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A shorter workweek in South Korea, 2001 to 2011: the economic impact

In 2001, South Korea had 21.57 million workers who worked an average of 50.4 hours per week. Total working hours per week were 1,087,220,000 worker-hours. In 2011, South Korea had 24.25 million workers who worked an average of 43.9 hours per week. Total working hours per week were 1,064,310,000 worker-hours. During this ten-year period, employment increased by 12.3 percent, average working hours decreased by 12.8 percent, and total worker-hours per week decreased by 2.1 percent. Basically, this describes the change from a six-day to a five-day work week. These numbers come from the Korea Labor and Society Institute.

“The labor market now has more people working fewer hours in less stable jobs,” wrote reporter Ryu Yi-geun.

“Since the implementation of the five-day workweek, total working hours have decreased while number of jobs steadily increased, showing that a decline in working hours led to an increase in jobs.

Korea Labor and Society Institute (KLSI) issued a report on the economically active population on August 28. According to the data, the total number of workers in Korea increased 12.3% from 21.57 million in 2001 to 24.24 million in 2011.

During the same period, the weekly total working hours fell from 1.8722 billion to 1.6431 billion. This new phenomenon is thought to be a result of a 12.8% decline in working hours per person from 50.4 hours per week to 43.9 hours per week.

Hwang Soo-kyung of the Korea Development Institute (KDI) said, “Aggregate demand (number of labor force multiplied by working hours per person) in the labor market has decreased since the end of last year. The increase in employment may be attributable to the reduction in working hours,” she said.

It seems that the implementation of five-day workweek (40 hours per week) was critical in shortening working hours, which then resulted in higher employment. Statistics from KLSI show that in the case of a 10% decrease in working hours, there is a corresponding 9.7% increase in employment.

“Since the five-day workweek effect is wearing out, we need to find a new way to reduce working hours. We should expand the five-day workweek targets to work places with fewer than five employees, and legally prohibit overtime surpassing 52 hours,” suggested Kim Yu-seon from KDI.

Presently, only a little more than half of workers (53.5%) are the privileged targets of the five-day workweek (according to a data from last year August). Also, 21.8% of workers (3.8 million) work overtime (longest to be 52 hours per week by law).

But there are drawbacks of expanding employment by reducing working hours. The growth of part-time employment is one of the most evident defects. During the last decade, the number of part-time workers has increased from 0.81 million (6.6% of all wage earners) in 2002 to 1.7 million (9.7%) last year, despite the decline of temporary workers. Part-time and unskilled workers have been used by companies seeking to fill up the reduced working hours. Hwang said, “While the enforcement of the five-day workweek opened more jobs, we must acknowledge the fact that the number of short-time workers has also grown.”

Low growth rate despite a recent job boom can be explained in a similar context. Employment in jobs that require highly skilled employees such as manufacturing business is decreasing while employment in jobs with comparatively low value-added service industry such as health and welfare is increasing. Along with this, the change in the labor market supply is also critical. A person in Ministry of Strategy and Finance claimed, “One of the reasons why employment keeps rising despite the low growth rate is because older people are starting to participate in the labor market.”

Translated by Yoo Hey-rim, Hankyoreh English intern

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