Gov’t raises incentives for shorter work hoursThe government will offer as much as 1 million won ($925) a month for three years in financial aid to new employees at small and medium-sized companies that pre-emptively adopt shorter working hours.
The incentive was part of a raft of measures introduced by the government on Thursday in a bid to encourage businesses to quickly adopt shorter working hours, which the government hopes will create jobs. For companies with less than 300 employees the new shorter working hours will be enforced from 2020.
In a meeting led by Prime Minister Lee Nak-yon, the government raised the financial aid offered to new hires at SMEs that adopt shorter working hours from the previous 800,000 won while extending the incentive from two to three years.
The financial aid, however, is only available to SMEs that adopt the new working hours at least six months before it is legally enforced.
The financial aid offered to larger companies with over 300 employees will also be raised to 600,000 won per new hire, up from 400,000 won.
Companies are allowed to adopt the bolstered financial aid scheme alongside other forms of government aid, including the scheme that offers 9 million won per year for three years for employees under the age of 34 hired by an SME, but only up to 70 percent of the original incentive value.
Major conglomerates, especially those that have a cross-shareholding governance structure or assets exceeding 10 trillion won, are excluded from the incentive.
“The shortened working hours that will be introduced from July 1 will bring huge changes to our society,” said Lee. “Not only will it reduce working hours but it will influence the way we work, wages and even corporate culture.”
He said the government needs to help these changes not only improve the quality of life but also increases job opportunities and bring about a positive effect on productivity.
“The key is how to land the reduced working hours in practice,” Lee said. “There are concerns that by industry the income of employees could be reduced while companies could struggle to hire more people.”
The maximum weekly working hours will be cut from 68 hours to 52 hours at the start of July for companies with more than 300 employees.
Companies with more than 50 employees but less than 300 will adopt the new working hours in 2020, while those with less than 50 employees will adopt the new policy from 2021.
The government estimates that limiting the legal working hours to 52 per week will reduce the average working hours of 1.03 million people that have been working overtime by a minimum of 6.9 hours a week while creating at least 140,000 jobs.
But SMEs have raised concerns over the increasing labor costs. On top of the rising minimum wage, shortened working hours will likely force many companies to hire additional employees in order to meet targets.
BY LEE HO-JEONG [firstname.lastname@example.org]
More in Economy
Gangbuk beats Gangnam
600,000 jobs added last year, but many public or welfare
Consumer price gains pick up speed in November
Life expectancy up 7 months for Koreans born in 2019
OECD knocks tenth of a point off Korea's 2020 growth