"In the Era of Industrial Structure Transformation, a New Working Hours Paradigm is Needed for Companies"

The digitalization of the economy and the prolonged COVID-19 pandemic have accelerated changes in working methods and increased the need for flexible working hours, leading to calls for reforming the outdated working hours system established during the industrialization era to better suit the current times.

The Federation of Korean Industries (hereinafter FKI) announced on the 15th that it submitted a "Proposal for Institutional Improvements to Flexibilize Working Hours" to the Ministry of Employment and Labor on the same day.

The five tasks proposed by the FKI to flexibilize working hours are: ▲improvement of flexible and selective working hours systems ▲expansion of reasons for approval of special extended working hours ▲introduction of exemption system from working hours regulations for high-income and professional workers ▲improvement of discretionary working hours system ▲introduction of working hours account system.

Due to the accelerated digital transformation of industrial structures and the prolonged COVID-19 situation, the number of workers choosing various working methods free from working hours constraints, such as telecommuting and staggered working hours, has surged. Last year, the number of wage workers working from home or remotely was 1.14 million, which is 12 times higher (an increase of 1.045 million) than the 95,000 in 2019 before the COVID-19 outbreak. The number of wage workers using staggered working hours increased by 41.4% (309,000 increase) from 746,000 in 2019 to 1.055 million in 2021.

The FKI pointed out that the current working hours system was designed in the 1950s based on collective and uniform factory work, making it unsuitable for regulating the individualized and diverse working forms of the Fourth Industrial Revolution era.

In fact, Korea’s working hours system is more rigid compared to major advanced countries. Korea limits extended working hours to a maximum of 12 hours per week, whereas the United States has no restrictions on working hours, and major countries such as Japan and Germany operate flexible working hours on a monthly or yearly basis and set broader limits on extended working hours than Korea. The FKI emphasized that the constraints on working hours often cause difficulties in responding to various variables in actual industrial sites, which can hinder corporate productivity and erode national competitiveness, making innovation in the working hours system urgent.

Since the introduction of the 52-hour workweek limit, the need to utilize flexible and selective working hours systems has increased, but the short unit period and complicated adoption procedures make it difficult for companies to use them promptly in irregular work environments. The FKI argued that Korea’s flexible working hours system has a maximum unit period of six months, which is shorter than that of major advanced countries, and that the unit period should be extended to a maximum of one year.

Recently, unexpected situations such as disruptions in overseas raw material supply due to the Ukraine crisis have frequently required intensive extended working hours for corporate survival. The FKI pointed out that the scope of approval reasons for special extended working hours is narrow, and that approval from the Minister of Employment and Labor and consent from workers are required, making it ineffective in urgent situations. They argued that special extended working hours should be allowed for cases requiring extended work due to research and development of new technologies or products, business management circumstances, or the nature of work.

The FKI evaluated that applying the working hours system uniformly, including the 52-hour workweek and overtime pay, to high-income professionals above a certain income level is inappropriate as it hinders productivity and causes work inefficiency. Major countries such as the United States and Japan have excluded high-income professionals from working hours regulations and established performance-based evaluation and compensation systems.

Despite increasing demand for the discretionary working hours system due to industrial specialization and diversification of working forms, the scope of applicable work is limited and the adoption procedures are rigid, restricting its use. In Japan, which has a labor law system similar to Korea’s, the scope of applicable work was expanded beyond professional tasks to include planning, analysis, and promotion related to business operations in response to changes in the labor environment. The FKI argued that Korea should also expand the scope of discretionary working hours system to include planning, analysis, and promotion tasks, as in Japan, to broadly guarantee autonomy over working hours.

Additionally, the FKI proposed the introduction of Germany’s working hours account system as another way to overcome the limitations of the current rigid working hours system. The working hours account system allows workers to work overtime when workload is high and save the extra hours, then use them as leave when workload is low, enabling autonomous adjustment of working hours. In Germany, it was found that about 81% of workplaces with 250 or more employees had adopted a long-term working hours account system with a unit period of one year or more as of 2016, indicating its widespread use.

Choo Kwang-ho, head of the Economic Headquarters, said, “The need for a paradigm shift in working hours will increase with the diversification of working forms requiring autonomy over working hours and the expansion of work-family balance demands,” and emphasized, “It is necessary to establish a reasonable working hours system that allows workers with various working forms to work according to their circumstances and enables companies to actively respond to changes in the industrial environment through flexibilization of working hours.”

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