Businesses balk at shorter hours

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Businesses balk at shorter hours

A legislative revision to the country’s maximum work hours is irking Korea’s business community.

After a committee in the National Assembly agreed on Monday to reduce the maximum weekly work hours to 52 next year from the current 68, local companies are expressing concerns that the change, meant to mitigate the country’s notoriously bad work culture, will make an already sour business environment even worse. They say they’ll either to have to shrink production volume, which will mean layoffs or pay cuts, or spend more on overtime to maintain current levels of productivity.

Both choices will mean a loss for them, they say. A study on spending impact by the private think tank Korea Economic Research Institute from 2013, the latest available, showed that reducing maximum work hours to 52 per week will lead companies to spend an average 12.3 trillion won ($10.9 billion) extra on labor costs per year. Firms with less than 300 employees will be forced to cough up 8.6 trillion won more on labor per year, meaning smaller companies are likely to feel the regulation change the most.

The current maximum of 68 hours per week includes 40 weekday hours plus 12 hours of overtime and 16 weekend hours. The regulation change is meant to entirely ban weekend work hours.

“The unemployment problem - among the youth, in particular - is getting ever serious, and the solution is believed to lie in cutting work hours,” Rep. Ha Tae-keung of the minor conservative Bareun Party, who heads the committee, said Monday.

The committee was supposed to finalize the revision of the Labor Standards Act on Thursday so that it can head to a vote in the legislature, but lawmakers failed to reach consensus. The committee will reschedule the meeting today for a later date.

The degree of impact will vary by industry. A separate analysis by the Korea Economic Research Institute of 2015 data from the Ministry of Employment and Labor on the industrial impact of shortened labor hours showed it will influence real estate and leasing services the most. These services will be short an average 29.7 hours per week if they want to keep up productivity with the new rule.

Restaurants and accommodations will also be hit hard, short 20.9 hours, followed by mining with 20.9 hours and wholesale and retail with 15.6 hours. As expected, industries that do not demand long hours, including education, finance, insurance, electricity, gas, steam, water works, science and technology, will see less impact.

The committee’s agreement on Monday stipulates that companies with 300 or more employees will receive a two-year grace period, during which they will be immune from criminal prosecution for violating the new measure. Companies with fewer than 300 workers will get four years. Businesses say the period should be extended with more graduated levels.

The Korea Federation of SMEs, another group representing the country’s small businesses, contends that the grace period should be given in five steps depending on the scale of companies. It argues that firms with five to 50 employees need at least 10 years to adjust.

One precedent that shows how hard it is to carry out a labor regulation change in Korea is from 2003, when the government sought to remove Saturdays from the workweek of salaried employees at large companies and shorten weekday work hours from 44 to 40.

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