Lee presented a report titled "How Should the Working-Hours System Be Changed?" on Oct. 6 of the Institute for Future Strategy's population cluster held at Seoul National University in Gwanak-gu, Seoul. He co-authored the report with Oh Sam-il, head of the employment research team at the BOK's Economic Research Institute. Lee, whose term ended in April, is serving as a distinguished professor at Seoul National University, his alma mater, where he once taught as an economics professor. It is unusual for a BOK governor to return to academia immediately after leaving office and continue research with central bank staff.
According to the report, the productivity gains expected from shorter working hours shrank as hours fell under the 52-hour cap. Cutting working hours is premised on the idea that workers who rest adequately and work efficiently are more productive than those putting in long hours. But when the researchers analyzed the period after the 52-hour cap took effect, the trend slope of productivity per worker fell to 0.30 from 0.44, meaning the pace of growth actually slowed. An analysis of establishment-level data also found no statistically significant effect on productivity per worker.
The 52-hour cap was found to have pushed productivity down particularly at companies with a high share of performance-based pay. At firms where performance pay accounted for 1 percentage point more of compensation, the increase in value added per worker over four years was 2.5 percentage points lower.
Income losses were also concentrated among low earners. Under the 52-hour cap, workers in the bottom 20% of the income distribution saw overtime hours and overtime pay each fall 16%, leaving total pay down 1.3%. No significant decline in total pay was found among high earners.
"The current 52-hour system is applied rigidly to both white-collar workers, who perform their duties based on expertise and autonomy, and traditional blue-collar production workers," Lee said.
Lee stressed that easing regulations and granting autonomy to white-collar workers, who need to work intensively in a globally competitive environment, would strengthen the Korean economy's competitiveness. "For Korea to prosper going forward, this is the time for white-collar workers to work hard," he said. "We need a system in which people earning 150 million won work really hard and that drives the country forward." He added: "We should let white-collar workers run hard and give them the flexibility to look after their own health. I believe there is no national development if we manage white-collar workers the same way we manage blue-collar workers."
He also voiced opposition to proposals now under discussion to cut statutory working hours to the equivalent of a 4.5-day week. "As confirmed with the 52-hour system, shorter working hours have not been shown to raise productivity, and the income shock was concentrated among low-income workers with weak bargaining power," the researchers said. "Among major economies, no country other than France has statutory working hours below 40 hours a week."
The researchers also argued that caution is needed in uniformly cutting statutory working hours below the current eight hours a day and 40 hours a week at a time when the labor environment is changing rapidly because of population aging and the spread of artificial intelligence.
