The Korea Federation of SMEs and Micro Enterprises holds a press conference outside the Seoul Administrative Court in Seocho-gu on Wednesday to announce its lawsuit seeking to overturn the government's 2027 minimum wage notice. [Yonhap]
The Korea Federation of SMEs and Micro Enterprises holds a press conference outside the Seoul Administrative Court in Seocho-gu on Wednesday to announce its lawsuit seeking to overturn the government's 2027 minimum wage notice. [Yonhap]

Federation files suit at Seoul Administrative Court against Employment Ministry

Plaintiffs say small businesses' ability to pay was ignored, sector-based rates excluded

Second legal challenge since lawsuit over 2018 minimum wage notice

Small business owners have filed an administrative lawsuit seeking to nullify the Ministry of Employment and Labor's notice setting next year's minimum wage at 10,700 won ($7) per hour, arguing that their ability to pay was not adequately considered and that industry-specific rates were excluded from the decision.

The Korea Federation of SMEs and Micro Enterprises held a press conference at the Seoul Administrative Court on Wednesday and said it had filed a suit against the employment minister to cancel the "2027 minimum wage notice." The federation also submitted a request for a constitutional review of certain provisions of the current Minimum Wage Act.

The Ministry of Employment and Labor finalized and published the 2027 minimum wage last month, setting it at 10,700 won per hour — 380 won, or 3.7 percent, above this year's rate. Based on a 40-hour workweek and 209 hours per month, the monthly equivalent comes to 2.24 million won.

This is the second time the federation has filed a cancellation suit over a minimum wage notice, following litigation related to the 2018 minimum wage. In that case, the Seoul Administrative Court dismissed the claim, ruling that the monthly wage equivalent stated in the notice did not constitute an administrative disposition subject to appeal.

In the current suit, the federation said it would challenge the legality of applying a uniform minimum wage without sufficiently examining small businesses' ability to pay and the operating conditions of individual industries.

Federation chairman Song Chi-young said the group had filed a lawful objection to the Minimum Wage Commission's 3.7 percent increase proposal, but the Ministry of Employment and Labor "mechanically rejected it while ignoring the desperate cries from the field." He said the number of self-employed business closures reached 624,000 in the first half of this year — the highest for any half-year period on record — and condemned what he called "irresponsible desk-bound administration."

The federation and the plaintiffs argued that the ministry's failure to request a re-deliberation from the Minimum Wage Commission after receiving the federation's objection constituted an abuse and excess of discretionary authority.

They said the ministry had an obligation to re-examine the impact of a wage increase on small businesses, given the mounting loan and delinquency burdens on the self-employed and the surge in business closures.

The plaintiffs also raised the gap in below-minimum-wage rates across industries as a key issue. According to an analysis by the Korea Enterprises Federation based on Statistics Korea's economically active population supplementary survey, 33.9 percent of workers in the accommodation and restaurant sector earned below the minimum wage in 2024.

The plaintiffs said applying a uniform minimum wage despite significant differences in productivity and wage-paying capacity across sectors — such as accommodation and restaurants versus information and communications — violated the constitutional principle of equality. The current Minimum Wage Act allows the minimum wage to be set separately by type of business.

The federation also called on the National Assembly and the government to overhaul the minimum wage system and introduce support measures for small businesses, including abolishing the weekly holiday allowance, shifting to a biennial minimum wage decision cycle, legislating industry-specific differentiated rates, and reviving the job stability fund.


hong@heraldcorp.com