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The Peninsula

The 52-hour Work Week Comes Under Pressure From SMEs

Published December 17, 2020
Author: Korea View

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • South Korea’s 52-hour workweek system will be applied to small and medium enterprises (SMEs) starting January 1, 2021 despite their request to extend the grace period.
  • According to a survey conducted by the Korea Federation of SMEs, 39 percent of 500 SMEs who are by majority manufacturers have indicated that they were not prepared to adopt the policy.
  • The government said lawmakers are trying to pass legislation that will allow flexibility in the average working hours.

Implications: Korean Lawmakers are caught between addressing the struggles of SMEs that employ 80% of the labor force and the promises it made to workers that maximum working hours will be capped at 52 hours per week. Already struggling due to the sluggish demand during the pandemic, manufacturing companies expressed their worry that they will further lose competitiveness under the government’s new labor regulation. In response, lawmakers have put forward legislation that will allow workers to work more than 52 hours when demand is high and work less when demand is lower. However, this walks back a major policy promise that the government had made to workers.

Context: Despite the Moon Jae-in administration’s broad aim to promote SMEs, these firms have been under greater pressure due to the government’s recent measures that set the stage for larger firms to have greater domestic market share vis-a-vis foreign competitors. For instance, conglomerates have been permitted to compete in the used car market that had previously been dominated by SMEs and foreign firms. In addition, innovative SMEs face constraints to growing their business when the government imposes regulations that protect workers in industries that face disruption while simultaneously supporting large firms that are seen as proven drivers of innovation.

Korea View was edited by Yong Kwon with the help of Sophie Joo and Chris Lee.

Picture from flickr user Arnaud Matar

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