More Burdens on Small and Medium Companies Due to Lack of Labor

“When a five-day workweek system is induced without reducing the monthly and yearly allowances or the other vacations, small and medium companies like us will be crucially affected by. There is no way to make a profit because selling price is continuously down due to severe competition.” President of Saehan Enertech Co. that produce battery Han Seung-woo said May 8, “When big enterprises adopt a five-day workweek system, small and medium companies can not but adopt the system. However, small and medium companies will face very difficult situation unless there is a grace period or a differentiated terms and conditions.” The president Han also mentioned that he was considering to move the factories to China saying, “We worry because the government`s policy seems to stand on the side of the Labor Unions.”

As big enterprises like Samsung and LG adopts day off system on Saturdays, the other big enterprises and small companies are struggling to consider the countermeasures for a five-day workweek system. The amendment of the labor-related laws was dissipated last year after the fruitless talks among the employees, employers and government. But the amendment of the labor-related laws is going to reconsider in discussion from last month being hosted by the Congress Environmental Labor Committee. After then, the Labor Unions for the big enterprises such as Hyundai Automobile Company, Doosan Industrial Company and the Metal Labor Union under the Democratic Labor Consolidated Union demanded to adopt the five-day workweek system with never give up intention. Thus, the management of those companies has more stranded. The Labor Unions showed strong intension that they would not give up any one of the breaks on monthly and yearly, all kinds of vacation, the regular payment and a five-day workweek system.

Samsung and LG have given day-off on Saturdays to the workers using the monthly and yearly breaks. And they have the policy to follow the request of the Labor Unions if the Labor-related Law would be made. As Samsung adopted day off on Saturdays starting from May, many of the cooperating companies of Samsung Electronics are adopting day off on Saturdays and holidays by using the monthly and yearly breaks.

On the other hand, the other big enterprises and the small and medium companies are struggling because they have not many choices while they envy Samsung’s decision for a five-day workweek system. A staff in Hyundai Automobile Company said, “It is nonsense that a company tries to compromise before the law was made even though the Labor Union presented a five-day workweek system on issue.”

Therefore the big enterprises hope that the government and congress may compromise the demand from the Labor Unions before the management would be overpowered by the Labor Unions. However, the small and medium companies don`t afford to accept the compromising measures.

The Policy Department director in the Korea Employers Federation, Lee Dong-eung said, “The small and medium companies mostly operate for 56 hours a week which is consisted of 44 hours of the currently legal labor hours and 12 hours a week of the excessive labor hours. When the legal labor hours are reduced, the expense will go up. And the labor and equipments are needed to expand. However, most of those companies cannot adopt it because they are already having troubles in expense of labor and capital supply.” The director Lee added, “This spring will be the crucial moment to overcome the crisis because the Labor Unions try to take an advantage to reduce labor time by the dealing privately or in group meeting.”

Yeon-Su Shin ysshin@donga.com