New 52-hour workweek comes into effect July 1

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New 52-hour workweek comes into effect July 1

The 52-hour workweek goes into effect July 1, guaranteeing controversy and confusion in many places of business.

Starting tomorrow in some workplaces and Monday for many more, private companies and public institutes with over 300 in staff will be obliged to follow a revised Labor Standards Act that reduces the maximum working hours per week to 52 hours, including work on weekends.

The previous weekly limit was 68 hours.

Organizations with fewer than 300 employees will be covered by the new law in January 2020 and those with fewer than 50 starting from July 2021.

Companies that violate the 52-hour workweek are subject to penalties of up to 20 million won ($17,960) in fines and even jail time of up to two years for the company’s managers. But the government announced last week that the first six months of the implementation will be a grace period during which there will be no crackdowns or legal punishments.

The business community has expressed worries that the 52-hour workweek may hurt companies, especially small ones that have fewer financial resources, and certain industries.

Employment and Labor Minister Kim Young-joo reconfirmed her strong support for the new cap on Friday.

“Reducing working hours is a significant change to the conventional rules of our labor market - it’s only natural there are voices of anxiety and concern,” she said in a press briefing at the Sejong government complex.

“A study of all 3,627 companies to be affected by reduced working hours from July 1 showed that 59 percent of them are already abiding by a 52-hour workweek and have no problem with the policy going into effect.”

Kim also made clear that the six-month grace period doesn’t mean that the enforcement of the law will be loose.

The policy is a signature one for President Moon Jae-in. His administration hopes that a shorter workweek will improve workers’ quality of life and give them more free hours for recreation and consumption, which should boost the economy.

It also hopes that a shorter workweek will push companies to hire more, creating jobs.

Private companies have been releasing plans this year to adjust to the new workweek.

Some have introduced systems that shut down employees’ computers after 6 p.m. Retailers in the labor-intensive service sector reduced operation hours or hired more staff. Others are still studying their options.

A report from the Construction and Economy Research Institute of Korea earlier this month said the new law may increase costs per building site by a maximum 14.5 percent.

The government implied it will make exceptions for certain sectors like ICT, where emergency situations like a server crash or hacking attempts occur around the clock.

Companies with over 300 staff who abide by the 52-hour workweek will receive a monthly subsidy of up to 800,000 won per month for a year for each new employee hired.

However, some sectors are obviously not ready. The Korea Financial Industry Union failed Thursday to reach an agreement with local banks on the 52-hour workweek’s implementation.

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