The administration of the Republic of Korea discusses a plan to reorganize the current overtime rules. With the plan (if passed by the National Assembly), employers and employees would negotiate whether they will be allowed to work up to 69 hours in a week. As the details of the plan is expected to be announced in late February or so, there are growing concerns among workers on how the plan may affect them. Thus, it is very important to know what the expected changes are, and how the plan may affect us eventually (if implemented).
We must review the background of the plan to understand potential changes well. First, the plan is not about increasing total overtime working hours, but adjusting ‘overtime counting period’ (changing from week to month, quarter, half year, or year). Specifically, employees currently would be allowed to work 52 hours (40 regular hours + 12 overtime hours) per week. However, with the proposal, employees will be able to work 69 hours per week maximum, which correspond to 40 regular hours + 52 over time hours per month (140 hours per quarter, 250 hours per half-year, or 440 hours per year) when in agreement with their employers. This 69 hours per week is the maximum working hours allowed by the proposal. Second, we are not sure how the plan works for both employers and employees eventually, as the effects of the rule may vary across industry, occupation, size of organizations, etc. Specifically, the proposal could provide more flexibility in the labor market as explained by the government, and employees could not only earn more income, but also plan how to use their time outside work. However, it is possible that employers may abuse the new law, such as asking for more overtime working hours without providing proper compensations. It is also possible that employers might be in a superior position to apply the proposal (if passed) to their employees, considering relatively low union membership in Korea. Employees in small and medium enterprises might be even more vulnerable to the change due to the proposal. We already have one of the longest working hours among countries of the Organization for Economic Cooperation and Development. Moreover, some countries like the United Kingdom are discussing implementing a four-day work week in 2023 to improve employee’s productivity.
Therefore, it is important to carefully review the pros and cons of the change, and maintain a balanced view of each side. More importantly, we must agree on the details of the proposal and how it will be implemented, so that we can also work on some complementary interventions to protect employees or minimize potential negative impact on both sides, such as providing proper compensation and leave. During the COVID-19 pandemic, the business environment has dramatically changed, and it is necessary to implement some interventions to improve the competitiveness of an organization and a country. To maintain competitive advantages, some levels of change are necessary, including overtime working rules. However, as discussed earlier, the rule might be used in ineffective ways or in other contexts. So, we must keep an eye on the change, and pay attention to how the rule will be implemented. When the 52 working hours rule was first introduced in 2018, there were high levels of tension and concerns in our society, too. At this time, we must continue to pay attention to the details of the rule (when introduced), and why this change might be necessary and how things will change if the rule is implemented. Furthermore, we must understand the importance of context, and put our efforts into maintaining a balanced view of each side.
I sincerely hope that all Soongsilians use this uncertainty as a good opportunity to increase our awareness of a controversial business topic.
[Professor at the School of Business Administration]