Employment, sales and labor productivity fell in manufacturing and small businesses
Service sector and large firms adapted through flexible work arrangements and capital investment
KDI urges labor-management consensus to balance shorter hours with productivity gains
The Korea Development Institute has found that the 52-hour weekly work cap has had a negative impact on employment, sales and labor productivity in the manufacturing sector and at small and midsize businesses, while leaving the performance of service-sector firms and large companies largely unaffected — a divergence that highlights how the regulation's effects vary by industry and company size.
The findings come from a KDI study titled "Working-Hours Policy in an Era of Population Decline," which People Power Party lawmaker Park Sung-hoon obtained from the institute Wednesday. Conducted last year, the research is scheduled for public release in the fourth quarter of this year.
The analysis found that employment, revenue and labor productivity indicators all declined in manufacturing and at smaller businesses. KDI attributed the trend to the working-hours cap constraining firms' ability to adjust labor inputs flexibly.
Service-sector companies and large businesses fared differently. They responded to the regulation by adopting flexible work arrangements and increasing capital investment, which allowed them to maintain their overall performance.
KDI recommended that rather than tightening uniform, rigid caps, the government should encourage companies to manage working hours autonomously based on labor-management agreements. Through measures such as flexible work arrangements, the institute said, "it is necessary to pursue both a reduction in working hours and an improvement in labor productivity simultaneously."
"The KDI research confirms that a one-size-fits-all working-hours regulation does not affect all businesses equally," Park said. "Particularly given that the burden falls disproportionately on small and midsize manufacturers that lack the workforce and capital to adapt, we need to consider a more flexible working-hours system that reflects the realities of different industries and company sizes."
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