A private domestic research institute called for a fundamental review of South Korea’s new 52-hour workweek system as it will wreak havoc on the Korean economy.
Pi-touch Institute released a report on the economic ripple effects of the shortened workweek on Feb. 19. The report said that the new workweek system will reduce each year 400,000 jobs, slash earned income by 5.6 trillion won (US$4.96 billion), curtail real gross domestic product by 10.7 trillion won (US$9.48 billion), diminish consumption by 5.5 trillion won (US$4.87 billion), lower investment by 1.8 trillion won (US$1.60 billion) and make 77,000 companies disappear. In addition, it will destroy 235,000 skilled jobs a year, which is about 1.4 times the size of non-skilled job reduction.
The number of jobs will decrease due to the reduction of labor supply from shorter working hours and the increase in unit wages, while GDP and investment will drop because of output reduction due to job cuts.
Pi-touch Institute is a nonprofit foundation established with approval from the Ministry of Economy and Finance.
A researcher, surnamed Kim, from the institute said, “It was found that workers who work more than 52 hours a week had a high level of job satisfaction when they were paid for extra hours.” Long work hours reduce the level of job satisfaction. However, workers had a high level of job satisfaction when they had more income for extra working hours.
Kim said, “Considering the current economic situation and the outcome of our analysis, the government needs to fundamentally reconsider the new 52-hour workweek system. It should delay the implementation of the new system or even abolish it if companies are not capable of absorbing the shock.”
He added, “If it is difficult to reconsider the 52-hour workweek system, the government has to ease companies’ burden by extending the unit period of flexible work arrangements by up to one year, like other advanced countries.”