Shinsegae Group to shift to 35-hour workweek

Posted on : 2017-12-10 10:58 KST Modified on : 2019-10-19 20:29 KST
Company is the first in South Korea to cut working hours while maintaining wage levels
Emart and its labor union agreed to implement a 35 hour work week beginning in January of next year. (by Kim Seong-gwang
Emart and its labor union agreed to implement a 35 hour work week beginning in January of next year. (by Kim Seong-gwang

The Shinsegae Group, South Korea’s tenth largest chaebol, announced on Dec. 8 that it will be implementing a 35-hour workweek in January of next year, with its employees only working seven hours a day. Wages will not be cut, either. The legal workweek in South Korea is 40 hours, and this would be the first time for a chaebol to adopt a 35-hour workweek. Since Shinsegae has voluntarily taken this step to improve corporate culture while the Moon Jae-in administration is calling for a reduction in working hours, this is likely to have a major impact not only on the distribution industry but also on the South Korean business community as a whole.

Starting in January of next year, Shinsegae staff will be working a seven-hour day (not including a one-hour lunch break), going to work at 9 am and leaving work at 5 pm. Depending on the work involved, alternative schedules will be available, such as 8 am to 4 pm or 10 am to 6 pm. Since employees at E-mart branches are working morning and afternoon shifts, their working schedules will be adjusted to reduce their working time by one hour each day. The reduction in working hours will occur throughout Shinsegae’s 16 subsidiaries, which means the change will apply to more than 50,000 employees.

“South Korean culture is infamous for people working too long and took much, and this revolutionary innovation will provide our staff with a more relaxing lifestyle. We will create a corporate culture in which people can relax when they are off the clock and focus on their work when they are on the clock,” said a company spokesperson.

Shinsegae’s announcement is groundbreaking. As of last year, South Koreans worked an average of 2,069 hours a year – the longest work hours of any OECD member state except for Mexico. That was 306 more hours than the OECD average of 1,763. Work hours can be reduced by shortening the legally prescribed 40-hour workweek or by cutting down on overtime in the evenings and on the weekends.

Currently, both the government and private sector are making an effort to cut down overtime hours, but Shinsegae has gone a step further by shortening the basic workweek itself. South Korea introduced the 40-hour workweek in 2004 and still maintains it today. A 35-hour workweek is in place in France and other European countries, while in South Korea it only exists at certain small-scale startups such as JenniferSoft, which are regarded as “dream workplaces.”

Despite reducing work hours, Shinsegae plans to keep wages at their current level. To compensate, it will be shortening business hours at E-mart and other stores and increasing productivity without hiring additional workers. “We will be watching to see if the reduction in work hours is followed by expanding job responsibilities or intensifying work to increase hourly productivity,” said Yun Yun-gyu, director of employment policy research at the Korea Labor Institute.

This discussion is likely motivated by the fierce pushback expected from employees at E-mart outlets, who account for a large proportion of the Shinsegae workforce, if their meager monthly wages (around 1.4 million won; US$1280) were slashed because of the reduction in work hours.

The changes at Shinsegae are having an immediate impact on the distribution industry. “This policy of changing corporate culture is having a major effect on other companies, not only on corporate image but also on the issue of employee morale. While nothing will happen right away, other companies will start quietly reviewing these changes while keeping an eye on the mood in society,” said one source in the industry.

This is also expected to be a positive message in the current debate about reducing work hours. While Shinsegae’s 35-hour workweek is distinct from the issue of reducing work hours, which is currently the subject of a dispute between politicians and business leaders, it is significant in the sense that it offers a future direction for South Korean society. The key revision to the Labor Standards Act that is being discussed in the National Assembly would reduce the maximum hours that can be worked in a week from the current level of 68 to 52. The government is also eager to implement this revision, since it could reduce overtime hours.

“Unless we share jobs by reducing working hours, it will be impossible to achieve a groundbreaking increase in the employment rate and quality of life. If the National Assembly is unable to pass revisions to the Labor Standards Act that would reduce working hours, we will need to find a way to correct the government’s administrative interpretation [of the law],” South Korean President Moon Jae-in said recently.

When it comes to the manufacturing industry and smaller companies, however, Shinsegae’s reduction of work hours is expected to have a limited effect, because of issues including additional costs and differences in production system.

“SMEs are not prepared to reduce work hours because of their low wages. The government needs to create programs to help improve productivity and increase employment,” said Noh Min-seon, an analyst at the Korea Small Business Institute.

 

By Cho Il-joon and Kim So-youn, staff reporters

Please direct questions or comments to [english@hani.co.kr]

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