[Feature] Labor Reform Picks Up Pace, but Flexibility Still Lags in SMEs

As Korea moves toward introducing a 4.5-day workweek, small and medium-sized enterprises (SMEs) are lagging in adopting flexible work arrangements. Industry experts say it’s time for the government and local authorities to help SMEs overcome the structural challenges—such as limited manpower, outdated systems, and organizational culture—that prevent workplace innovation.

 

According to the Korea Small Business Institute (KOSBI) on July 2, the adoption of flexible work systems in SMEs remains low. In 2023, only 11.5% of SMEs utilized any form of flexible work, a drop from 12.9% in 2021. This figure is about one-third the adoption rate among large corporations. The smaller the company, the lower the adoption. In fact, less than 5% of wage workers at SMEs participated in any form of flexible work - 3.6% in staggered work hours, 2.6% in flexible scheduling, 1.8% in selective working hours.

 

Experts argue that flexible work can complement the 4.5-day workweek by preventing productivity loss and improving employee satisfaction. By combining both approaches, companies can reduce working days while maintaining performance and morale.

 

A spokesperson from Human Consulting Group (HCG), a leading HR tech firm, explained, “The 4.5-day workweek represents a fundamental shift in how we define workdays and hours. Since Korea introduced the 52-hour weekly cap in 2018, various flexible work models—staggered hours, flextime, selective schedules, and autonomous work—have emerged and gained traction.”

They added, “Implementing a 4.5-day workweek inherently requires the use of flexible work schemes tailored to each company’s environment. In other words, the 4.5-day model is a goal, and flexible working is the means to achieve it.”

 

SME organizations are also highlighting the importance of flexible work. The Korea Federation of SMEs emphasized the need to guarantee employer–employee autonomy in work-hour arrangements in a recent policy proposal to the 21st presidential candidates.

 

However, practical challenges remain. SMEs often lack the workforce to absorb absences, and each employee plays a critical role. Physical presence is still required in many SME-dominant sectors like manufacturing, logistics, and retail—making remote or staggered schedules difficult.

 

For example, only 9.9% of manufacturing-sector SME employees used any form of flexible work, compared to 12.3% in services. In fact, the rate in manufacturing dropped 1.4 percentage points year-over-year.

 

Measurement challenges also persist. For flexible work systems to succeed, companies need performance-based roles, time-tracking tools, and collaboration systems. Yet many SMEs lack the infrastructure or data to support this shift. Government support programs exist but are often insufficient or underutilized.

 

An HCG expert noted, “SMEs are hesitant to adopt the 4.5-day model due to limited staffing, design complexity, and concerns over productivity loss. However, if we shift our perspective, policies like the proposed abolition of the fixed-salary system point to a broader shift toward pay structures based on actual working hours.” They added, “In this context, reducing unnecessary overtime and focusing on efficient time management can improve productivity and even become a survival strategy for SMEs.”......(hereafter omitted.)