South Korea officially kicked off its annual procedure to set the country’s minimum wage level for the following year, with the labor and business sides presenting wildly divergent views on how the rate should be adjusted.

Minister of Employment and Labor Lee Jae-kap on Wednesday sent a written request to the Minimum Wage Commission to start the procedure to negotiate and determine the minimum wage level for 2022.

The request authorizes the commission to gather 27 representatives -- nine each representing labor, business and the general public -- to determine a new rate by mid-July to be formally announced Aug. 5. Yet due to stalled talks between the labor and business sides, the deadline is rarely met.

This year’s negotiations will likely be a repeat of 2020’s, as the two sides are already expressing contrasting visions for how the minimum wage level should be set in response to the impact the coronavirus outbreak has had on the Korean economy.

The labor side has asked for the minimum wage to be raised to 10,000 won ($8.85) per hour, as President Moon Jae-in promised when he took office in 2017. Instead the minimum wage rose 16.4 percent in 2018, 10.9 percent in 2019 and 2.9 percent in 2020.

The minimum wage for this year is 8,720 won per hour, or 1.82 million won per month for a full-time employee, up 1.5 percent from the 2020 rate. It was the smallest-ever annual increase, as the decision-makers took into account the economic difficulties facing small-business owners due to the pandemic.

“The ones incurring the most damage from the COVID-19-induced social distancing rules are low-income contract workers, including those with unstable employment and day-to-day workers,” the two major umbrella labor and civic groups said in a press conference Thursday.

“Companies that claimed to suffer losses from COVID-19 conversely enjoyed unprecedented success from the virus outbreak, but at the same time the minimum wage level for low-income workers rose at its lowest levels for the past two years.”

The jobless population surged and low-income workers suffered while large corporations such as Hyundai Motor, Kakao, CJ and Samsung Electronics saw their profits shoot up, they said.

The labor side is standing firm on its demands. Last year, major labor unions and representatives who took part in the negotiations faced backlash for letting the commission sign off on the smallest-ever annual increase.

While the business side has yet to make an official announcement, it is expected to ask that the minimum wage be frozen or even lowered for next year. A number of business groups have released reports detailing how businesses have struggled or closed due to continued revenue losses.

According to a survey of 3,148 proprietors last month by a consortium of small-business owners, 42 percent of respondents said they had considered closing their businesses due to continued loss of revenue. Close to 96 percent of the respondents said their sales had declined since the COVID-19 pandemic started.

The survey also found that the number of hired workers dropped from an average of four employees before the pandemic started to 2.1 by last month. The proportion of businesses with no employees rose from 16 percent in pre-pandemic times to 36 percent.

In light of such findings, the business side is likely to demand that the rate be fixed at the current level to maintain or expand employment opportunities for job seekers.

By Ko Jun-tae (ko.juntae@heraldcorp.com)