[Saving SMEs through Labor Flexibility] ② Rigid working hour regulations actually disrupt 'work-life balance'

The 'Overwork Trap' Caused by Uniform Working Hour Regulations
SMEs' Utilization of Flexible Work Arrangements Less Than One-Third That of Large Companies

Editor's NoteLabor regulations such as the 52-hour workweek, which were introduced with the aim of creating advanced working conditions, continue to burden both companies and employees across various industries. The problem is becoming increasingly recognized, especially as small and medium-sized enterprises (SMEs) face significant challenges due to a prolonged economic downturn and difficulties in securing labor. Amidst this, as the Lee Jaemyung administration accelerates the introduction of a '4.5-day workweek without wage reduction,' anxiety is mounting among SMEs, which are both the backbone and the weakest link of the economy and industry. There is a growing call to urgently consider a flexible and autonomous work culture that can overcome the rigid and uniform regulations that disproportionately affect smaller and less established companies. Asia Economy seeks solutions based on the realities of SMEs on the ground.

[Saving SMEs through Labor Flexibility] ① Even 'century-old businesses' cannot withstand labor regulations

[Saving SMEs through Labor Flexibility] ② Rigid labor regulations actually undermine 'work-life balance'

[Saving SMEs through Labor Flexibility] ③ Criminal penalties even after labor-management agreement?no other country does this

[Saving SMEs through Labor Flexibility] ④ The added burden of the 4.5-day workweek could widen the gap between large and small companies

[Saving SMEs through Labor Flexibility] ⑤ "SME jobs are the backbone of industry and must be protected through flexibility and autonomy"

Park Seongtae (pseudonym), who works at a manufacturing company in Incheon, leads a difficult daily life. Recently, he started taking on delivery work after his regular job. Unless he moves quickly after work, it is hard to secure delivery gigs. Only around 10 p.m., when orders slow down, does Park finish his day and head home. He needs to combine his monthly salary from his main job with his delivery side job earnings just to barely cover living and education expenses each month.

This change occurred after the company began strictly enforcing the 52-hour workweek, resulting in a more than 30% drop in his income. His wife, who used to be solely responsible for childcare and household chores, also had to enter the workforce. Park said, "Previously, the standards for overtime were not so strict, so I could work overtime and on holidays. But now, since the company must strictly adhere to the 52-hour rule, they keep the weekly hours at about 50 to leave some leeway for sudden surges in orders." He added, "If you calculate it this way, the actual working hours are reduced by about 50% when you consider overtime premiums."

This has led to a vicious cycle in which his main job performance suffers due to his side job. Park said, "If I could have worked extra hours at my main job, I could have earned more money. But now, commuting to another workplace after work increases my time and expenses, and I can't work in good condition the next day." He shakes his head at the idea that the 52-hour workweek is meant for "work-life balance." Park argues that uniform regulations on working hours are instead pushing workers into a "trap of overwork."

◆ SMEs Trapped in 'Overwork' Due to Side Jobs After Work = According to the SME community on June 24, a survey conducted last year by the Korea Federation of SMEs among manufacturing workers in Busan and Ulsan found that nearly half?41.3%?reported taking on a second job or having a cohabiting family member enter the workforce after the expansion of the 52-hour workweek. Meanwhile, 50.7% of workers said they needed extended working hours to increase their wage income.

A similar trend appeared in another survey conducted by the Federation one year after the full implementation of the 52-hour workweek. Among 300 workers at small shipbuilding companies, more than half?55.0%?said their work-life balance had worsened. Only 13.0% said it had improved. When asked why their quality of life had declined despite reduced working hours, 93.3% cited "reduced economic stability due to lower wages from shorter working hours." Additionally, 35.8% said they had to take on side jobs to make up for lost overtime pay, which led to less leisure time.

◆ SME Utilization of Flexible Work Arrangements Less Than One-Third That of Large Companies = According to a recent report by the Korea Small Business Institute titled "Trends in Working Hours and Utilization of Flexible Work Arrangements in SMEs," the proportion of wage workers at SMEs with fewer than 300 employees who worked more than 52 hours a week (including both main and side jobs) dropped from 19.6% in 2014 to 6.0% in 2024, a decrease of 13.6 percentage points over the past decade.

The proportion of those working 40 hours or less per week rose from 45.6% in 2014 to 73.9% in 2024, an increase of 28.3 percentage points. Among workers aged 29 and under, the proportion working 40 hours or less per week was highest at 76.7%, while those working more than 52 hours was lowest at 5.0%. This means that even without the 52-hour cap, working hours at SMEs have been steadily decreasing, especially among younger generations.

No Minseon, a research fellow at the Korea Small Business Institute, explained, "SMEs are naturally having to reduce working hours, and employers can no longer force long hours as in the past. Since perceptions of long working hours are changing, especially among young people, the total amount of working hours is likely to decrease further in the future."

In contrast, as of last year, only 11.5% of SME wage workers used flexible work arrangements, less than one-third the rate of large company workers (36.6%). The smaller the company, the less likely it was to use flexible work arrangements. By type, the utilization rates were all below 5%: staggered working hours (3.6%), flexible working hours (2.6%), selective working hours (1.8%), reduced working hours (1.3%), and remote or telecommuting (1.2%).

Notably, since the 52-hour workweek was fully implemented for SMEs in 2021, the use of flexible work arrangements has continued to decline. The rate of flexible work arrangement adoption at SMEs rose by only 3.5 percentage points compared to before COVID-19, while it increased by 6.9 percentage points at large companies. Although working hours are decreasing at SMEs, the gap with large companies is widening in terms of practical systems such as flexible work arrangements.

Research fellow No added, "Many SMEs cannot survive if the law simply orders them to reduce working hours. For these companies, breathing room must be provided based on labor-management agreements. The activation of flexible work arrangements?such as staggered working hours, flexible work systems, and selective working hours?must come first."