The government decided Monday to partially amend a revised labor statute regarding the calculation of minimum wage, dismissing most complaints from businesses in a sign of reaffirming its drive for policies intended to boost incomes.
The Cabinet was originally set to pass the revised legislation designed to add paid time off to the calculation of minimum wage, starting from next year.
In Monday's meeting, the government decided to exclude non-obligatory paid holidays that are set under a collective agreement between management and labor unions. The latest revision will be tabled for passage in the next Cabinet meeting, slated for the following Monday, the government said.
The government sees it as part of required steps to complete the reform on minimum wage, aiming for a drastic 54 percent raise to 10,000 won (US$8.90) in three years by 2020.
Businesses have opposed the move by saying it will kill small and self-employed shops and burden bigger companies with higher personnel expenses amid an already slowing economy.
A revision of a subordinate statute, or presidential decree, does not require parliamentary approval.
Business lobby groups reacted immediately to the decision.
"We are very disappointed and see (the decision) as unfair," the Korea Employers Federation said in a statement. "The revision is meaningless to the industry as it is no different from the government's original version."
The lobby group earlier demanded exclusion of paid time off from the calculation criteria, calling it the only solution to reducing additional burden on businesses and confusion at workplaces.
The government says it will provide a grace period of up to nine months following the enactment of the new rule to allow companies to amend their own employment regulations and salary systems in accordance with the new act.
Labor groups also slammed the government, accusing it of surrendering to the demands of businesses and backpedaling on President Moon Jae-in's election pledge to improve labor conditions.
"The finance ministry is trying to reverse the matter after they were lobbied by firms and employers," said the Federation of Korean Trade Unions, the larger of two labor umbrella organizations here.
"It undermines the underlying purpose of the workweek cut, which shows that this government is backing away from its own labor policies," it added in a released statement.
In a related move, the government also decided to extend the six-month grace period for the new 52-hour workweek system, which went into effect at the start of July. The duration of the extension has yet to be decided.
Prime Minister Lee Nak-yon pointed out that ending the grace period ahead of other rules that are still being reviewed would be useless and will only further deepen confusion at workplaces.
"Rational adjustments are inevitable," he told the cabinet meeting. "Careful considerations are essential to minimize inconvenience for the public when we put a policy into practice, as much as when we draw it up."
Most large firms are required to limit the maximum work week to 52 hours under the revised act. It is one of President Moon Jae-in's key labor policies aimed at reducing Korea's notoriously long working hours and improving quality of life.
Businesses insist the workweek cut will further undermine the country's productivity and competitiveness amid slowing growth.
Lee also mentioned the delay in parliamentary deliberation on revising the flexible work system, which largely aims to expand its applicable period, needs to be resolved in order for the new workweek system to fully take off.
Regarding the revision of the minimum wage statute, the prime minister vowed to find "the best solution" to quell concerns from both industry and labor sectors.
"Since it's a sensitive issue to both industry and labor sectors ... we will do our best to explain (the statute revision.)"