No more burden on companies

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No more burden on companies

Lawmakers often present labor bills, prompting skepticism that politicians are making populist policy pledges one after another. The plan to introduce substitute holidays and create a law to force the system onto the civilian sector appears especially populist.

The substitute holiday system is a move that will be welcomed by office workers. Conglomerate employees who can benefit from the system particularly support it. Who will say no when they can take more days off, work less and be paid more? The problem is whether we really need to introduce the system when a series of undesirable aftereffects are expected.

The substitute holiday system is not a bill that must be approved immediately. It’s been only two years since companies with more than five workers adopted the 40-hour workweek.

The global economic crisis still lingers, and the economy is expected to slow down further. A private research institute recently forecast that economic growth for this year will fall below 2 percent.

Under these circumstances, introducing the substitute holiday system will likely deal a serious blow to companies.

The number of Korea’s holidays is higher than in other advanced countries and increasing the number of holidays will likely weaken the competitiveness of our businesses and national economy. Furthermore, most OECD countries designate statutory holidays as unpaid holidays, while Korea adopted a paid holiday system.

When the number of holidays goes up, companies will face higher payroll costs and their competitiveness will weaken because they need to pay their workers 100 percent of wages if the workers do not work and up to 350 percent of wages if workers actually work. The plan to enforce holidays by law is a rare move from around the world, and it will bring about enormous burdens on the manufacturing industry that needs to operate factories 24 hours a day and service industries that must operate on holidays.

While some argued that Korean workers are working longer hours because the holiday system is broken, that is not true. Korean workers are guaranteed holidays, and the system is as good as those in other advanced countries. Of course, it is true that Korean workers are working longer hours than in other advanced countries, but that is not because of the holiday system but the lack of flexibility in the labor market and the companies’ financial compensation for unused holidays.

Workers are guaranteed more than enough holidays, but the situation does not permit them to use all their holidays.

In order to heighten the quality of life and guarantee the right to rest for workers, there is no need to introduce a substitute holiday system. On average, Korean workers only use 40 percent of their annual vacation days, so they must be encouraged to use them all in order to see the economy benefit.

There is also an argument that increasing holidays will revitalize consumption and the economy. But the economic loss from the increased burden on companies, and the decrease in production appears far larger than the gain.

The benefits from the substitute holiday system are also expected to be given only to workers who already enjoy favorable working conditions, and it can also hinder social unity.

Now is the time to do all we can to revive the economy. The substitute holiday system must be withdrawn from the legislature after taking into account the reality of our society and economy as well as companies’ situations.

I expect politicians will make the right choice.

Translation by the Korea JoongAng Daily.

*The author is a professor of industrial management at the Kyushu Sangyo University.

By Ahn Hee-tak
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