BOK becomes more vocal about socially-divisive issues
The Bank of Korea (BOK) has undergone a notable shift in research priorities under the leadership of Governor Rhee Chang-yong, no longer hesitating to confront the decades-long challenges of extreme social disparity.
Previous reports from the BOK primarily concentrated on the impact of financial policies, data analysis, market research, and development monitoring. However, there has been a shift in this pattern, with a recent report making a contentious suggestion of not providing a minimum wage for foreign workers in the caregiving sector.
The recent wave of BOK-commissioned reports exemplifies the ongoing realization of Rhee’s mantra, “Noisy BOK,” signaling a newfound identity for the central bank. This transformation solidifies the shift away from a culture of silence that had been cultivated over the years, particularly during the tenure of Governor Lee Ju-yeol, Rhee’s predecessor, when the organization maintained a low profile.
“The governor pledged to make BOK a ‘noisy’ organization at his inauguration in April 2022, and a lot has changed since then,” a BOK official said.
One such report that sparked controversy is a March 4 document proposing exceptions from the blanket minimum wage rule for workers in the caregiving industry.
In the report released during a seminar co-hosted by the BOK and the Korea Development Institute, the central bank recommended a drastic reduction in the hourly minimum wage for foreign caregivers. Rhee emphasized this measure as crucial for enhancing the country’s long-muted labor productivity and addressing the labor shortage in the sector, particularly amid a low birthrate.
The socially divisive issue was on the agenda of the Minimum Wage Committee, overseen by the employment ministry, in 2021. However, it concluded without meaningful progress due to opposition from labor. Similarly, attempts to revise the law governing the wage of caregivers also faltered last year, facing protests from both labor and civic groups.
Rhee addressed the concerns raised by some critics, who suggested that such discrimination in minimum wage for foreign workers might result in an overall reduction in income for minimum wage workers.
“The issues should be addressed within the framework of offering a range of price-varying options in a market characterized by significantly varying service quality,” he said during the seminar.
“Discussions hindered and stalled by potential pushbacks must not lead to the conclusion that government assistance would ultimately bear the costs,” he added.
This notably radical policy recommendation has elicited strong reactions. While the country’s two umbrella labor groups have demanded immediate apologies from Rhee, business groups have praised what they described as his “firm grip on reality.”
The central bank is expected to issue a report on the country’s education reform, another controversial issue, in the second quarter.