Aiming for OECD Average Working Hours... Key Issues in the 4.5-Day Workweek Debate

The government has officially begun efforts to reform South Korea's long-hours, low-wage labor structure. The goal is to reduce actual working hours to the Organisation for Economic Co-operation and Development (OECD) average level by introducing a 4.5-day workweek and banning the comprehensive wage system. Labor unions, management, and the government will hold discussions over the next three months. The key issue is how quickly the government can coordinate the labor unions’ demand that “shortening working hours is meaningless without wage preservation” and management’s concern that “not considering industry-specific characteristics will lead to significant side effects.”

On September 23, the Ministry of Employment and Labor officially launched the “Real Working Hours Reduction Roadmap Task Force,” which includes representatives from labor, management, government, and 17 experts. Over the next three months, the task force will hold on-site meetings and public forums, aiming to announce the final roadmap by the end of the year. The government plans to reduce the annual working hours to 1,742 hours, the OECD average, by 2030. Last year, South Korea’s average working hours were 1,872 hours, which is 130 hours more than the OECD average.

The government is preparing to pilot the 4.5-day workweek in selected workplaces starting next year. This is a preliminary step to lay the institutional foundation through future amendments to the Labor Standards Act. The 4.5-day workweek can take various forms, such as a half-day off once a week, a 35-hour workweek, or a four-day workweek every other week. The core principle is that both employees and companies should be able to maintain work-life balance without wage reductions. Some large companies and small and medium-sized enterprises have already partially implemented such arrangements.

Labor unions have welcomed the government’s initiative. They argue that the 4.5-day workweek can reduce long working hours and help address issues such as low birth rates and sluggish consumption. The government plans to encourage voluntary adoption by offering incentives such as tax credits and wage subsidies to companies that implement the 4.5-day workweek. According to the roadmap reported by the Ministry of Employment and Labor to the National Policy Planning Committee, the government will first introduce support programs and legislative measures for the 4.5-day workweek within this year, and plans to expand the system in earnest after 2027.

In line with this, the government will also push for legislation banning the comprehensive wage system next year. The comprehensive wage system involves paying fixed allowances for overtime, night, and holiday work regardless of the actual hours worked, and labor unions have long identified it as a main cause of long working hours. They point out that many workers do not receive proper additional compensation for overtime work because of the fixed payment system. The government has also determined that the current system does not accurately reflect actual working hours and will seek to amend the Labor Standards Act to require employers to keep precise records of working hours.

Kim Younghoon, Minister of Employment and Labor, is holding the kickoff meeting of the Real Working Hours Reduction Roadmap Task Force on the 24th.

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The issue lies in the scope of calculation. The government is considering whether to include the “fixed overtime” system, used by large companies such as Samsung and Hyundai Motor Company, within the ban on the comprehensive wage system. This is because fixed overtime pays a set allowance regardless of actual hours worked. It is also essential to develop supplementary measures to accurately track working hours, including time spent on smoking breaks and personal errands.

While management agrees that changes to the labor environment are necessary, there are concerns that a rapid, government-driven reduction in working hours could undermine corporate competitiveness. This is based on the view that shorter working hours could directly lead to lower productivity. Rising labor costs must also be taken into account. For small businesses, adopting the 4.5-day workweek would necessitate hiring additional staff, resulting in increased costs. The Korea Federation of Micro Enterprises has argued that existing systems such as paid weekly holidays should be reformed before introducing the 4.5-day workweek.

In addition, abolishing the comprehensive wage system could increase the administrative burden and fuel labor-management conflicts due to stricter requirements for managing and recording working hours. The Korea Chamber of Commerce and Industry stated, “While we agree on the need to address long working hours, it is important to ensure flexibility so that reduced working hours can be used efficiently according to market conditions. Supplementary measures such as expanding the unit for overtime management or introducing the white-collar exemption (a system that exempts high-income office workers, such as senior executives, professionals, and managers earning above a certain salary, from working hour regulations and overtime pay requirements) should be discussed together.”

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