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The minimum wage system is a system in which the state intervenes in the wage determination process between labor and management to set the minimum wage level and legally forces employers to pay wages at or above this level, thereby protecting low-wage workers.
1. Key Indicators for 2026 Minimum Wage
2026 minimum wage has been increased by 290 won (2.9%) from 2025 (10,030 won) and was decided through labor-management agreement for the first time in 17 years.
- Hourly rate: 10,320 won
- Daily rate (8 hours basis): 82,560 won
- Monthly conversion amount (40 hours per week, 209 hours per month basis): 2,156,880 won
※ The monthly conversion amount includes paid weekly holiday allowance (8 hours per week) under the Labor Standards Act.
2. Main Application Principles
- Same application across all industries: Although there was discussion about differential application by industry, in the end, the same amount is applied to all workplaces without distinction by industry.
- Regardless of employment type: Not only regular employees but also temporary workers, daily workers, part-time workers (part-time jobs), foreign workers, and any worker under the Labor Standards Act are applied equally.
3. Scope of Inclusion and Practical Checkpoints
- After 2024, according to the revision of the Minimum Wage Act, most cash-based wages are included in the calculation of minimum wage. When reviewing wage adequacy in the field, the following items must be considered.
- Meal allowance and accommodation costs (welfare benefits): Cash-based meal allowances or transportation costs that are paid regularly at least once per month are 100% included in the minimum wage.
- Regular bonuses: Regular bonuses paid in monthly installments are also 100% included in the calculation of minimum wage.
(However, payments made bi-monthly, quarterly, or annually are excluded)
- Short-time workers (less than 15 hours per week): The minimum hourly wage is still 10,320 won, but they are not eligible for weekly holiday allowance, paid leave (annual leave), and severance pay, so they are calculated by multiplying the hourly wage by the hours actually worked.
4. Legal Considerations
If a labor contract is signed with a wage less than the minimum wage amount, the agreement is legally invalid and must be paid as much as the minimum wage. If the sum of the basic salary and includable allowances of existing employees is less than 2,156,880 won per month, the labor contract must be rewritten to adjust the wages and be careful not to report to the Ministry of Employment and Labor.