Working Hours Exemption for Semiconductor R&D Still 'Under Review' 8 Months After Special Act's Passage… Narrowed to Yet-to-Exist Special Zones

SEOUL

Special exemptions to working hours for core semiconductor research and development (R&D) personnel have remained merely a "review" task under the government's new regulatory rationalization plan. The Ministry of Trade, Industry and Energy announced 13 tasks under the joint ministerial "Regulatory Rationalization Plan for the Rapid Implementation of Mega-Project Semiconductor Investments" at the 2nd Plenary Meeting of the Regulatory Rationalization Committee, chaired by President Lee Jae-myung at the Cheong Wa Dae Guesthouse at 2:00 p.m. local time on October 23. The scope of the working-hour exemption was limited to mega-regional special zones, conditioned on prior consultations with labor and business circles. More than eight months have passed since the special act on semiconductor support passed the National Assembly plenary session on January 29, but the working-hour issue for research personnel remains at the review stage, pending labor-management consultations.

Working-Hour Exemptions Remain Under 'Review' and 'Consultation' Without a Deadline

A press release from the Ministry of Trade, Industry and Energy stated, "To ensure that core research personnel can concentrate on research when needed, the government is reviewing special working-hour exemptions for core semiconductor R&D personnel within mega-regional special zones." It added, "However, on the premise of appropriate compensation and measures to protect the right to health, we plan to consult with labor and management to harmonize productivity with fundamental rights."

Other tasks in the same document specify concrete methods of implementation. The government stated that it would "introduce a special exemption exempting gift tax" when a non-profit semiconductor testbed operating corporation with a public character receives facilities and equipment from companies free of charge. The government explained that this exemption would encourage corporate donations of equipment and expand opportunities for materials, parts, and equipment companies to test new technologies in real production environments. Regarding hazardous chemical subcontracting procedures, it stated it would "pursue measures to deem subcontracting reporting under the Chemicals Control Act as filed if subcontracting approval has been granted." For working-hour exemptions, however, only the applicable area (mega-regional special zones), the target group (core semiconductor R&D personnel), and preconditions (compensation and health rights) were set. The permissible scope of working hours, compensation levels, and the consultation schedule were left to future labor-management discussions.

The press release categorized the plan into three pillars: "shortening time," "creating time," and "maximizing time efficiency." The working-hour exemption was placed under the second pillar, "creating time." The subtitle of this pillar was "'Creating time' by securing time for concentrated R&D, demonstration, and verification." The opening section of the press release assessed that "'Time'—such as how quickly plants are built and how rapidly new technologies are developed—is determining market competitiveness." The government also noted, "If delays occur in certain procedures, they could spill over into delays across entire fab groundbreaking and operational schedules, disrupting corporate investment timelines and market preemption." Yet within that same assessment, working-hour regulations that determine the hours research personnel can work were categorized as a matter for consultation without a definitive conclusion.

Government Explains Labor and Management Must First Consult on the Premise of Compensation and Health Rights

The government's rationale focuses on the need to address working-hour exemptions alongside fundamental labor rights. The press release cited "appropriate compensation" and "measures to protect the right to health" as preconditions for the exemptions, setting the harmonization of productivity and fundamental rights as the goal. The consultation partners include both labor and management circles. Restricting the geographic scope of the exemptions to mega-regional special zones rather than nationwide was also among the conditions presented by the government that day.

Minister of Trade, Industry and Energy Kim Jung-kwan stated, "Semiconductor competition is a battle against time," adding, "This semiconductor regulatory rationalization plan is not merely about removing regulations, but about reducing waiting times for businesses, securing the time needed for research and demonstration, and maximizing time efficiency by aligning government actions with corporate investment schedules." Kim added, "While safeguarding safety and workers' rights, we will decisively reform procedures unsuited to the field, and work alongside related ministries to support semiconductor companies so they do not miss the optimal window for investment and R&D, ensuring the smooth implementation of mega-projects."

