eNewsletter

According to the Korean Ministry of Employment and Labor, the South Korean government plans to revise the current Labor Standards Act and strengthen work-hour regulations. This policy, once implemented, will be the first roll-back of exemptions to the labor laws currently in effect.

The current labor policy places a statutory limit of 40 working hours and 12 hours of overtime per week.  The work week is restricted to a maximum of 52 hours.  Employees in twelve industries—which include finance, insurance, and communications—are exempt from this Labor Standards Act and permitted to work over this legal limit.  However, companies not in the twelve exempt industries have, thus far, gotten around the 52-hour workweek limit.  These companies have been taking advantage of the legal loophole that excludes the weekend shifts as part of the work week.

The Economic and Social Development Commission—composed of the government, labor unions, and employers—announced a policy that would re-divide the previously exempted industries into 26 categories.  The policy would impose the working hour restrictions on all but ten of these new categories.  Once the revised labor law is implemented, only 13% of 10.55 million workers will be exempt from the 52-hour work week restriction.  Currently, 38% are exempt.

The South Korean government hopes that the new policy will create new jobs, boost private consumption, and increase worker productivity.  However, companies in Korea will probably face higher overall labor costs because they have to hire new employees to maintain existing productivity levels.  The companies fear that this will place them at a competitive disadvantage against cheap-labor companies in China.  Resistance can also be anticipated from the workers (who currently work more than 52 hours), as the stricter limitations will negatively impact their annual income at a time of rising living costs in Korea.