The Korea Development Institute (KDI), a state-funded research institute, has concluded that the 52-hour workweek cap has hurt employment, sales and labor productivity at manufacturers and small and midsize companies. According to a report the institute submitted to Rep. Park Sung-hoon of the People Power Party on the 14th, working-hour regulations have constrained companies' flexibility in deploying labor, producing the counterproductive effect of lowering both hiring and revenue. The report recommended a shift in policy, arguing that "future working-hour policy needs to encourage flexible work arrangements through labor-management agreement rather than tighten rigid ceiling regulations." Its point is that labor flexibility should be raised through the voluntary will of employers and workers, not imposed by a uniform standard on working hours.
The 52-hour cap carries a serious flaw: it not only erodes corporate competitiveness but also strips workers of the opportunity to work longer hours and earn more. Former Bank of Korea Governor Changyong Rhee and the central bank's research department recently published joint findings in the same vein, concluding that "rigid working hours do not help improve national competitiveness." Among workers in the bottom 20% of the income distribution, overtime hours and overtime pay each fell 16%, leaving total pay down 1.3%. A policy advanced in the name of protecting workers, and with good intentions, has become a boomerang that makes life harder for low-income earners.
Even so, the government and the ruling party are preparing to push through a 4.5-day workweek with no pay cuts, rather than fix the side effects of the 52-hour cap. The Ministry of Employment and Labor has rolled out subsidies of up to 600,000 won per worker a month and is urging private companies to take part. With major rivals such as the United States, China and Japan loosening labor rules and staking their futures on the race for dominance in advanced industries, it is worth asking whether spending public money to artificially shorten working hours is the right direction.
The 52-hour cap, which ignores the shift in the employment market and the realities facing companies, urgently needs surgery. Labor deregulation should not be confined to mega special zones but extended to advanced industries and beyond. The 52-hour cap and the 4.5-day week will only entrench the vested interests of large unions, while concentrating the damage on the weakest links — jobless young adults and self-employed business owners. Our economy has no room to spare for ideologically driven policy experiments.