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Smooth it out

June 19,2018
이미지뷰
Kwon Soon-won
*The author is a professor of business administration at Sookmyung Women’s University.

The biggest change to workplaces since the five-day workweek became mandatory in 2004 is coming soon. Based on the revised labor standards act, work hours in Korea will be capped at 52 per week for businesses with 300 or more employees from July 1. The change will roll out in stages to companies of different sizes in order to ready them against reduced wages and impact on production.

The business sector, nevertheless, is in shambles. Although the revised law was passed in March, many companies still have to adjust to the changes. The Ministry of Employment and Labor announced guidelines for the reduced workweek only three weeks before the July 1 deadlines.

The cutback is designed to address Korea’s notoriously long work hours. Before this new law, people could work a maximum of 68 hours because working on weekends was not counted as overtime. The law also addresses sectors where overwork is inevitable due to the nature of the jobs. Of 26 sectors including finance, telecommunication, restaurant, lodging and retail, only five — such as transportation and health care — were made exceptions to the new work hour guideline.

A pact of convenience between labor and management has also been blamed for long work hours in Korea. Korea Inc. is famous for rigidity in employment and layoffs. For instance, in times of high demand, companies increased work hours instead of hiring more. That saved labor costs for employers and increased wages for the workers. Such a system led to the concentration of work hours and high wages on a small number of workers and aggravated the disparities between large and smaller workplaces.

A workplace employing five or fewer workers has been exempted from the new workweek for now. The labor front worries about overwork for small companies. But according to statistics, workers at small businesses do not work overtime that much. A survey by the Ministry of Employment and Labor found that overtime at companies with five or fewer employees averaged one hour per month. To them, shorter work hours is a bigger problem than working overtime.

The new act is meant to strike a balance between work and life and promote the health and safety of workers. Employers may have to increase hiring to keep up production and services and help bolster jobs.

But in reality, that may be wishful thinking. Companies have several options to adjust to the shorter workweek. They either have to increase hiring to sustain productivity or replace human work with machines. Also, they can outsource or take their business overseas.

Polarization between companies with and without unions may also worsen. Overtime in workplaces employing 300 or more workers averaged 13.3 hours per month, higher than the overall average of 9.2 hours. Management and unions in large companies could also strike a deal to keep up production even with shorter workweeks without cutting wages. In this case, workers would walk away with smaller paychecks due to reduced hours.

Changes are inevitable to correct the notorious work hours among Koreans. But more attention is needed to smooth the transition.
First of all, flextime must be expanded. The law should be revised to increase flextime to respond quickly to growth in demand overseas. The strict rule also must become more responsive to the changing labor environment. As the new law was primarily based on the manufacturing sector, it does not reflect rapid changes in the business environment and industrial structure. Many professions these days do not count on the absolute amount of work hours. Instead, they hinge on the quality of workers’ performance. The labor, management and government must come together and discuss the shortcomings in the new rule.

Meanwhile, employers must correct their unfair work schedule management. Employers made office workers work overtime without adequately rewarding them. The top-down corporate culture also kept employees at offices late. Self-correction in unjust legacies should be the true beginning of the changes in Korean workplaces.

JoongAng Ilbo, June 18, Page 29