[Editorial] Reforming work practices

One major policy goal of the Ministry of Employment and Labor for this year is to reform shift work practices at domestic companies. The reform drive is intended to shorten Korea’s notoriously long working hours, which is essential to improving workers’ quality of life, creating jobs and enhancing productivity.

The ministry’s reform initiative is belated but welcome as it can benefit workers, their companies and the national economy. Yet the benefits don’t materialize automatically. As shift work reform would reduce working hours, productivity improvement is essential to avoid any output loss. There is no guarantee of benefits unless workers and management cooperate to enhance productivity.

According to a survey conducted by the ministry last year, some 15 percent of domestic firms used shift work. Among manufacturers, the percentage was 22 percent, with the auto industry showing the highest ratio of about 44 percent.

The most widely used shift pattern was a double-shift system in which two teams of workers rotate, each frequently forced to work extra hours. Among companies operating work shifts, some 64 percent used this arrangement. In the auto industry, the ratio topped 90 percent.

The survey also found that the weekly working hours of shift workers were four hours longer than the 41.3 hours worked by the average Korean wage earner. Shift workers in the auto industry, however, had a workweek more than 10 hours longer than average.

The survey clearly showed where the ministry should start its reform campaign. Hence it started to put pressure on the nation’s five automakers ― Hyundai, Kia, Ssangyong, General Motors and Renault Samsung. In November, it accused the five companies of breaching the Labor Standards Act by forcing their employees to work more than 12 hours a week in overtime.

The ministry told the car producers to present a comprehensive plan to change their shift work arrangements or face prosecution for their breach of the law.

Under the ministry’s pressure, Hyundai and Kia recently presented a reform plan. Currently, employees of the two companies work in two shifts, one working from 8 a.m. to 7 p.m. and the other from 9 p.m. to 8 a.m. the next day. Hyundai and Kia proposed a new double-shift arrangement under which one team works from 6:30 a.m. to 3:10 p.m. and the other from 3:10 p.m. to 12:50 a.m. the next day. For some plants that need to run around the clock, the companies would introduce a three-team, three shift system.

The plan, if implemented as proposed, would enable Hyundai and Kia to avoid breaching the overtime rule. But it requires the two companies to hire 1,400 new employees and invest some 700 billion won to upgrade facilities this year.

Even after the addition of new workers and facility investment, the two companies would still suffer an output loss of 187,000 vehicles a year, unless workers manage to enhance productivity.

On the part of workers, the change in the shift system means a reduction in wages as their overtime pay would be cut. But Hyundai and Kia said there would be no pay cut if workers could maintain their previous output levels. This means workers have to tolerate a sharp increase in labor intensity if they want no reduction in pay.

Thus, a successful execution of the ministry’s reform scheme requires mutual concessions between management and workers. Management should be willing to invest in productivity-enhancing equipment and hire more staff, while employees need to boost productivity in return for improvement in working conditions.

To help management and workers reach a bargain, the ministry said it would provide up to 10.8 million won for a maximum two years for each new worker hired due to shift work reform. Previously, it provided 7.2 million per employee for one year.

Yet the ministry’s budget for this financial support is set at a mere 9.8 billion won for this year, which means it can only subsidize some 1,000 employees. The government needs to ramp up the funding.

The ministry has all but finished its campaign to revamp the auto industry by endorsing the reform blueprint of Hyundai and Kia. Their plan will serve as a reference for other car producers. The ministry is now looking for its next target, which is likely to be the electronics industry. Major companies in this sector need to take steps voluntarily before being pushed by the government.