Bank of Korea researchers present findings at Seoul National University forum

Overtime pay fell 6.7% after 52-hour cap took effect

Researchers propose Korean-style white-collar exemption

First research release since former governor's departure

Former Bank of Korea Governor Lee Chang-yong delivers his farewell address at a departure ceremony held at the bank's annex building in Jung-gu, Seoul, on April 20. [Herald DB]
Former Bank of Korea Governor Lee Chang-yong delivers his farewell address at a departure ceremony held at the bank's annex building in Jung-gu, Seoul, on April 20. [Herald DB]

Former Bank of Korea Governor Lee Chang-yong and BOK researchers have proposed exempting certain managerial and professional workers earning 82 million won ($60,400) or more annually from the 52-hour weekly work cap and overtime pay requirements.

Oh Sam-il, head of the employment research team at the BOK's research department, presented the findings Tuesday at a forum titled "How Much and How Should We Work in the Era of Demographic and AI Transformation," hosted by Seoul National University's National Future Strategy Institute at the university's Woo Suk Economics Building. Lee, now a special professor at Seoul National University, also participated in the research.

The researchers said that as aging demographics and the spread of AI are rapidly transforming the labor environment, policymakers should exercise caution before uniformly cutting the statutory workweek below the current eight hours a day and 40 hours a week.

The team found that since the 52-hour cap was introduced, overtime hours and overtime pay fell 7.7 percent and 6.7 percent, respectively. The income shock was concentrated among lower-wage workers — those in the bottom income bracket saw overtime hours and overtime pay drop 15.5 percent and 15.9 percent, respectively.

Among high earners, however, no significant reduction in total pay was observed. The cap also showed no meaningful improvement in per-worker productivity. Companies with a higher share of performance-based pay saw more negative productivity effects, raising the possibility that performance-driven work clashes with uniform working-hour rules.

In response, the researchers proposed introducing a Korean-style white-collar exemption for roles in research and development, IT and finance — fields where performance can be measured and workers have high job autonomy. The system would exempt qualifying managerial and professional workers above a certain pay threshold from mandatory overtime pay obligations.

The proposed eligibility threshold covers managerial, professional and clerical workers whose annual total pay reaches at least 82 million won — equivalent to 200 percent of the median wage for full-time employees. The researchers estimated the eligible pool at about 1.49 million workers, or 10.8 percent of all full-time employees.

However, the researchers said the exemption from the 52-hour cap and overtime, night and holiday pay premiums under the Labor Standards Act should apply only to workers who can genuinely determine their own working hours and methods and whose performance can be measured. They also called for a performance-based compensation system to replace the overtime premiums, along with safeguards to protect workers' health.

"Rather than limiting the exemption to specific regions or industries, a broader approach based on job type, income level and work autonomy is needed," Oh said.

The researchers also proposed boosting vacation use as an alternative to cutting statutory hours, arguing that raising the paid-leave utilization rate from the current 75 percent to 95 percent could reduce annual working hours by about 31 hours, or roughly four working days.

"We should be cautious about uniformly cutting the eight-hour day and 40-hour week further," Oh said, "but efforts to reduce actual working hours through a culture of taking proper rest must continue."

At the forum's discussion session, Lee said South Korea's labor system remains anchored in a blue-collar framework shaped during the country's manufacturing-led growth era, and called for a separate set of labor rules suited to white-collar workers.

"For our country to prosper going forward, white-collar workers need to work hard," he said. "A system must be created where people earning 150 million won truly put in the effort and drive the country forward." He added that white-collar workers should be given the flexibility to work hard and manage their own health, and said, "I don't think the country can develop if white-collar workers are managed the same way as blue-collar workers."

Lee also said that simply pushing to cut working hours without presenting a way to protect the income of lower-wage workers would amount to thinking only of workers in the middle.

Lee said current arrangements such as discretionary work schemes fall short of providing adequate labor flexibility. He cited cases in which some foreign financial firms reduced their South Korean headcount and shifted operations overseas after the 52-hour cap was introduced, pointing to the legal uncertainty surrounding long working hours as a problem even after labor-management agreements are reached. "There is no reason to hire high-skilled, high-paid workers in Korea when that kind of legal risk exists," he said.


kimstar@heraldcorp.com