Concerns are mounting over the future of South Korea’s semiconductor industry as it faces increasing pressure from the relentless research and development (R&D) efforts of competing nations. While countries like the United States, Japan, China, and Taiwan are pouring virtually unlimited resources and talent into advancing their semiconductor technologies, South Korea’s progress is being stymied by outdated regulations. Experts are calling for urgent reforms in labor market flexibility to ensure that leading companies such as Samsung Electronics and SK Hynix can remain competitive in the global market.
According to data from the semiconductor industry and the Ministry of Employment and Labor released on Nov. 5, the average monthly working hours for employees in South Korean businesses with one or more regular workers is 156.2 hours. This figure is significantly lower than the 180.3 hours worked by Taiwanese employees as of August 2024. Assuming an 8-hour workday, this means South Korean workers are working three days less per month than their Taiwanese counterparts.
This disparity in working hours is contributing to a decline in R&D competitiveness. Experts argue that it is unrealistic to expect South Korea’s semiconductor industry to compete effectively with companies like Taiwan’s TSMC or the United States’ Nvidia, where engineers can work around the clock if necessary. In South Korea, however, engineers face legal restrictions that prevent them from staying in the office beyond a set time. Despite Samsung Electronics investing a record 8.87 trillion won in R&D in the third quarter of this year, the efficiency of such investments is compromised by these restrictions. Reduced R&D efficiency leads to delays in technology development, which in turn diminishes product competitiveness. Although South Korea currently holds a tenuous lead in the memory semiconductor sector, this position is at risk of being overturned.
Prof. Lee Byung-tae of KAIST Business School highlighted the unique challenges faced by South Korean researchers. “There are almost no countries in the world where the lights go out in research labs except for South Korea,” he said. “Like in the United States or Japan, while production workers may not be exempt, R&D-related employees need exceptions from labor hour regulations, and companies can compensate with salaries.”
The semiconductor industry is a cornerstone of South Korea’s economy, with major players like Samsung Electronics and SK Hynix playing pivotal roles in the global supply chain. The country has historically been a leader in memory semiconductors, which are critical components in a wide array of electronic devices. However, the global semiconductor market is fiercely competitive, with significant investments in R&D being made by major players in the United States, Taiwan, Japan, and China.
South Korea’s strict labor regulations, including a 52-hour workweek limit introduced in 2018, were designed to improve work-life balance and reduce overwork. While these regulations aim to protect workers’ rights and health, there is growing concern that they may be hindering economic growth and innovation, particularly in high-tech industries like semiconductors. The ability to work extended hours is often crucial for maintaining competitiveness in rapidly evolving fields, and the current regulations may be putting South Korean companies at a disadvantage.
The debate over labor flexibility versus worker protection is a significant one in South Korea. The country’s rapid economic development, often referred to as the “Miracle on the Han River,” was driven by a strong work ethic and substantial investment in education and technology. The current labor regulations represent a shift from the historically long working hours that contributed to the country’s economic rise.
