[Editorial] Cutting working hours

The government is stepping up efforts to cut the maximum working hours per week from the current 68 hours to 52 hours. On Monday, it agreed with the ruling Saenuri Party to revise the relevant law during the ongoing parliamentary session.

Under the law, standard working hours in Korea are eight hours a day, or 40 hours per week. On top of that, up to 12 hours of overtime work is allowed per week. The problem with the law, however, is that it does not say whether weekend work is included in overtime work or not.

The government’s interpretation thus far has been that it is not included. This has allowed employees to work up to 16 hours on weekends after working 52 hours during the weekdays, thus effectively extending the maximum working hours to 68 hours per week.

The government intends to shorten working hours by defining weekend work as overtime work. It hopes this change will generate new job opportunities, helping it boost Korea’s employment rate to 70 percent, as pledged by President Park Geun-hye.

The government plans to implement the proposed change in working hours gradually, first applying it to companies with 300 or more employees in 2016, then to those with 30 to 299 workers in 2017 and to the remainder in 2018.

It also plans to allow companies to extend overtime work beyond 12 hours a week, providing that their labor unions accept it. This is intended to mitigate the impact that the shortened working hours could have on companies.

The government’s scheme thus accommodates employers’ concerns about any abrupt change in their business environment. But employers, especially those running small and medium-sized enterprises, are still worried that the government’s reform campaign might end up simply increasing their labor costs.

A reduction in working hours can expand employment to the degree that wages are cut. If working hours are shortened without any reduction in salaries, employers will find it difficult to expand their workforce.

Government data show that compensation for weekend work accounted for more than 13 percent of wages in 2010. If weekend work is included in overtime work, it is rational to expect that salaries are cut by as much.

But labor organizations are against any cut in pay. They have made it clear they would not tolerate any attempt to cut workers’ wages.

They are also critical of the government’s latest proposal as it suggests a gradual approach in cutting working hours. They have been calling for an immediate and across-the-board reduction of working hours.

The government’s scheme is also met with criticism from the main opposition Democratic Party, which has been supportive of labor organizations. The party also slammed the idea of allowing companies to extend overtime work beyond 12 hours a week.

As things stand, it is hard to expect employers and workers to narrow their gap on this issue. So the government needs to pursue a “grand bargain” on a set of interrelated labor issues, which encompass reform of the wage structure, extension of the retirement age, defining ordinary income, as well as cutting working hours.

Separately, these issues are hard to resolve. Yet a breakthrough can be found if they are put on the bargaining table at the same time.