S. Korea should make working hours more flexible and promote a performance-based remuneration model
Minister of Labor Lee Jung-Sik (Yonhap)
The Department for Employment and Labor announced its policy plans on Thursday, which are expected to increase labor market flexibility.
During the first post-inauguration press conference at the government complex in Sejong, President Yoon Suk-yeol’s first labor minister, Lee Jung-sik, focused on two issues: the country’s 52-hour work week and the majority-adopted seniority-based pay scheme company in South Korea.
According to Lee, the government will explore ways for companies to charge overtime on a monthly basis, so certain industries can better manage excessive workloads than on a weekly basis. Under the new program, overtime hours may be extended to up to 92 hours a week, but employees will be compensated with days off, according to Lee.
Moon Jae-in’s government had limited working hours to 52 hours – which included 40 regular hours and 12 overtime. The government then regulated weekly overtime hours to enforce the new law.
However, Yoon criticized the 52-hour workweek policy during his presidential campaign and indicated that he would introduce changes that could allow for a more flexible work schedule.
According to the ministry, however, whether companies will adopt the new regulation depends on negotiations between employers and employees.
Lee explained that changes to the 52-hour workweek are needed as more industries, particularly those related to information technology and software, require a flexible work schedule based on the needs of the industry and the nature of their work.
Lee also stressed that the country should move away from seniority-based pay models, where employees naturally see pay increases throughout their careers.
Lee argued that more companies should be able to adopt performance-based pay models so management can better deal with the increasing salaries of older workers, which the country will continue to expand in the future due to a rapidly aging population.
Lee added that seniority-based compensation schemes don’t match the high turnover rate of the current job market.
In South Korea, around 70 percent of companies with more than 1,000 employees are currently using seniority-based compensation models, while 55.5 percent of companies with more than 100 employees are using seniority-based compensation models.
Meanwhile, Lee stressed that the government would not introduce any measures that would lead to more layoffs.
By Shim Woo-hyun ([email protected])