about half of the median income for households in their 30s (5.09 million won). Many families cannot afford such a salary, which is high even compared to the wages Filipino caregivers receive in other countries. The manufacturing sector, also facing rising costs associated with the influx of foreign workers, has also called for applying differentiated wages.
2. What are the arguments against applying different minimum wages?
Some critics argue that such wage differentiation conflicts with Korea’s commitments as a member of the International Labor Organization (ILO), which prohibits discriminatory treatment based on nationality. Korea’s Labor Standards Act also mandates equal treatment regardless of nationality. Various international agreements, such as the Korea-EU Free Trade Agreement, also encourage the ratification of core ILO conventions, potentially making a separate minimum wage for foreigners a policy that could do more harm than good.
3. Are international practices any different?
Many countries do not permit different minimum wages based on nationality or race, but exceptions exist. In Taiwan, Hong Kong and Singapore, foreign workers do not receive the same minimum wage as local workers. For example, foreign caregivers in Hong Kong are paid a minimum of 770,000 won per month, and in Singapore, the range is between 400,000 to 600,000 won. In Austria, foreign caregivers are classified as self-employed, resulting in lower wages than those paid to local care workers.
Some countries also apply different minimum wages by sector of activity, age, or region, indirectly easing the labor cost burden for employers in sectors with a high concentration of foreign workers.
4. Are these these practices applicable in Korea?
While ILO conventions are not legally binding, the general consensus is that they should not be violated, as non-compliance could lead to international criticism. Implementing a separate minimum wage for foreigners would require amendments to domestic laws, which would likely face strong resistance from labor groups and require political consensus between the ruling and opposition parties.
An alternative would be introducing “sector-specific differentiated wages,” particularly in industries with a high concentration of foreign workers. This could be done without amending existing laws. If this approach is not feasible, experts suggest extending the “statutory probationary period” for foreign workers, during which wages can be reduced, as a potential solution.
5. Will different minimum wage rates lead to a surge in illegal immigrants?
That is a possibility. Higher-paying jobs may attract more foreign workers, especially those with visas restricted to specific sectors seeking a chance to switch to these higher-paying jobs, who could become illegal immigrants. This could result in more foreign workers choosing higher-paying jobs with additional benefits, such as those in the hospitality industry, over lower-paying domestic work. Korea already has over 400,000 illegal immigrants, a figure much higher than in many other countries. An additional surge in illegal immigrants could increase social costs associated with managing a workforce outside of the government system.
