Long working hours entail a heap of associated problems in Korea; OECD averaged 1,696 hours while Korea reached 2,092 hours a year

2013-10-08 17:17

Cutting working hours

Few will deny that South Koreans are the hardest-working people on the planet. While the yearly working hours among the member states of the Organization for Economic Cooperation and Development (OECD) averaged 1,696 in 2011, South Korea’s reached 2,092 hours last year. In fact, long working hours entail a heap of associated problems. First of all, employees are prone to depression and anxiety disorders. It’s also rare to find any improvements in productivity because employees work at a slower rate during business hours.    Given this, the ruling camp’s agreement on Monday to push for a bill that would cut the maximum working hours per week to 52 hours from the current 68 carries great significance. Under this agreement, the governing bloc will revise the Labor Standards Act to that effect during the current regular session of the National Assembly.
To cushion the shock caused by the abrupt revision of the law, the new rule will be gradually enforced from 2016, according to the size of each employer.  Specifically, companies with more than 1,000 employees should comply with the regulation from 2016, those with 100 to 1,000 from 2017, and firms with fewer than 100 workers from 2018.
This change is a belated but welcome move, given that the nation must rectify the notorious practice of working very long hours to improve the quality of life. More importantly, reducing the legally permissible working hours could help create more jobs, thereby enabling the incumbent administration to deliver on its promise of raising the employment rate to 70 percent.
But the revision could be disastrous to both management and labor unless the new system works properly. What’s most disturbing is that the nation must kill three birds with one stone ― expand job opportunities, enhance the quality of life and keep the corporate competitive edge intact.
Laborers could suffer wage cuts if working hours are shortened. During this process, only labor unions at large companies with great bargaining power will reap practical benefits.
Employers, for their part, will suffer from rising costs, which will in turn deal a fatal blow to their competitiveness. The impact, in particular, will be decisive for small and medium businesses, given possible disruptions in production and increased difficulties in hiring new workers.
It’s for this reason that the government should push for the revision after careful consideration. There are also prerequisites for businesses to fulfill before introducing the new system ― enhance labor flexibility and narrow labor-management discrepancies on wage cuts.
It will be more realistic if the tripartite committee of labor, management and government takes the lead to negotiate a fair solution, thereby emerging from its current lethargic state.

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.

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