Labor policy could see a big break from the Moon years
Korea Inc. is bracing for big changes in labor policy as the new government promises to overhaul the rules about minimum wage and working hours.
“If I win the presidency, I will achieve labor market flexibility,” Yoon Suk-yeol said on a January presidential campaign stop at an industrial complex in Incheon.
That suggested limits to increases in the minimum wage and a more flexible approach to the 52-hour workweek instituted by the Moon Jae-in government.
Moon’s labor policies received so much blowback that his own administration tried to roll back some pledges in the later years.
For instance, the Moon government raised the hourly minimum wage by 16.4 percent in 2018, a year after his inauguration, the highest rate since 2001. Critics said that led to a reduction in net job growth as employers feared the higher costs of employing people.
The number of new employees increased by 97,000 that year, one-third the amount in 2017. The number of jobless people hit 1.07 million, a record at the time.
In later years, the government dramatically slashed yearly increases in the minimum wage to 2.9 percent in 2020 and 1.5 percent in 2021. But through Moon’s five years in office, between 2018 and 2022, the minimum wage rose 36.75 percent.
Yoon has called for different minimum wages by region and industry.
“A drastic rise in minimum wage has kept people who are willing to work for lower wage from working,” he said last year during a meeting.
Choo Kyung-ho, whom Yoon nominated to be his finance minister and deputy prime minister for economy, echoed that stance.
“The varied imposition of minimum wage is needed,” the nominee said in a statement ahead of a confirmation hearing last month.
“The Moon administration drastically raised the minimum wage to a point where the market can’t keep up,” Choo noted, “The consensus is that the move posed a significant burden on small business owners and exerted a negative impact on employment of low wage workers.”
Another flashpoint is the 52-hour workweek system introduced in 2018. The significant drop in maximum weekly work hours, from the previous 68 hours, triggered a backlash especially from small-and-medium sized manufacturers operating around the clock.
They were forced to hire more people while some existing workers were perfectly willing to work longer for more pay, critics argued.
The new president promised to give more autonomy to employers.
“I’ve been hearing a lot of requests for allowing them to increase work-hours during peak times without notice in advance to the government and to change the existing rule in a way that applies the 52-hour workweek as an annual average [not on a weekly basis],” he said during the visit to Incheon in January.
Faced with a backlash from industry, the Moon government allowed “extraordinary overtime” last year for specific industries, but that system wasn’t very efficient.
“For an employer to be entitled to overtime allowance, it should file applications in advance after getting agreement from the workers,” said an executive at a local chipmaker. “But it is really hard to predict when we actually need overtime and the hassle of preparing all the documents kept us from actually benefiting from the policy,” he said.
Yoon, however, distanced himself from completely overturning the rule.
“The 52-hour workweek is already put in place. So we can’t reverse the rule altogether,” he said in a panel discussion hosted by the Kwanhun Club, an association of journalists. “Rather, we can take a more flexible approach towards it, letting management and employees negotiate work terms on a regular basis,” he said.
BY PARK EUN-JEE [firstname.lastname@example.org]