Labor and management at loggerheads over proposal to cut work hours

Rep. Kim Sung-tae (second from right) from the ruling Saenuri Party, speaks during a labor policy consultation between the Ministry of Employment and Labor and the party at the National Assembly on Monday. (Yonhap News)

A recent proposal by politicians and the government to cut maximum working hours is raising eyebrows among businesses worried about possible cost increases and limits to flexible work shifts.

Labor circles are also less than enthused with the legislation. It may come later than they anticipate, could affect their wages and could still give leeway for employers to lengthen work time.

Despite such concerns the government and the ruling Saenuri Party are firmly committed to what would be one of the biggest changes to the workaholic culture in Korea.

On Monday, policymakers from the Ministry of Employment and Labor and the party agreed to work together for the passage of the bill submitted by its lawmaker Kim Seong-tae in May.

The bill aims to reduce the legal maximum work hours from the current de facto 68 hours to 52 by revising complicated clauses of the labor laws.

The current law allows employees to work up to 68 hours a week ― 52 hours from Monday to Friday, eight hours on Saturday and another eight hours on Sunday.

The bill articulates a week as “seven days” including weekends and counts weekend shifts as overtime. Currently, weekend work is categorized as “holiday work” and not regarded as overtime.

To minimize the impact on businesses, they decided during the meeting to introduce the reduction in phases, first to large companies with more than 1,000 employees in 2016, to those with 100 to 1000 workers in 2017, and smaller firms hiring less than 100 in 2018.

Its promoters believe that the shortened work time is indispensable to a better work-life balance and job creation.

“The 10-year debate over lowering the maximum working hours should end here. We can’t fully be in favor of one side, but the revision should be passed immediately for the social good,” Kim told The Korea Herald on Wednesday.

“This is precisely why the ruling and opposition party lawmakers have all agreed on the bill already.”

Parliamentary sources said the bill will likely be debated at the National Assembly Environment and Labor Committee in mid-November.

President Park Geun-hye pledged to cut the nation’s notoriously long work hours and raise the employment rate to 70 percent by 2017 during her election campaign last year.

Despite growing support in the political circles, the plan is facing a rough ride given strong resistance from businesses and persistent demands from labor unionists that its effect on their wages and conditions be minimized.

The Korea Employers Federation, one of the major business lobbies, said less working hours will inevitably lead to lower wages, which will in turn exacerbate the conflict between labor and management.

The limit will also make it more difficult for companies to adjust work hours flexibly to changing demands, the group said.

It would especially have negative effects on smaller companies which do not have enough financial resources to hire more employees when work increases.

“Long-hour weekend shifts have been a win-win strategy for both workers and management,” Kim Pan-joong, director of economic research at KEF, told The Korea Herald.

“Management, especially those in small- and medium-sized enterprises, can be more productive by making employees work extra hours on weekends, without the need for additional facility investment and hiring,” Kim explained.

The economist added that employees, on the other hand, can earn more money by doing more shifts and those whose income is low will suffer economically if the government limits weekend work hours.

“Korean workers’ base pay accounts for only 35 to 50 percent of the total salary. To complement the low base pay, companies have different types of overtime pay,” said Kim Jong-jin, research fellow at the Korea Labor and Society Institute.

“The country’s wage system is the biggest problem here. The quality of workers’ life may improve, but their bank accounts will have fewer digits.”

To lessen the burden on businesses and expedite the implementation, experts suggest the government offer tax benefits and manpower support.

“Once the law is effectuated, companies will have to come up with measures like hiring more temporary and part-time workers,” the researcher noted.

Korea is notorious for its long working hours and limited time off. According to data from the Organization for Economic Cooperation and Development, Koreans worked 2,092 hours on average in 2011, the second longest among its 34 member countries.

The figure is far above the OECD average of 1,776 hours, and the U.S.’ 1,704 hours in the same year.

 

In 2011, Korea’s labor productivity ranked 23 among them, according to the Ministry of Trade, Industry and Energy. The total output by each Korean worker came to $62,185, which amounts to 79.9 percent of the OECD average and 60.6 percent of that of the U.S. Labor productivity is measured by dividing total industrial output by total labor input.

Though the revision is aimed at improving labor conditions, the Federation of Korea Trade Unions, one of the top two labor umbrella groups, is opposed to the government’s plan to phase the implementation.

The union group also complains about the government plan to allow the maximum working hours to be extended by up to eight hours for a period of less than six months on condition of workers’ consensus,

Carrying out the new law in stages and offering exceptions will eventually create loopholes for business circles to circumvent the regulation, the labor group said.

“We demand a full implementation at the drop of a hat. It reflects the government’s excessive leniency toward businesses. Companies will eventually find their way out from the regulation,” union spokesman Kang Hoon-joong told The Korea Herald in a phone interview.

Some opposition lawmakers echo the labor concerns.

“Excusing some companies to have additional working hours in effect amounts to setting the maximum time to 60 hours. The Saenuri Party’s new bill is insufficient to be passed,” said the Democratic Party’s Rep. Hong Young-pyo.

By Suk Gee-hyun (monicasuk@heraldcorp.com)