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최종편집 : 2019.10.10 목 18:58
CoverControversial Issues
52-Hour Workweek Has a Lot of Problems
Yang Chae-hyun  |  ych9962@cau.ac.kr
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승인 2019.10.05  17:40:11
트위터 페이스북 미투데이 요즘 네이버 구글 msn

On July 1st, 2018, the 52-hour Workweek was introduced and took effect in full scale, without distinction of industry or job category. Behind the implementation of the system was the aim of reducing workers' excessive working hours. Despite this good purpose, however, the 52-hour Workweek has caused many problems for workers and businesses over the past year due to its rigidity. Moreover, voices of discontent have grown further as Japan recently implemented export restrictions. The Korean business community has expressed its position that it is extremely difficult to compete with Japan's technology industry under the system. Lee Won-wook, floor leader of the ruling party, recognized the issue seriously and proposed a revision bill calling for delaying the implementation by up to 3 years. It seems evident that the 52-hour Workweek is producing many economic side effects.

           The biggest problem with the 52-hour Workweek is that it is being pushed forward at the same time as an excessive minimum wage hike, adding pressure on companies to pay for labor costs. Unlike large companies that can fully afford labor costs, small and medium-sized ventures and businesses, whose working conditions or financial status are still weak, can hardly absorb the changes of shorter working hours. According to the Bank of Korea's Financial Stability Report for the first half of 2019, 34 percent of companies are with an interest coverage ratio of less than one. This means that as many as 34 percent of companies are unable to pay back loans with their operating profits. The 52-hour Workweek system imposes stronger restrictions than is necessary on the labor market, causing rigidity in companies. In the same vein are issues about 52-hour Workweek due to the current Japanese export regulations. Kim Young-joo, president of the Korea International Trade Association, said, "The Japanese export regulations are a golden opportunity for small and mid-sized companies at the site to enhance the competitiveness of the domestic material and parts equipment industry, but they are an obstacle to the rigid and costly working hours of R&D workers." The 52-hour Workweek will be a stumbling block to the competitiveness of South Korea's key industries.

           The second problem lies in the fact that the effects of creating jobs, which were among the original purposes of the system, are not working properly. The Institute of Economic Research Pi-touch raised the issue that companies would replace the decline in labor demand with an automated system. As the labor costs that companies have to pay act as a big burden, they choose to invest in facilities instead of hiring workers to improve productivity. In fact, even though Quebec and Portugal have reduced working hours, employment has declined due to the high ratio of facility replacement. Even if it is not in the direction of investing in facilities, the 52-hour Workweek system does not help create regular workers. According to the data by National Statistical Office of Korea, the number of employed people stood at 2.581 million in the first five months of this year, up only 24,000 from the same month last year before the system was legislated. It is hard to even analyze how much the 52-hour Workweek has affected with such changes in the number of employed people. Even the number of employed people is attributed to an increase in the number of irregular workers whose employment is unstable. “The reduction in working hours does not lead to job creation at a time when companies do not have more wages to distribute,” said Kim Taek-ki, an economics professor at Dankook University. Reducing working hours without properly analyzing the current situation of Korea's working environment, businesses and workers is only an irresponsible academic theory.

           Another problem is that the job environment is getting worse. It has been pointed out that since the system took place, overtime and work hours have been faster than in the past. However, the intensity of tasks a person has to deal with has been higher. According to a survey of office workers conducted by Job Korea, a leading job-related website, about 38 percent of respondents said their work intensity has increased. The amount of work companies gives to employees without increasing employment in order to reduce the burden of labor costs has increased. Also, the 52-hour Workweek system has reduced salaries for office workers. South Korea's wage system is largely in the form of preserving bonus for low basic pay, which has caused complaints among office workers that they are not allowed to work overtime and do not receive extra work benefits. That's why some say it's better to get paid and work more like before. The government said it would create a ‘life with dinner’ for ordinary people, but there is still no leeway for those with reduced pay.

           Global investment bank Goldman Sachs predicts that South Korea's economic growth rate will fall another 0.3 percentage point next year due to the 52-hour Workweek. The system will increase corporate labor costs by an additional 9 trillion won, with companies expected to cut production or shift to facility investment rather than hire additional workers amid sluggish domestic demand and growing external uncertainties. The 52-hour Workweek can be a major obstacle to the growth of Korea's core industries, and it does not have enough positives effects on job creation to justify its undesirable side effects. As such, the 52-hour Workweek, which is fragmented and rigidly implemented, is a regulation that does not fit the lives of the real industry and the working class and is flowing in the opposite direction from its original purpose. If you insist on the system without knowing that shorter working hours will have a real effect only when labor flexibility is secured, you will accept the consequences of the side effects.

           The 52-hour Workweek has caused a lot of controversy. Those in favor of the system argue that the system contributes to improving the quality of life by preventing workers from overworking. It also says that it can increase the efficiency of workers' work, which is one way to increase the labor productivity of companies, and that it can also bring about job creation. However, opponents argue that contrary to its intentions, the 52-hour Workweek is not working properly, but is rather becoming an industry-wide stumbling block without being of much help to workers. Instead, it adds to the burden of labor costs for companies, and it has not created as many quantitative effects as were expected when the system was legislated.  Nor does the policy create quality jobs. For all of these reasons, it is hoped that the benefits of the 52-hour Workweek will be accurately recognized and improved in a more desirable direction for both businesses and workers.

 

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