South Korea allocates KRW2.6 billion to push a 4.5-day workweek for SMEs

South Korea recently announced a move toward shorter workweeks through a pilot project, and to advance this initiative, earmarking KRW2.6 billion to help businesses transition to a four-and-a-half–day schedule starting January 2026.

According to a report by The Korea Herald, the funding will subsidise labour and operating costs for small and mid-sized companies willing to reduce weekly hours without cutting pay.

An additional KRW1.7 billion has been set aside for consulting support to guide firms through the shift. Under the new scheme, organisations with fewer than 50 employees can receive up to KRW600,000 per worker each quarter for adopting the 4.5-day workweek, plus KRW800,000 for every new hire they bring on during the transition. 

Companies with 50 to 300 staff are also eligible, with subsidies capped at 100 workers. Employment insurance investigators will oversee eligibility to prevent misuse. 

A Labour Ministry official said that the programme is designed to ease cost pressures on employers as they shorten workweeks. The initiative aligns with President Lee Jae Myung’s broader commitment to bring down South Korea’s still-high working hours, which reached 1,865 in 2024, well above the OECD average of 1,736, according to the OECD. 

Last month, Gyeonggi Province became the first province of the nation to implement a four and a half days workweek, curbing longer working hours. 

The province is testing this with 67 small and midsize enterprises and one public institution. The multiyear study will run through 2027, and track shifts in productivity, business performance and employee satisfaction. 

Under the scheme, workers can choose from three options, reducing weekly hours to 35, adopting a 4-day week every other week, or moving to a consistent 4.5-day schedule.