The “Seoul-type Living Wage System” guarantees a minimum wage level that ensures low-income households with financial difficulties maintain their quality of life in all areas, such as housing, food, transportation, and culture, setting the minimum hourly wage for 2015 at KRW 6,687. In determining this wage level, cost of living, educational expenses, and inflation rates were all taken into consideration.
The hourly wage of KRW 6,687 is KRW 1,107 more (20 percent higher) than the 2015 minimum wage of KRW 5,580 per hour. Multiplying this hourly wage by the legal minimum monthly working hours (209 hours), the minimum monthly salary comes to approximately KRW 1.39 million. In the first phase of this change, workers employed by the Seoul Metropolitan Government and government-funded institutions will be entitled to receive the additional salary, with the new wage system being applied retroactively from January 1, 2015.
Following Seoul Mayor Park Won Soon’s first initiative for economic democratization—converting irregular workers into regular positions in the public sector—the “Seoul-type Living Wage System” will be implemented in earnest this year. Through the first initiative, 5,625 of the approximately 7,300 irregular workers were given regular positions (as of January 2015) with the goal of increasing employment stability.
Seoul Mayor Park’s second initiative for economic democratization, the “Seoul-type Living Wage System,” aims to guarantee a humane quality of life for workers and reduce income disparity, ultimately protecting the rights of underprivileged workers.
<After combining 50 percent of the average expenditure of three-member family households, 50 percent of the average cost of private education, and the minimum living expenses, the consumer price inflation rate was applied.>
In order to calculate the minimum living wage, Seoul City developed a “Three-person Household Spending Model” by applying the average living costs, educational expenses, and inflation rates for a one-year period from 2013.
Based on Seoul City’s average number of three-person households (dual income couples (two people) + one child), 50 percent of the average expenditure of three-member households, 50 percent of the average private education cost, and the minimum living expenses were combined to determine the guaranteed minimum wage based on household spending levels. Again, the combined total was divided by 365 hours—the total monthly working hours of a three-member household (from the dual income couples, one person: 8 hours on a full-time basis/ one person: 6 hours on a part-time basis) —and Seoul City’s consumer price inflation rate (1.6 percent) was applied, finally setting this year’s hourly wage at KRW 6,687.
<Applied to all workers directly employed by the city government in 2015>
Through consultation with the Ministry of Government Administration and Home Affairs, the city government plans to set up a specific institutional foundation for contract and services workers who cannot yet enjoy the benefits of the system, according to the current law, so that the new system can be applied to all related workers from 2016.
In addition, a variety of measures will be taken, including accrediting firms that actively adopt the new wage system as “Seoul City Labor-Friendly Firms,” in order to expand the “Seoul-type Living Wage System” to the private sector.