Small and medium-sized enterprise A, a manufacturer of early childhood education content devices, is set to launch a new product within the year. But A is worried about disruptions in production due to the Chuseok holiday from Oct. 3 to 9, including National Foundation Day and Hangeul Day. A considered paying employees a holiday work allowance at 1.5 times the weekday wage and running the factory on the 8th and 9th, except for Chuseok day on the 6th and the following day on the 7th. But the increase in labor costs from the 1.5-times holiday allowance became a burden.
Company head B said, "With sales of our existing early childhood content devices rising, we need to bring the new product to market quickly to sustain growth," but added, "Due to the labor cost burden of holiday work, we ultimately decided to take off on the 8th and 9th during the Chuseok holiday as well." The person added with a sigh, "Resting isn't really resting."
◇ SMEs: "If there are many red days, we fear production disruptions"
With the October Chuseok holiday stretching to seven days, concerns are growing among small and medium-sized enterprises. For SMEs, where each day matters, fewer working days can hurt productivity. A CEO of a small machinery parts manufacturer said, "People talk about systems, systems, but unlike large corporations, many SME manufacturing sites do not run on systems," adding, "More working days are structurally better for product output."
This is why the manufacturing SME sector says, "The fewer 'red days' on the calendar and the more working days, the better."
This Chuseok break ends on Thursday the 9th, and large corporations such as SK, CJ, and Hyundai Motor are designating the following day, the 10th, as a companywide day off or encouraging employees to use annual leave. The idea is to rest properly and deliver better results afterward as part of employee benefits.
But SMEs face a different reality. Especially for corporations with backlogged orders or for which the current period is critical for growth, it is hard to take the Chuseok holiday off in full like others. The problem is labor costs.
A simple calculation based on the minimum wage (10,030 won per hour) puts a weekday worker's daily pay for eight hours at 80,240 won. But for SMEs with five or more employees, the allowance for eight hours of holiday work is 1.5 times that, at 123,600 won.
Earlier, A decided not to run its factory during the Chuseok holiday due to the burden of holiday work allowances, but corporations with schedules requiring immediate delivery to clients after the holiday must keep factories running during Chuseok. There is concern that failure to meet deadlines could cut off future transactions. The resulting increase in labor costs is something corporations must bear.
In fact, an auto parts SME in South Gyeongsang Province will operate its factory on the 8th and 9th during the Chuseok break despite the labor cost burden of holiday work. It has no choice if it is to supply products to overseas clients on time. The company, with annual sales of about 60 billion won, currently supplies products domestically as well as to North America and Europe.
The company's CEO said, "By law, paying 1.5 times the weekday pay suffices for holiday work, but in reality you have to offer nearly double to get employees to work on holidays." The person added, "Once this Chuseok would be fine, but if holiday work keeps piling up, Korea's small manufacturing sector could be overtaken by Japan as it already has been pressured by China, which uses labor costs as a weapon."
◇ 2030 generation at the center of internal discontent: "work-life balance, not money"
There are also concerns about internal discontent within SMEs due to holiday work. Large corporations are taking off even on the 10th, a weekday, and enjoying a full Chuseok holiday, prompting the question, "Why do we have to work on holidays?"
Such complaints mostly appear among the younger 20s and 30s. Many workers in their 40s and older are married and tend to welcome holiday work because it means more pay, but the 2030 generation values work-life balance. The resulting resignations among young employees cannot be ignored.
An SME CEO said, "One of the big problems for SMEs is a lack of talent, especially younger staff, and more young employees are leaving over work-life balance issues such as holiday work," adding, "We must address the deepening labor shortage at SMEs and the work-life balance gap between large corporations and SMEs."
Noh Min-seon, Deputy Minister at the Korea SMEs & Startups Institute (KOSI), said, "We cannot view a long Chuseok holiday itself negatively, but from the SME perspective, holiday work can raise expense issues," adding, "Fundamentally, we need measures to boost SME productivity, and we also need mechanisms for large corporations (to which SMEs supply products) to help raise SME competitiveness from a mutual growth standpoint."
Noh also emphasized, "Large corporations draw attention in the Korean economy, but we must recognize that SMEs are underpinning them from below."