South Korea’s Ministry of Employment and Labor announced on Dec. 26 that the law restricting the workweek to a maximum of 52 hours will apply to small and medium-sized enterprises (SMEs) with fewer than 30 employees starting Jan. 1 next year.
For the past two years, SMEs with fewer than 30 employees have been exempt from the 52-hour workweek policy under a grace period, calculating weekly working hours up to 60 per week. The government’s abrupt notice that this grace period will end by the end of the year confused small business owners, who claim that they “didn’t see it coming.”
Some SMEs have expressed frustration, criticizing the government for announcing such a significant policy change less than ten days before implementation, leaving them no time to prepare.
“Most small businesses with fewer than 30 employees assume the 52-hour workweek does not apply to them due to a lack of enforcement and penalties,” said Choo Moon-gab, head of the Economic Policy Department at the Korea Federation of Small and Medium Business (KBIZ).
In many small businesses, workers are often paid minimum wage and rely on overtime hours and special shifts to increase their earnings. Critics argue that the voices of these workers are usually drowned out by the demands of labor unions at large conglomerates.
The SME community warns that enforcing a blanket 52-hour workweek will worsen existing challenges, particularly for businesses that rely on foreign labor. For companies where foreign workers make up a significant portion of the workforce, a reduced workweek would lead to a drop in income for these workers, potentially exacerbating the sector’s labor shortage problem.
“An employee that works 60 hours earns 3.3 million won ($2,300) per month, but if the hours are capped at 52, the employee’s salary decreases to 2.8 million won,” said one SME employer. “Foreign workers, who prioritize pay over work-life balance, may start leaving or even become illegal immigrants in pursuit of higher pay.”
Some fear that more companies will restructure or split into smaller entities with fewer than five employees to exploit exemptions from the 52-hour regulation.
“Companies with workweeks exceeding 52 hours are usually startups with strong innovation and growth potential,” said Noh Min-sun, a researcher at the Korea Small Business Institute. “This 52-hour workweek policy could deal a blow to these competitive startups.”
