A national commission on Monday set next year's minimum hourly wage at 9,160 won ($7.98) in a 5.1 percent on-year increase.

The Minimum Wage Commission, which is composed of nine members each from labor, business and the general public, struck the agreement around midnight during a plenary session held at the government complex in Sejong.

During the negotiations, the labor side had called for a significant increase from this year's 8,720 won, while the management side had called for a freeze, with both sides citing the economic damage caused by the COVID-19 pandemic.

The final figure was proposed by the commissioners representing public interests after the labor and business commissioners failed to bridge their gap, and confirmed by a 13-0 vote. One person abstained.

All nine business commissioners and four labor commissioners recommended by the Korean Confederation of Trade Unions left the room in protest before the vote.

The increase of 440 won is equivalent to 5.046 percent, but the commission asked that 5.1 percent be used as the official figure.

The 5.1 percent increase is seen as a reflection of the commission's optimism about the country's economic recovery from the pandemic.

The Bank of Korea has forecast the economy will grow by 4 percent this year, while the number of the employed has increased by more than 600,000 for two consecutive months since April.

Still, next year's minimum wage is lower than the 10,000 won level demanded by labor commissioners, likely due to considerations for small business owners who have been hit hard by COVID-19 restrictions.

By law, the commission is required to present the new minimum wage to the labor minister, who is then required to announce it publicly by Aug. 5.

The new wage would then take effect on Jan. 1.

Both labor and management can object to the agreed minimum wage, and subject to the minister's approval, request a reevaluation by the commission. A reevaluation has never occurred since the minimum wage system was introduced in 1988.

Under the Moon Jae-in administration, the minimum wage increased by 16.4 percent in 2018, 10.9 percent in 2019, 2.9 percent in 2020 and the lowest-ever rate of 1.5 percent this year. (Yonhap)