A state-funded research institute has found that South Korea's 52-hour weekly cap on working hours had a negative impact on employment, revenue and labor productivity at manufacturers and small and mid-sized workplaces.
The Korea Development Institute (KDI) reached the conclusion in a study on working-hour policy in an era of population decline, conducted last year, according to Rep. Park Sung-hoon of the People Power Party on the 14th. The study explored policy directions for securing labor supply and raising productivity in response to population decline. It is scheduled for release in the fourth quarter of this year.
Chapter 4 of the report, titled "The 52-Hour Cap and Corporate Responses," found that the working-hour regulation affected industries and workplaces differently depending on their size. Manufacturers and small and mid-sized workplaces in particular found it harder to adjust labor input flexibly, and their employment, revenue and labor productivity indicators declined.
Service firms and large workplaces, by contrast, showed no pronounced negative effects. Those companies maintained their business performance by using flexible work arrangements or expanding capital investment to cope with the limits on working hours. In other words, the same regulation produced different outcomes depending on the nature of the industry and a company's capacity to respond.
Based on the findings, KDI recommended revising the system to give companies more autonomy rather than applying uniform working-hour rules. Instead of tightening a rigid, across-the-board cap, the institute said, the government should promote flexible work arrangements based on labor-management agreements to pursue shorter hours and higher productivity together.
"The KDI study also confirms that uniform working-hour regulation does not affect all companies in the same way," Park said. "The burden is concentrated on small and mid-sized manufacturers that lack manpower and capital in particular, so we need to consider a flexible system that reflects the realities of different industries and company sizes."