The New Government Must Prioritize Improving the 'Serious Accident Punishment Act'

Survey of 500 Top Companies by FKI... 60% Say 'Labor Laws Are a Burden on Management'
Most Impactful Labor Policy on Companies Identified as '52-Hour Workweek'

[Asia Economy Reporter Lee Hye-young] '52-hour workweek system, Serious Accident Punishment Act, minimum wage increase, and discussions on retirement age extension...'

A survey released on the 17th revealed that major labor laws in Korea are placing burdens on corporate management activities. The business community identified the Serious Accident Punishment Act as the top labor issue that the new government should improve.

According to a survey conducted by the Federation of Korean Industries targeting HR and labor practitioners from the top 500 companies by sales, 60.0% responded that Korea's labor laws "pose a burden on corporate management."

The top labor issue that the new government should address was the "Serious Accident Punishment Act" (28.6%). This was followed by easing regulations on working hours (23.8%), improving the minimum wage system (21.9%), and easing regulations on fixed-term and dispatch labor laws (11.4%).

The business community expressed concerns that the Serious Accident Punishment Act, which will be fully enforced on the 27th, will cause significant confusion on-site due to ambiguous legal provisions and excessive punishment levels, urging the new government to prepare improvement measures.

The Federation of Korean Industries stated, "Although the enforcement decree of the Serious Accident Punishment Act has been prepared and explanatory materials distributed, the industrial sites still report difficulties in understanding the specific contents," adding, "It is necessary to resolve the ambiguity of the law and ease excessive punishment levels to minimize confusion."

The labor policy with the greatest impact on companies is the '52-hour workweek system'

Among recent labor policies, the one that had the greatest impact on companies was the '52-hour workweek system' (52.4%). This was followed by 'minimum wage increase' at 44.8% and the 'Serious Accident Punishment Act' at 41.9%.

The 52-hour workweek system has been applied since July 2018 to workplaces with 300 or more employees and public institutions, and since July last year, it has been expanded to workplaces with 5 to fewer than 50 employees.

The Federation of Korean Industries pointed out, "The 52-hour workweek system was implemented uniformly without distinction by size or industry, causing a significant shock in industrial sites," and suggested, "Flexible operation of working hours is needed by expanding the unit period of the flexible working hours system to one year, introducing a working hours account system like Germany that allows autonomous adjustment of working hours as needed, or adopting the U.S. 'white-collar exemption' that excludes high-income earners from working hours regulations."

The Federation analyzed that the minimum wage rose by 29.1% in 2018-2019, rapidly increasing in a short period, which had direct and indirect effects on large corporations' management. This appears to be due to some industries presenting the minimum wage increase rate as a standard for wage increases during collective wage negotiations.

"Minimum wage increase and retirement age extension discussions will have a significant impact this year"

The labor issue expected to have the greatest impact in 2022 was the 'minimum wage increase' (38.1%). 'Discussions on retirement age extension' (35.2%) and 'results of working hours exemption review' (31.4%) were also expected to have considerable influence.

The Federation of Korean Industries stated, "The annual recurring labor-management conflicts over minimum wage decisions impose a heavy burden on companies," adding, "This year, discussions on retirement age extension, such as continuous employment systems, are expected to begin, and a review to reset the exemption limits on working hours for union full-time officials is being held for the first time in nine years, drawing high attention as a new labor issue."

The scene of Myeongdong street in Seoul on the 13th / Photo by Hyunmin Kim kimhyun81@

The biggest external variable is COVID-19... "Labor system flexibility is necessary"

Among external variables expected to have the greatest impact aside from labor-management issues, COVID-19 was overwhelmingly cited at 71.4%. The spread of ESG (environment, social, governance) was 35.2%, carbon neutrality 33.3%, and supply chain instability 32.4% followed.

Meanwhile, companies recognized 'expansion of flexible work systems' (46.7%) as the most important focus in HR and labor this year. 'Stabilization of labor-management relations' (42.9%) and 'securing new talent' (32.4%) were also highly noted.

The Federation emphasized, "With the experience of the COVID-19 pandemic, work forms such as flexible work systems and telecommuting have diversified, but the existing uniform and rigid labor laws have limitations in responding," adding, "It is necessary to not only flexibilize working hours but also comprehensively overhaul outdated labor laws to suit the Fourth Industrial Revolution era."

Additionally, 21.0% of respondent companies evaluated labor-management relations as unstable last year, and 21.9% forecast instability this year as well.

Choo Kwang-ho, head of economic policy at the Federation of Korean Industries, stated, "In recent years, labor regulations have been rapidly strengthened, causing companies to feel burdened in their management activities," and added, "Despite the strengthening labor regulations, large corporations seem to be making efforts to stabilize labor-management relations more than ever to avoid unnecessary disputes."