Korea: Republic of Workaholics

2013-07-21

Korea: Republic of Workaholics

Long working hours make workers unhappy

By  Kim Bo-eun
130721_a01_korea2

Korea is notorious for being a country of workaholics, having one of the world’s highest numbers of annual working hours per employee. While the government and leading conglomerates have been cutting back on working hours and lengthening breaks, small- and medium-sized companies still face the miserable reality of all work and no play. Korea still has one of the lowest numbers of legally guaranteed vacation days. Even then, employees rarely use up all of their vacation days due to the workaholic culture, and when they do go on their short vacations, they are prone to be stress-ridden.Long working hours 

Korea’s Labor Standards Act states that employers must give 15 days of paid vacation to employees who have worked for 80 percent or more of the total working days in the past year. The number of vacation days increases up to 25 days in accordance to the years the employees have been with the company. However, the act still falls short of International Labor Organization (ILO) standards, both in terms of the minimum number of working days before employees can go on vacation, as well as the number of vacation days.

ILO standards state employees working for six months are qualified to take a paid vacation, and employees who have worked for a full year are eligible to take at least three weeks of paid vacation, two weeks of which may be taken consecutively.

The European Union (EU), whose member states are mostly developed economies with superior welfare benefits, advises organizations to give employees at least four weeks of vacation per year. It also stipulates weekly working hours should not exceed 48 hours.

But Korea, along with its short vacation for employees, also happens to be among the countries with the longest working hours. The government has been cutting back on working hours, which has decreased the official number of annual working hours. However, the country still falls behind other developed countries. According to the latest data from the Organization for Economic Cooperation and Development (OECD), Korea ranked second among 34 member states in average annual hours worked in 2011, with 2,090 hours per employee. It was surpassed only by Mexico with 2,250 hours.
 

 

Some 600,000 vacationers pack Haeundae Beach in the southern port city of Busan on July 31, 2011. Domestic vacation destinations and major highways become jam-packed during the last week of July and first week of August each year, as around half of the working population take their vacation during then. The congestions and overcharged prices leave vacationers feeling little but refreshed. / Korea Times file


Excessive workloads

While employees are legally granted vacation days, the workaholic culture prevents them from using all of the given days. According to a November survey by online job recruiting agency Incruit, 82.6 percent of 425 workers said they failed to use up their vacation days for the past year. On average, they used only seven out of their 13 days of vacation.

An excessive workload was the most widely cited reason (31.1 percent) for not using up all vacation days, closely followed by disapproval from bosses (30.5 percent), cultural tendency among employees not to use up all vacation days (18.2 percent) and to get extra pay (13.1 percent).

Lee Sung-tae, the chief researcher at the Korea Culture and Tourism Institute (KCTI), pointed out the tendency to discourage taking vacations is perhaps the greatest obstacle to the development of a proper vacation culture in the country.

“Because of its lack of natural resources, Korea achieved economic growth through labor. From this background, people developed the mentality that going on vacation is a sin,” Lee told The Korea Times’ Business Focus.

“Although a handful of companies are taking the initiative to fix this flawed notion, many still discourage their employees from taking vacations. They regard those who request vacations as lacking dedication to the company or failing to adjust to the corporate culture.”

In addition to the deeply rooted workaholic culture, the lack of understanding of the benefits of taking breaks prevents companies from upholding their vacation policies.

“For workers, resting is as important as working,” said Lee. “Vacation is a time for recharging one’s batteries and is an opportunity for self-improvement. When workers achieve these goals, their productivity can rise, which benefits companies. Companies should acknowledge this.”

Summer nightmares 

Most workers in Korea take their vacation in the summer. Around half of the working population sets off for vacation during the last week of July and the first week of August. This is because married workers with children schedule their vacations to coincide with their children’s summer school break. Further, while some workers and their families go abroad for vacation, many tend to spend it in the country because of the limited number of vacation days. Workers and their families commonly spend around three days at a summer resort a couple of hours away from home.

Last Tuesday, the Ministry of Land, Infrastructure and Transport forecast 47 percent of vacationers would be on vacation from July 27 to Aug. 2, and highways would be most congested from Aug. 2 to Aug. 3. From July 25 to Aug. 11, the ministry said some 4.3 million vacationers would be traveling across the country each day, a total of 77 million for the period. Accordingly, the ministry will take measures to alleviate the highway congestion.

As millions of vacationers flock to domestic vacation destinations during the peak season, highways and tourist attractions become overcrowded, vacationers pay exorbitant costs that are typically charged during the period, According to and as a result, they return with little satisfaction from their vacation.Lee pointed out that this structure of having the majority of workers spend their yearly vacations during a couple of weeks in summer, inevitably makes those in the vacation business charge more to make their year’s worth of money, as they have little business during the rest of the year.

“As supply struggles to meet demand during the peak season, the vicious cycle continues,” he said. stressing the need to disperse vacations across the year.

Costs of overworking employees 

In an attempt to increase productivity, companies encourage employees to work overtime in exchange for extra pay. However, data shows this strategy does not increase productivity much. Some studies even show this strategy causes employees and companies more harm than good. Experts say excessively long working hours and lack of sufficient breaks decreases the productivity of workers and causes significant financial losses to companies.

Consulting firm Towers Watson’s 2012 Global Workforce Survey showed Korean workers’ engagement levels regarding their work were substantially low. Only 17 percent responded they were highly engaged in their work. This figure is much lower than the 53 percent of Chinese workers or 48 percent of Indian workers who are engaged with their work. As much as 42 percent of Korean workers said they worked in poor conditions and had low levels of engagement.

While low productivity can be attributed to other factors, and the relationship between working hours and productivity is yet to be clarified in the Korean corporate context, studies show that greater leisure time will boost the economy by encouraging spending. According to a 2012 study by the KCTI, improvements in workers’ vacations will create greater demand for domestic tourism, stir up private investment in the tourism sector, boost the domestic economy and create new jobs. Further, the study predicted helping employees balance work and life will enhance their quality of life in the long term.

Breaking the impasse 

To improve circumstances, the study proposed revising related laws and systems, as well as public perception.

Clause 5 in Article 60 of the Labor Standards Act stipulates employers can reschedule employees’ vacation dates when the original dates pose significant harm to business operations. Lee said this clause needs revision because important phrases such as “pose significant harm to business operations” are vague, and thus, are prone to abuse by employers.

He also suggested stricter monitoring of companies to ensure they allow employees to take vacations and provide them with extra pay when they forgo it.

“In European countries or the U.S., CEOs acknowledge taking vacations as an inherent right. Korean companies need to start doing so,” said Lee.

Korea is notorious for being a country of workaholics, having one of the highest numbers of annual working hours per employee. While the government and leading conglomerates have been cutting back on working hours and lengthening breaks, small- and medium-sized companies still face the miserable reality of all work and no play. Korea still has one of the lowest numbers of legally guaranteed vacation days. Even then, employees rarely use up all of their vacation days due to the workaholic culture, and when they do go on their short vacations, theyare prone to be stress-ridden.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: