ED Dispute on working hours

The major political parties tentatively agreed to cut the maximum weekly working hours to 52 from the current 68 during a parliamentary labor subcommittee meeting. The measure could be discussed at Thursday’s meeting of the National Assembly Environment and Labor Committee.

The current Labor Standards Act recognizes only 52 working hours _ 40 hours during weekdays and 12 overtime hours _ in principle, but makes it possible for laborers to work 16 hours more on Saturdays and Sundays. If the law is revised, laborers can work up to 52 hours during the seven-day workweek.

To cushion the shock from the sudden reduction of legally permitted working hours, the parties agreed that a company with 300 or more employees would be given a two-year grace period. A business that employs fewer than 300 workers will be given a four-year grace period.

Cutting working hours is long overdue. According to the Organization for Economic Cooperation and Development, Koreans worked the second-longest hours among OECD members in 2014 with 2,124 hours on average, which is 1.2 times more than the average. Therefore few would dispute the need to improve people’s quality of living by reducing working hours. As unemployment has become chronic, one could also expect a job creation effect.

But the matter is not that simple. The likelihood is that companies must bear a greater financial burden because of increased employment. If not, they have no other choice but to reduce production. A study by the Korea Economic Research Institute shows that if the maximum working hours are cut, employers must pay 12.3 trillion won more a year as labor costs. Of the expenditure, 70 percent must be shouldered by small- and medium-sized companies already struggling with manpower and funding shortages.

Also, there are doubts about whether the reduction of working hours would ramp up employment as businesses are expected to expand automation rather than hire more workers.

All this raises fears that the wage gap between large companies where labor movements are strong and smaller ones would widen. Granted, lawmakers have no reason to hurry to revise the Labor Standards Act. They need to discuss the matter in depth, particularly in consideration of its huge impact on smaller companies.