SEOUL, July 4 (UPI) -- South Korea's banks and other major financial institutions are to switch to a five-day workweek this month, amid warnings that the shorter workweek would have a negative impact on businesses and exports.
The new system that takes Saturdays off would force a dramatic change in the life and working style in the country, especially if the five-day standard workweek spreads to the public and corporate sectors, as expected.
South Korea is the only Organization for Economic Cooperation and Development member that has a six-day workweek schedule, which includes a half-day on Saturdays.
South Koreans work an average 47.9 hours a week, well above many other countries, including Taiwan, where the average is 44.6 hours; the United States, 37.4 hours; Germany, 42.9 hours; and Japan, 36.3 hours, according to recent reports from the Ministry of Labor.
Bank employees, numbering 80,000, welcomed the cut in the working week. "Korean workers need to live more humanely," said Park Kwang-woo, a policy chief at the Korean Confederation of Trade Unions, the country's largest labor group. The five-day workweek system would improve the quality of life and creativity of workers and help stimulate domestic consumption, he said.
Some analysts say the move to switch to a five-day workweek opens critical opportunities for leisure-related industries and boost the country's economy. The private Samsung Economic Research Institute said the five-day workweek will increase domestic consumption by 10 percent, boosting the economic growth by 0.57 percent.
The central Bank of Korea predicted that the shorter workweek would generate $2.2 billion worth of product value annually. The new system will boost tourism expenditures by 10 percent and create 74,064 jobs, the bank said.
The Korea Leisure Industry Consulting said the domestic leisure industry is expected to grow into a $33.5 billion market by 2010 as a result of the shorter working hours.
"We are going to see the domestic tourism industry taking a leap buttressed by the introduction of the five-day workweek from July," said Lee Kang-wook of the Korea Tourism Research Institute.
Automakers are enjoying brisk sales of sport utility vehicles thanks to the shorter workweek scheme. "Our sport utility vehicle sales have been rising about 40 percent from a year ago because more companies are adopting a five-day workweek," said Ssangyong Motor spokesman Chung Moo-young, adding its first half sales were the highest since the carmaker was founded in 1954.
"No doubt, the shorter workweek will eventually contribute to economic growth by improving the country's business culture," said Lee Won-duk of the Korea Labor Institute.
But business leaders have voiced concerns that the shorter workweek would reduce corporate profitability due to production decreases and additional expenses. Critics said the new system would cause an average 19.8 percent increase in expenses, including labor and welfare costs, which would in turn necessitate an average 15.8 percent hike in product prices.
"The five-day workweek would deteriorate Korea's economic fundamentals as it is most likely to hurt competitiveness of exports, which account for one third of gross domestic product, and force local businesses to leave Korea," said Lee Jae-woong, a professor at Sungkyunkwan University.
"The five-day workweek is not desirable for now as it will have a far-reaching impact on out economy," said Cho Nam-heung, vice president the Korean Employers Federation.
The new system would deal a serious blow to small companies that are already suffering from manpower shortages, said Kim Young-soo, the head of the Korea Federation of Small and Medium Business, citing a survey that about 98 percent of domestic small firms are opposed to the new workweek system.
The Federation of Korean Industries, an influential business lobby, is calling for the government to implement the five-day workweek as an option and not as forced law to give firms here time to adjust and find ways to make up for the losses. The Korea Chamber of Commerce and Industry said the five-day workweek will make the country's actual non-work days reach 165 to 175 days a year, the highest level in the world.
But the government vowed to push for the five-day workweek in all sectors. "The government would encourage small and medium industries to adopt a five-day workweek, by providing incentives, including lowering their contributions to the social security fund," a labor ministry official said.
The five-day workweek system was initiated by President Kim Dae-jung, who elected in 1997 on reform and welfare platforms. The government has played a mediating role between labor and management for more than two years to help them break a compromise over the controversial five-day workweek.
But the two sides have failed to reach a final agreement due to differences over whether to cut wages and paid vacations in return for the shorter workweek.
The five-day workweek system, which calls for reducing the legal working hours from the current 44 per week to 40, has been the subject of one of the biggest disputes between labor and management. The labor side has wanted to ensure more compensation for reduced work hours and more paid leave, while management is trying to minimize them.
In a bid to revitalize the stalled labor-management negotiation, the government helped banks and financial institutions adopt the five-day workweek. The government plans to take the new system to effect in all sectors by 2010.
"Korea is no longer the country that it was 20 years ago. It certainly is high time for the country to introduce a shorter workweek, a trend gaining momentum throughout the world," the labor ministry official said.
