Chang-yong Lee's Bold Proposal: "Discretion Is Not Enough... Lift the 52-Hour Weekly Cap for Office Workers Earning Over 82 Million Won" (Comprehensive)

Proposal to Introduce a Korean-Style White-Collar Exemption
Managers, Professionals, and Office Workers Earning Over 82 Million Won Annually Targeted
Abolishing Weekly Working Hour Limits and Shifting to Performance-Based Compensation
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"We can no longer treat the working methods of white-collar (office workers) and blue-collar (manual workers) employees as identical. The future lies in becoming a country where white-collar workers thrive. We need reform of both working hours and wage structures."

Changyong Lee, former governor of the Bank of Korea and a distinguished professor at Seoul National University, has proposed introducing a "Korean-style white-collar exemption"—a results- and autonomy-based working hours system. He suggested that for managerial, professional, and office positions whose total annual pay exceeds 200% of the median wage, or 82 million won or more, the 52-hour workweek cap should be abolished. Instead, employees should be allowed to work autonomously and without time restrictions, focusing on performance when working, and ensuring adequate rest during extended breaks or vacations.

He emphasized that the compensation structure should also change. Rather than overtime pay for extra hours, there should be a clear salary and performance-based bonus system, awarding compensation based on merit. Lee noted that such discussions have thus far been largely limited to the semiconductor industry, but argued for expanding both the target scope and magnitude of these reforms.

Changyong Lee, former governor of the Bank of Korea, is answering questions from the press at the monetary policy direction press conference held at the Bank of Korea in Jung-gu, Seoul, on April 10. Photo by Joint Press Corps

"For Korea's Future, White-Collar Work Must Be Done Right"

At the Population Cluster Forum hosted by the National Future Strategy Institute at Seoul National University on the 6th, Lee released a paper titled "How Should Korea's Working Hours System Change?" He said, "Our country's current system still views all workers through the blue-collar frame that supported Korea's economic growth for the past 20–30 years. But for Korea to prosper going forward, white-collar workers must be motivated and productive. Yet our labor laws and regulations do not distinguish between white-collar, blue-collar, or marginal workers, and are primarily designed for large-company employees. This raises questions about whether the entire economy can continue to thrive under this structure."

He continued, "While the total annual working hours for white-collar positions could remain the same, the system should allow them to focus intensely on work as needed, with autonomy over when to work." By linking pay and bonuses to performance, he explained, it would eliminate side effects such as slacking off during the day and working overtime at night solely for extra pay.

Lee pointed out that current discretionary working hour systems are not sufficient to remedy these issues, as there are restrictions such as having to fall within legally specified job categories. As an example, he cited a foreign financial institution that, after the 52-hour workweek was introduced, reduced its Korean staff and moved key operations to Hong Kong. He added, "Even if such work is done by mutual agreement, when disputes later arise, an employee might claim that they agreed 'against their will,' which creates potential legal liability. These concerns have driven the shift."

He also addressed concerns that adopting such a system could harm health. "At the International Monetary Fund (IMF), for instance, if someone goes on a business trip for a week, they are required to take the following day off," he said, adding that it is essential to institutionalize various ways to ensure rest periods and health protection measures.

"Abolish the 52-Hour Cap and Replace Overtime Pay with Performance-Based Compensation"

The paper was co-authored by Lee; Samil Oh, Head of the Employment Research Team at the Bank of Korea's Research Department; Jinyoung Yoon, Assistant Manager, Employment Research Team; and Jinsu Han, Senior Researcher, General Investigation Team. The presentation that day was delivered by Oh. Oh stated, "With an aging population and the proliferation of artificial intelligence (AI) changing both workforce size and work methods, Korea's working hours system must evolve as well. A Korean-style white-collar exemption needs to be introduced for positions where real discretion and performance-based rewards are possible."

Oh further noted, "High-skill, knowledge-based roles in R&D, IT, and finance are particularly dependent on creativity and immersion, and intensive work is vital in the global competition. In industries where knowledge-based workers comprise a larger proportion, there is a clear positive correlation between work hour flexibility and per capita productivity."

The potential target population is estimated at approximately 1.49 million workers, or 10.8% of all regular employees. According to Oh, "Among managers, professionals, and office clerks earning more than 200% of the median wage, 79% of managers, 19% of professionals, and 16% of office workers meet this threshold." Around 42% of these potential candidates are employed in knowledge-based service industries. For these workers, performance-based bonuses account for an average of 18.5% of total compensation, indicating a foundation for adopting results-linked pay structures.

