Leeway for firms on new workweek

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Leeway for firms on new workweek

After a new 52-hour maximum workweek comes into effect July 1, the government will give conglomerates six months before it starts cracking down on non-compliance.

“The Korea Employers Federation proposed suspending any crackdown for six months,” Prime Minister Lee Nak-yon said in a meeting between government officials and the ruling Democratic Party lawmakers. “We understand the reality that there wasn’t enough time given to prepare for the reduced working hours as the reform bill was passed swiftly.”

However, Lee said the government will not postpone the implementation of the 52-hour workweek, which replaces the previous maximum workweek of 68 hours.

“It will be implemented as planned,” Lee said. “But we need some time to allow a soft landing in terms of implementation.”

Park Beom-kye, the Democratic Party spokesman, said the ruling party agreed with suspending any punitive actions to minimize any chaos created by the new rule.

Many businesses are complaining about the cost of cutting work hours for their employees, which comes on top of a 16.4 percent minimum wage hike that went into effect at the beginning of this year.

The Moon Jae-in administration hopes that a shorter workweek will give a better quality of life, allowing workers to spend more time with family and friends.

That would also lead to increases in consumption, contributing to the expansion of the domestic economy and allowing companies to hire more employees.

Korea has been infamous for its long working hours, which experts have argued were inefficient but reduced productivity.

In order to reduce the impact of the shortened workweek, the government is applying it to big companies first and then gradually extending it to smaller companies in 2020 and 2021.

According to a study by the Korea Economic Research Institute, companies will have to hire an additional 266,000 workers to maintain the current level of production after the new workweek comes in.

That will cost up to 12.3 trillion won ($11.1 billion) a year in salaries and benefits. A disproportionate share of the burden will fall on small and medium-sized companies with fewer than 300 employees: 8.6 trillion won, or 70 percent of the 12.3 trillion won.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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