Analysis of Key Labor Policy Pledges of the New Lee Jae-myung Administration
President Lee Jae-myung has consistently advocated for a transition to a “labor-centered economy” since before his inauguration. Accordingly, the new administration’s labor policies are expected to have a direct impact on corporate operations. The major policy pledges are summarized as follows:
First, the administration plans to legislate restrictions on the use of comprehensive wage systems. This would limit practices where fixed overtime pay is bundled into base salaries, and instead mandate that wages be paid based on actual hours worked. Such a change would require significant adjustments to HR and labor management systems, especially in industries like IT, platform services, and finance where comprehensive wage schemes are common.
Second, a standardized wage index for implementing “equal pay for equal work” is expected to be introduced. This involves the public disclosure of wage levels by job category and a gradual shift from seniority-based pay structures to performance- or role-based compensation systems. For large corporations and manufacturing companies with complex personnel structures, job analysis and pay system reforms may become necessary.
Third, a revision to the Trade Union and Labor Relations Adjustment Act is being pursued to strengthen the bargaining rights of subcontracted and youth workers. This change would enable subcontracted workers to demand collective bargaining directly with the primary contractor. Companies with multi-tiered outsourcing structures will need to closely manage labor relations risks.
Fourth, the formalization of the employee representative system is also a key policy agenda. The government plans to clearly define the selection procedures, qualifications, and authority of employee representatives under the law. This would necessitate updates to HR regulations and internal labor consultation frameworks within companies.
Lastly, the administration aims to gradually reduce the standard workweek to 36 hours, including the potential introduction of a 4.5-day workweek. The target is to reach the OECD average by 2030, with pilot implementation likely to begin with office-based jobs. Employers will need to prepare for increased overtime costs, productivity management, and workforce restructuring in response to shorter working hours.
These reforms are likely to bring gradual but significant changes across industries. Companies are encouraged to review their internal systems and HR policies proactively and to develop response strategies in advance.
(Source: Kayen Consulting)