In the United States, the white-collar exemption exempts managerial and professional employees above a certain income threshold from requirements to provide overtime pay. Japan, in 2019, introduced a "highly professional system" for highly skilled professionals earning more than 10.75 million yen annually. Oh commented, "In Japan, the vast majority of workers (87.7%) reported satisfaction, especially in terms of performance and autonomy." However, he cautioned that 68.5% indicated working longer hours, highlighting the need for accompanying health protection measures.

To design a Korean-style white-collar exemption, it was seen as necessary to first exclude these workers from working hour and overtime pay regulations—specifically, removing the 40-hour and 52-hour weekly limits (Articles 50 and 53 of the Labor Standards Act) and exemptions from extended, night, and holiday premium pay (Article 56).

In addition, analysts underscored the need for clear and regularly updated criteria for eligible positions. Oh suggested, "The target should remain those earning at least 200% of the median wage for regular employees, but adjustments should be made periodically to account for wage growth and changing working conditions. Furthermore, jobs where the employer still substantially controls work hours and methods should be excluded, reflecting actual autonomy and measurable performance."

On this basis, establishing a system for performance-based compensation is essential. The criteria and calculation method for performance pay should be clearly stated in employment contracts. Existing guaranteed pay should be maintained, with pre-agreed performance linked as additional rewards. Sufficient health protection measures must also be ensured. Oh stated, "Guaranteeing minimum continuous rest periods, requiring annual leave and vacations, mandatory health checks and consultations for long work hours, and employer health protection obligations are all necessary."

On the 6th, at Seoul National University in Gwanak-gu, Seoul, participants including Lee Changyong, former Governor of the Bank of Korea (pictured right), are taking a commemorative photo at the Population Cluster Forum hosted by the National Future Strategy Institute at Seoul National University. Photo by Yuri Kim

"Income Loss Due to 52-Hour Cap Has Been Concentrated Among Low-Income Earners"

Over the past 20 years, working hours have steadily decreased in Korea. The annual working hours fell from 2,447 hours in 2000 to 1,846 hours last year. The gap between Korea and the OECD average also narrowed from 687 hours to 141 hours. However, Korea's growth potential has declined rapidly. According to OECD figures, Korea's potential growth rate fell from 2.5% in 2021 to 1.9% last year—a drop of 0.6 percentage points, which is a larger decrease than that seen in the G7 countries (–0.4 to +0.5 percentage points) over the same period.

Oh summarized, "The way we work now is characterized by low productivity with long hours, rigid working-hour frameworks, low rates of vacation usage, and limited use of flexible work systems." While working hour reduction through the introduction of the 52-hour cap has decreased overtime, the resulting income loss has been concentrated among low-income earners. Companies with a high proportion of performance-based pay have seen a negative impact on productivity.

He said, "Korea's potential growth rate per working hour (GDP) is below the OECD average. There is a structure in which long hours compensate for low productivity. Standard work patterns—Monday to Friday, 9 a.m. to 6 p.m.—are firmly entrenched, and flexible work that would allow for intense work followed by adequate rest is lacking."

Rigid and standardized working hours were cited as the main issue. "Although various flexible work arrangements exist, their actual adoption remains low due to prerequisites such as pre-fixed schedules, short application periods, limited job categories, and legal uncertainty," Oh explained. "Paid leave usage in Korea stands at 75%, second lowest among 12 major countries after Japan (63%). Not only is leave not being properly used, but the rate of taking extended vacations is also extremely low."

There needs to be caution toward blanket reductions in working hours, and a culture of "resting properly when you rest" must take root. He added, "If the rate of vacation use rises from 75% to 95%, annual working hours could decrease by about 31 hours. This is why a Korean-style white-collar exemption is necessary."

During the general discussion, when some argued for caution in further mandated working hour reductions, Lee said, "If a four-and-a-half-day workweek is introduced, consideration must be given to how to ensure income protection for low-income earners who want to work more but cannot. Otherwise, only those in the middle will be considered." Oh added, "With a 4.5-day workweek, we also need to think about whether workers are willing to accept lower income in line with reduced hours, or whether it can be demonstrated that the same level of work output can be achieved in fewer days."

This content was produced with the assistance of AI translation services.