Despite Desperate Pleas from SMEs... Enforcement of the '52-Hour Workweek' for Workplaces with Fewer Than 50 Employees

Ministry of Employment Briefing on Field Implementation
"Utilizing Support Measures for Flexible and Selective Work Systems"
Ignoring Joint Statement by Five Economic Organizations
Refusal of Requests Regarding Guidance Period Despite COVID-19

[Sejong=Asia Economy Reporters Moon Chaeseok and Kim Heeyoon] The government has decided to expand the 52-hour workweek system to workplaces with 5 to 49 employees starting from the 1st of next month as scheduled. Previously, the small and medium-sized business sector requested an extension of the guidance period and an expansion of the special extended work permit period, especially for micro-enterprises, but the government has effectively rejected these demands and expressed its intention to proceed firmly.

On the 16th, Kwon Kisub, Director of Labor Policy at the Ministry of Employment and Labor, said at a briefing on the "On-site Settlement of the 52-hour Workweek System," "From July, the 52-hour workweek system will apply to workplaces with 5 to 49 employees," adding, "However, since there are voices from the field saying they are not yet prepared, we will utilize various support measures such as flexible and selective working hour systems."

The Ministry of Employment and Labor applied the 52-hour workweek system to companies with 300 or more employees and public institutions starting July 2018, and after a one-year guidance period for companies with 50 to 299 employees, it began enforcement in January this year. However, for companies with fewer than 50 employees, it has decided to apply the system as originally scheduled.

At the briefing, the ministry disclosed the results of a survey conducted in April targeting 1,300 companies with 5 to 49 employees, stating that "93% expect to comply with the 52-hour workweek system starting July this year."

However, this decision has been criticized for ignoring voices from the field. Five economic organizations including the Korea Employers Federation, the Korea Chamber of Commerce and Industry, the Korea Federation of Small and Medium Business, the Korea International Trade Association, and the Korea Association of Mid-sized Enterprises recently issued a joint statement titled "Joint Position of Economic Organizations Urging Measures on the 52-hour Workweek System," arguing that "micro-enterprises find it difficult to operate their businesses if working hours are reduced, and it is not easy to replace foreign workers," and that companies with fewer than 50 employees should be given additional preparation time just like large companies and those with 50 or more employees." Mr. A, who runs a metal processing company in Hwaseong, Gyeonggi Province, said about the ministry's decision to introduce the system, "If it is enforced unconditionally, manufacturing companies like ours will have to shut down."

The ministry announced that it will actively guide supplementary measures such as a flexible working hour system for up to six months and a three-month selective working hour system for research and development (R&D) companies to mitigate the impact of implementing the 52-hour workweek system. Director Kwon said, "Among workplaces with fewer than 50 employees, companies with 5 to 29 employees, which account for 95%, can also have an additional 8 hours of extended work per week until the end of next year."

In addition, the ministry plans to operate a field support team for working hour reduction and expand industry-specific explanatory meetings to regional levels so that vulnerable industries can also utilize the system.

The government says "93% of companies with fewer than 49 employees can comply"... but SMEs oppose

With the government deciding to introduce the 52-hour workweek system as scheduled from next month for workplaces with 5 to 49 employees, the small and medium-sized business sector appears to be under immediate pressure. Economic organizations such as the Korea Federation of Small and Medium Business appealed for a guidance period but were effectively rejected.

A Ministry of Employment and Labor official dismissed the demand for a guidance period for workplaces with 5 to 49 employees, saying, "It is just the claim of economic organizations such as the Korea Federation of Small and Medium Business."

"Did they not consider the impact of COVID-19?"

The impact on small and medium-sized enterprises is expected to be significant. Kim Jinseop, CEO of Sub, a metal processing SME operating in the Mado Industrial Complex in Hwaseong, Gyeonggi Province, lamented, "Although orders from foreign clients have increased, working hours are restricted by the 52-hour workweek system, so we cannot meet delivery deadlines. On top of that, raw material prices keep soaring, labor costs are rising, and it is impossible to find foreign workers, so it is really frustrating." He added, "The government says it has given a grace period, but it seems they did not consider the reality that manufacturing lines were tied up for nearly a year due to COVID-19," and complained, "Shouldn't the implementation of the 52-hour workweek system be postponed further?"

Many SME representatives, including CEO Kim, are requesting an extension of the guidance period, citing economic downturn and labor supply difficulties caused by COVID-19 and lack of preparation.

Yang Okseok, Director of Human Resources Policy at the Korea Federation of Small and Medium Business, pointed out, "Among workplaces with fewer than 50 employees, there are many special industries sensitive to climate such as root industries, shipbuilding, and construction, or those that need to operate machines 24 hours a day. If the 52-hour workweek system is introduced immediately from next month to SMEs that are already short of more than 200,000 workers, many difficulties will arise in the field." He added, "Since the preparation period was insufficient due to COVID-19, the government should reconsider extending the guidance period to strengthen countermeasures in the field, and the current system allowing an additional 8 hours of extended work upon labor-management agreement applies only to companies with fewer than 30 employees, but it needs to be expanded to companies with fewer than 50 employees."

Government: "Over 90% of SMEs can comply"

Source: Ministry of Employment and Labor

The government's decision to expand the application of the 52-hour workweek system from next month was largely influenced by the fact that sufficient preparation time was given and that more than 90% of companies said they could comply according to survey results. According to the Ministry of Employment and Labor, a survey jointly commissioned by the Ministry of Employment and Labor, the Ministry of SMEs and Startups, and the Korea Federation of Small and Medium Business in April found that 93% of 1,300 companies with 5 to 49 employees responded that they could comply with the 52-hour workweek system starting next month. In the same survey conducted in December last year, the compliance rate was 90.2%, showing an increase.

To appease industry dissatisfaction, the ministry plans to actively promote various supplementary measures. According to the briefing materials, the ministry will actively implement measures including a six-month flexible working hour system and a three-month selective working hour system for R&D-focused companies for companies with 5 to 49 employees; expanding reasons for special extended work permits such as facility or equipment breakdowns and sudden workload surges; allowing an additional 12 hours of work per week upon labor-management agreement; permitting an additional 8 hours of extended work per week for companies with 5 to 29 employees until the end of 2022; providing one-on-one customized consulting by certified labor attorneys, labor inspectors, and employment support officers; supporting monthly labor costs of 400,000 to 800,000 KRW per newly hired worker for 1 to 2 years; and prioritizing the allocation of foreign workers to root industries and companies with 5 to 49 employees located in provincial areas.

This content was produced with the assistance of AI translation services.