Small Korean businesses dread the coming shorter work week

An employee works at a construction vehicle repair shop in Seo District, Incheon on Tuesday. Employees here often start working from 6 a.m. to 7 a.m. before the construction site begins. [BAEK IL-HYUN]

Extended working hours allowed for small companies in Korea will soon be ruled out of existence, drawing criticism from both the employers and employees.

Although a shorter workweek seems like a welcome change, small businesses argue that it reduces productivity and that workers cannot make much as they used to.

Korea has been restricting maximum work hours to 52 per week, while businesses with fewer than 30 employees remained exempt from the rule and have been allowed to implement 60-hour working weeks.

At around 5 p.m. on Tuesday, Kim Ji-seong, 36, an employee at a construction vehicle repair shop in Seo District, Incheon, was working overtime after he was dispatched to Gimpo for emergency work at 7:30 a.m. Under the 52-hour workweek rule, Kim would have to go home at 4:30 p.m.

“If the 52-hour workweek is applied uniformly to businesses from different sizes from this year, I’d become an offender — or in the worst case, I’d have to close my business,” said Kim Chang-woong, the repair shop owner.

“If the extra pay for working overtime disappears, I may have work on weekends as a delivery driver or a designated driver,” said a 34-year-old employee.

In Korea, any work performed beyond 40 hours per week is considered overtime, and the maximum weekly working hours are limited to 52, including overtime hours. But workplaces with fewer than 30 employees, like Kim’s, can temporarily offer an additional eight hours of overtime by mutual agreement of the employee and employer — meaning they can engage employees for 60 hours of work per week.

This exception was effective until the end of 2022, while the government introduced an extra one-year grace period to exempt violators from punishment. Starting 2024, employers that break the rule can face up to two years of imprisonment or 20 million won ($16,100) in fines — a blow to around 6 million workers at about 630,000 businesses. In particular, automotive maintenance plants like Kim’s, which experience varying seasonal demand and workflow, are directly hit by such policy.

“It isn’t easy to find engineers, and I cannot hire foreign workers either,” said Kim. “Due to high interest rates, the loan rate that was 6 million won a month increased to 14 million won in six months, and I cannot afford to hire new employees.

“If the additional pay for overtime work disappears, I’m afraid even the existing employees will leave,” the 70-year-old owner said.

"In addition to the expenses going up with my child, more than half of my salary is gone only by house loan costs,” said another employee, who has worked at the repair shop for seven years. “If the monthly overtime pay of 500,000 to 600,000 won is gone, I have no choice but to work two jobs.”

Kim Ji-seong, who worked in the repair shop for 16 years, said, “If overtime disappears, my wages would be cut by nearly 1 million won. Is it really a democratic society if the nation prevents one from working even if they want to?”

Koo Kyeong-joo, 41, CEO of E-plus Mart in Goyang, Gyeonggi, and her 28 employees also having similar concerns. Of them, 12 people work 60 hours a week, as the mart is open for 14 hours a day from 8 a.m. to 10 p.m.

“Most of the employees are women in their 50s or older who really need to prepare children's education costs,” said Koo. “These days, I’m concerned that employees will leave due to reduced salaries, while I'm also concerned about hiring new employees. I posted a job opening in November last year but couldn’t hire anyone.”

E-plus Mart employee Kim Seon-hee, 52, said, “If overtime work isn’t allowed, senior employees will have their wages reduced by 1 million won."

Small and medium-sized enterprises (SMEs) complain about the lack of countermeasures.

According to a survey conducted by the Korea Federation of SMEs (KBIZ), 75.5 percent of small and medium-sized manufacturers with 5 to 29 employees didn’t have a solution to the abolition of additional eight hours of overtime.

Workplaces already under the 52-hour overtime cap are at odds over the shorter working week.

Fifty-five percent of the 300 employees of small and medium-sized shipbuilding firms questioned by KBIZ responded that their quality of life deteriorated since the implementation of 52-hour workweek — mainly due to the reduction of the monthly average of 600,000 won of overtime pay.

Some point out that the practice of working long hours in small enterprises can be dangerous if it becomes a convention. Fatigue from working long hours often leads to deaths of workplaces, which are commonly seen in Korea.

SMEs are proposing a total working-hour system in which working hours are averaged out over a longer period of time, on a monthly, quarterly, semi-annual or annual basis.

Lee Dong-won, head of the Human Resources Policy Division at the Ministry of SMEs and Startups, said the ministry is preparing a reform plan to be out in February, adding that it is “discussing ways to expand the management of overtime from the current weekly basis.”

“We will cooperate with the Ministry of Employment and Labor and the National Assembly to establish a flexible and reasonable system, such as expanding the scope of overtime management to an annual basis,” said SME Minister Lee Young.

"Even if the overtime system is flexibly changed, efforts should be made to protect the healthcare right, such as guaranteeing at least 11 hours of uninterrupted rest,” said Lee Sang-hee, a labor law professor at Korea Aerospace University. “It is also important to accurately measure working hours to prevent employers from making excessive demands.”

BY BAEK IL-HYUN, SEO JI-EUN [seo.jieun1@joongang.co.kr]