A Comprehensive Breakdown of South Korea’s ‘Reduced Working Hours’

What happened?

On Feb. 28, the South Korean National Assembly passed a bill aimed at reducing the country’s maximum working hours from 68 hours a week to 52. This comes five years after parliament first started discussions to revise the law.

The labor reform won by a landslide vote, with 151 in favor, 11 against and 32 abstaining.

To mitigate any potential side effects from rising labor costs and recent rise in minimum wage, the new working hours will be rolled out in stages depending on the size of the company.

Companies and public organizations with more than 300 employees will have to observe the new rules starting July 1. For companies with 50 to 299 employees, the law will be applicable on Jan. 1, 2020, and for businesses with 5 to 49 employees, from July 1, 2021.

The cut in hours was a central campaign pledge of now-president Moon Jae-in, who promised to enhance the quality of life for laborers.

Why was it an issue?

As many media outlets have pointed out, South Korea has some of the longest working hours in the world — “inhumanely long” as the Guardian phrased it. According to heavily-cited OECD statistics, in 2016, South Koreans worked an average of 2,069 hours annually, second among OECD citizens only to Mexicans, who put in 2,255 hours each. (The OECD average was 1,763 hours).

But the greater issue at hand is a problem in the wording of the law itself. Currently, the Labor Standards Act (Articles 50 and 53) states that working hours:

  • shall not exceed 40 hours a week
  • can be extended (upon agreement) by up to 12 hours a week
  • shall not exceed eight hours a day
  • under special circumstances, may be further extended with authorization from the Ministry of Employment and Labor (MOEL) (with ex post facto approval possible if the situation is urgent and advance authorization cannot be obtained)

The above would suggest that South Korea’s work week can be up 40 hours, plus an extra 12 overtime, resulting in a maximum of 52 hours a week. But the definition of the week itself is not given: Is it five days or seven days?

An interpretation of the law by the MOEL in 2000 said, “Extended working hours excludes holidays [i.e.: public holidays and weekends],” essentially meaning that one week equaled five days. This left Saturday and Sunday open to working hours of up to eight hours per day work each. Total permitted working hours per week were therefore: 40 hours + 12 hours overtime on weekdays + 8 hours on Saturday + 8 hours on Sunday = a total of 68 hours.

The recent new amendment to the law will now clearly state, “One week equals 7 days, including holidays [i.e.: public holidays and weekends],” meaning 40 hours of work and 12 hours of overtime. As in, 52 hours total, effectively invalidating the Labor Ministry’s controversial interpretation of the law. Make sense now?

Do the new rules apply to everyone?

No. Companies that employ less than 30 people will be allowed to have employees work an extra 8 hours on top of the maximum 52, provided the hours and reasons for extended work are agreed in advance. This comes after pressure from groups representing SME interests including the Korea Federation of Small and Medium Business (KBIZ), the main argument being that there is already a shortage of 160,000 people workers in SMEs (a matter which, if left unaddressed, would result in the employment of more foreign workers — an “undesirable” situation). 

Also, the number business types exempt from the reduced working hours will be drastically reduced to just five: land transportation, water transportation, air transportation, other transportation services, and healthcare.

Why isn’t everyone happy?

If only reduced hours were that simple. Unfortunately, several thorny issues remain, including that of “double overtime pay.”

Overtime pay under Article 53 of the Labor Law states that employers must fork out an extra 50 percent pay for all work beyond the 40 hours or during holidays. But some workers argued that, under the previous “one week = five days” rule, they should be paid at 200 percent of their basic rate for work in excess of the 40 hours at weekends:

  • 50 percent extra for overtime over 40 hours, plus;
  • 50 percent extra for work during holidays (i.e.: the weekend)

Some employers thought otherwise and paid 150 percent, recognizing only the 40+ hours element of the work.

Under the new rules, during holidays (i.e.: weekends), workers would be paid 150 percent of their basic wage for up to 8 hours per day, then 200 percent for work over 8 hours (which, as mentioned above, is only possible with special approval).

While KBIZ welcomed the ability for SMEs with less than 30 employees to slap an extra 8 hours’ work on their already understaffed workforce, the Korean Confederation of Trade Unions (KCTU) dismissed the move, saying there was no reason why employers at such workplaces should be allowed to impose a 60-hour week.

KCTU, one of South Korea’s largest federation of unions, expressed disappointment that the government had allegedly passed the bill through behind-closed-doors collusion, without consulting labor groups, and that:

  • the changes didn’t effectively reduce working hours;
  • it was a serious problem that the changes did not to apply to businesses with fewer than five employees;
  • the inapplicability of “double overtime pay” during weekend work of less than 8 hours was in fact a step backwards for Labor Law
  • only industries responsible for the lives and safety of workers and citizens should be exempt.

Some have also expressed concern that workers didn’t actually want to leave their offices on time and achieve the elusive worabael (a buzz-portmanteau of ‘work-life balance’), because overtime offered a way of making extra money in an already expensive society. Diplomat-cum-udon noodle master and political pundit Shin Sang-mok took to Facebook to get this point across:

“[Sometimes] there is no reason to go home early: People in their forties have no children to go home to since their kids are at private academies until past 10 p.m. A bigger problem is money. As kids grow older, [the bread-earners] must pay for school fees, medical expenses for themselves, their partners, and their parents, buy a house, prepare for retirement…going home early isn’t very meaningful, and they would rather make a small profit than work a little less, avoiding a situation that affects their families’ livelihoods.”

“Your responsibility as head of the household is fulfilled only when you make more money, not when you come home early and work less,” he said.

What did the dailies say?

Overall, newspaper editorials welcomed shorter working hours, but held back from rejoicing, acknowledging that not everyone would be satisfied:

Hankook Ilbo noted that the new law would cause a burden to SMEs and that the reduction of labor hours may lead to a decline in the wages of employees, potentially widening the gap between small and large businesses.

Maeil Business Newspaper commented, “The problem is that reducing working hours without increasing productivity could negatively affect the Korean economy, resulting in a slowdown in production and rising labor costs.”

Donga Ilbo, quoting figures from the Korea Economic Research Institute, said that the costs incurred by hiring additional workers to maintain current production volume would amount to 12.1 trillion won ($11.2 billion) annually.

Hankyoreh said it was regrettable that the “double overtime pay” had not been maintained (for overtime of below 8 hours at weekends).

The bigger question: What will change?

Let’s face it: 52 hours a week is still long: It still assumes the possibility that, if an employee works the normal five days a week, they could potentially (and legally) be working from 9 a.m. to 9 p.m. (including lunch/dinner breaks).

Nonetheless, commentators say the changes will have a big impact on the country’s industries and labor force. Any employer found in breach of the extended working hours law faces up to two years’ imprisonment or a fine of up to 10 million won ($9,260).

But, as in many areas in South Korea, the question of whether a law exists is less important than that of whether it’s obeyed or enforced. In a culture where few employees even think of legally challenging their employer, will any employer feel compelled to follow the (new) rules?

 

Cover image: Ho Kyeong Jang, Korea 101 Editor at Korea Exposé, endures the harsh reality of working in a South Korean office. (Raphael Rashid/Korea Exposé)

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Raphael is a freelance journalist and fixer. He has an MA in Korean Studies from Korea University, and worked at Edelman Korea for three years representing some of South Korea's biggest conglomerates.