The growth of marginal part-time work in South Korea is a by-product of making existing protections work but also points to the need for better design of labour regulation.
In South Korea, marginal part-time work has risen sharply. Employers have stronger incentives to keep hours just below a 15-hour weekly threshold now that worker protections and compliance with paying benefits and social insurance are being more strongly enforced. The result is a widening labour-cost discontinuity that has unintentionally expanded very short-hour employment and excluded more workers from the protection system. This highlights the trade-offs inherent in threshold-based labour regulation.
South Korea is notorious for its long working hours but this new trend. From 2012–24, the share of marginal part-time workers outside the public sector — those contracted for fewer than 15 hours per week — rose from 3.7 per cent to 8.5 per cent.
These workers are systematically excluded from South Korea’s basic worker protection schemes, including the weekly holiday allowance, paid annual leave, national health insurance, employment insurance, the national pension and severance pay. Their growing numbers mean that more workers are being left behind.
One explanation for this growth is in institutional design. Workers below the 15-hour threshold are exempt from these schemes, making them up to 40 per cent cheaper to employ. This structure creates strong incentives for employers to keep workers just below the cut-off. Contracts specifying 14 hours, 14 hours and 30 minutes and even 14 hours and 55 minutes per week have all been documented.
But while intuitive, this explanation has an important limitation. The cost discontinuity at the 15-hour threshold has existed in South Korea since at least the late 1990s, yet the rapid growth in marginal part-time work began more than a decade later.
The actual driving force of this increase can be found by examining worker protections for those above the 15-hour threshold. In 2012, compliance with those worker protection schemes among workers just above the 15-hour threshold was surprisingly low — the threshold made little practical difference. Over the following decade, compliance rates improved substantially, making the threshold meaningful in practice.
Though it is not possible to directly observe compliance across all schemes, social insurance enrolment rates are a reliable proxy, as compliance rates across schemes are positively correlated. From 2012–24, the social insurance enrolment rate among eligible workers who worked 60–99 hours per month – just above the threshold – increased from around 40 per cent to 80 per cent. This improvement is highly correlated with the growth in marginal part-time workers – the cost discontinuity started to work in practice.
There are other factors that may have contributed to the growth in marginal part-time workers, but their explanatory power appears to be limited. The expansion of the service industry and an ageing workforce explain only a small fraction of the growth in marginal part-time work outside the public sector, as most of the increase occurred within such groups rather than across them.
While some studies suggest that rising minimum wages may have also contributed, given that improvements in compliance are particularly pronounced among workers near the minimum wage, some of the minimum wage effects may reflect the effect of improved compliance, which has played a critical role in the growth of marginal part-time work.
One plausible cause for improved compliance is public awareness. In 2011, the Youth Community Union, a South Korean youth labour advocacy group, raised the issue that even eligible part-time workers are not guaranteed their weekly holiday allowance, which requires that employers provide at least one paid holiday per week, raising wage costs by at least 20 per cent. After the campaign, newspaper coverage of the weekly holiday allowance stimulated debates and drew public attention to the 15-hour threshold. The positive feedback loop began, resulting in increased awareness, which drove improvements in compliance.
These findings provide guidelines for further policy reforms. The improvement in compliance for worker protection schemes and the expansion of workers outside the protection system are two sides of the same coin. The fundamental reason for this dynamic is the drastic change in labour costs at a given threshold. Reforms should aim to avoid such a drastic change at these points.
South Korea’s experience demonstrates the wider set of challenges facing developed countries. Worker protection systems generally have eligibility criteria that inevitably create discontinuities in labour costs. The design of such thresholds involves a trade-off – spreading eligibility criteria across multiple thresholds reduces the cost impact at any single point but may also reduce the salience of each scheme and weaken compliance. Concentrating them at a single threshold – as South Korea does – may strengthen compliance, but at the risk of creating a large discontinuity in labour costs, generating significant unintended consequences.
Compliance rates can shift dramatically even without formal institutional changes, as South Korea demonstrates. Policymakers should consider non-material policy tools such as public campaigns, advocacy and media attention, which can change how labour market institutions function in practice.
The growth of marginal part-time work in South Korea is a by-product of success in making existing protections work. Yet this progress pushes more workers outside the protection system. Given that those workers outside that system are among the most precarious, the welfare implications are significant. While this cost was neither intended nor inevitable, it could have been foreseen had the incentive structures embedded in the system been carefully examined. The lesson is not just about marginal part-time work, but rather institutional design more broadly.
Republished from the East Asia Forum
