Former Bank of Korea Governor Lee Chang-yong proposed the introduction of a "Korean-style White Collar Exemption" that would not apply the 52nd-hour weekly work limit and overtime pay regulations to high-income, highly skilled white-collar workers. The rationale is that uniform working hour regulations fail to boost productivity and may lead to income reductions for low-income workers.
According to the Bank of Korea and other sources on the 7th, former Governor Lee, along with Oh Sam-il, Ko Yong-yeon-gu (Team Lead) at the Bank of Korea's Research Department, Section Chief Yoon Jin-young, and Researcher Han Jin-soo, presented research findings titled "How Should We Change the Working Hours System?" containing this proposal at the Population Cluster Forum of the Seoul National University Institute for Future Strategy on the previous day.
The research team argued that working hour regulations should be applied differently to highly skilled jobs with high job autonomy and measurable performance, such as in research and development (R&D), information technology (IT), and finance.
Potential targets are workers in managerial, professional, and office roles whose total annual salary is approximately 82 million won or more, which is about 200% of the median wage of regular employees. This group numbers approximately 1.49 million people, accounting for 10.8% of all regular employees. However, jobs where workers find it difficult to determine their own working hours due to shift work and other factors should be excluded.
For these individuals, the team proposed a plan not to apply the Labor Standards Act's 40-hour weekly limit, the 52nd-hour weekly cap including overtime, or regulations on additional pay for extended, night, and holiday work. Instead, they suggested maintaining existing fixed salaries while establishing an additional compensation system based on performance, alongside health protection measures such as minimum continuous rest periods and mandatory vacation usage.
Former Governor Lee pointed out that the current working hours system is tailored to a past labor market centered on manufacturing. He stated, "For our country to prosper in the future, it is time for white-collar workers to work hard," adding, "A system must be created where people earning 150 million won each truly work hard and lead the nation."
He further added, "We must give flexibility so that white-collar workers can run hard and protect their own health," stating, "I believe there is no national development if we manage white-collar workers in the same way as blue-collar workers."
The research team analyzed that since the introduction of the 52nd-hour workweek cap, overtime hours and overtime pay decreased by 7.7% and 6.7%, respectively. However, no evidence was found indicating that the reduction in working hours led to improved productivity.
In the research team's analysis, the trend slope of per capita productivity dropped from 0.44 to 0.30 after the introduction of the 52nd-hour system. Firm-level data also showed no statistically significant impact on per capita productivity.
Notably, the negative impact on productivity was greater in companies with a higher proportion of performance-based pay. Companies with a performance pay ratio that is 1 percentage point higher showed a 2.5 percentage point lower increase in per capita value added over a four-year cumulative period. The research team explained that applying uniform working hour regulations to jobs where the correlation between performance and working hours is low can constrain productivity.
Income reductions due to shortened working hours were concentrated among low-income workers. Overtime hours and overtime pay for workers in the bottom 20% income bracket decreased by 15.5% and 15.9%, respectively, while total salary fell by 1.3%. In contrast, no statistically significant decrease in total salary was observed among high-income earners.
Consequently, the research team argued for caution regarding plans to further shorten statutory working hours to a level equivalent to a 4.5-day workweek.
The research team stated, "As seen with the 52nd-hour system, the productivity-enhancing effect of shortened working hours has not been confirmed, and income reduction shocks have been concentrated among low-income workers with weak bargaining power," adding, "Among major countries, excluding France, there is no country where statutory working hours fall below 40 hours per week."
Instead, they proposed the need to reduce actual working hours through measures such as expanding vacation usage. The analysis suggests that if the paid leave utilization rate of domestic workers were raised from the current 75% to 95%, annual working hours could be reduced by approximately 31 hours, or about four days based on an eight-hour workday.
The research team noted, "Due to aging and the spread of artificial intelligence (AI), the scale of the workforce and work methods are changing rapidly," concluding, "There is a need to reform the working hours system so that when working, performance and autonomy are increased, and when resting, people can rest properly."
in ECONOMY