President Lee also addressed regulations that must be preserved during the same meeting. According to Policy Briefing, President Lee said, "Inconvenient, outdated regulations that hinder the development of new technologies and emerging industries must be reformed swiftly and boldly," but emphasized, "Regulations to safeguard the public's lives, safety, and property, and to secure fairness and transparency, are indispensable." President Lee noted, "Regulation is not inherently bad," adding that there is a need to "continuously make adjustments so that regulations do not operate in a negative manner." He added, "Meticulous care is essential to ensure that outcomes do not fundamentally undermine the public's lives, safety, the environment, or the crucial values we must pursue." Policy Briefing headlined its article covering the remarks: "Boldly Reforming Outdated Regulations Blocking New Industries... Strengthening Necessary Regulations."

Special Bill on Semiconductors Clears Plenary Session 1 Year and 7 Months After June 2024 Introduction

The bill incorporated into the committee alternative that cleared the plenary session was originally submitted to the National Assembly in 2024. According to National Assembly legislative tracking data from the Ministry of Government Legislation's National Participation Legislation Center, the "Special Bill on Strengthening the Competitiveness of the Semiconductor Industry" (Bill No. 2200634) was sponsored by "Representative Ko Dong-jin and 28 others" on June 19, 2024. The bill was referred to the National Assembly Trade, Industry, Energy, SMEs, and Startups Committee on June 27, and referred on the same day to the Legislation and Judiciary Committee, the Land, Infrastructure and Transport Committee, and the Strategy and Finance Committee as related committees. On August 19, it was introduced at a plenary session of the 417th Extraordinary Session and transferred to a subcommittee. The bill's statement of reasons and key provisions included establishing a presidential special committee, expediting permitting and licensing, supporting power and water infrastructure, granting exemptions for preliminary feasibility studies, creating a special account for the semiconductor industry, and designating semiconductor clusters.

Deliberations were protracted. According to the same data, the committee subcommittee tabled the bill on November 21 and December 26, 2024, and on February 17 and April 8, 2025. A conclusion was reached on December 4, 2025. The 4th subcommittee and the 9th plenary meeting of the 429th Regular Session were held on the same day to approve the committee alternative, and the original bill was disposed of as incorporated into the alternative. The National Assembly plenary session finalized it at the 2nd meeting of the 431st Extraordinary Session on January 29, 2026. It took one year and seven months from referral to final plenary passage.

The passed legislation is titled the "Special Act on Strengthening and Supporting the Competitiveness of the Semiconductor Industry." In a reference material on January 29, the Ministry of Trade, Industry and Energy cited its key provisions as establishing a presidential "Special Committee on Strengthening Semiconductor Industry Competitiveness," formulating master plans, setting up a "Special Account for Strengthening Semiconductor Industry Competitiveness," designating semiconductor clusters and supporting industrial infrastructure, fostering talent and attracting overseas personnel, and providing legal grounds for exemptions concerning regulations, permitting, and preliminary feasibility studies. The ministry explained that the law provides an institutional framework supporting the entire supply chain, including memory and system semiconductors, design, manufacturing, packaging, and materials, parts, and equipment. Focused support for the semiconductor industry outside the capital region, establishing technology development and demonstration centers, and nurturing ecosystems for materials, parts, and equipment, contract manufacturing (foundries), and system semiconductors were also included in the key contents. Nowhere in either ministry document did working-hour exemptions for research personnel appear as part of the law. The ministry said at the time that the law was "scheduled to take effect as early as the third quarter of this year once subordinate decrees and related regulations are prepared."

On the day of the bill's passage, Minister Kim Jung-kwan stated, "With the enactment of this Semiconductor Special Act, we will maintain and strengthen the 'super-gap' of K-Semiconductors," adding, "We will swiftly prepare subordinate regulations to ensure tangible on-site support." The legislation was set to undergo transfer to the government, approval at a Cabinet meeting, and formal promulgation. Roughly eight months later, in the regulatory rationalization plan unveiled by the same ministry, the working-hour issue was deferred to a separate statute—the Mega-regional Special Zones Act—and labor-management consultations.

Other bills regarding the semiconductor industry support system remain stalled in the National Assembly. According to legislative tracking records, "Representative Park Soo-young and 17 others" proposed a partial amendment to the Government Organization Act (Bill No. 2201494) on July 8, 2024, to establish a National Semiconductor Industry Headquarters under the Ministry of Trade, Industry and Energy. The bill was referred to the Public Administration and Security Committee on July 9, 2024, and tabled on November 20, with its status marked as "referred to subcommittee." The bill is predicated on the passage of the "Special Bill on Strengthening and Protecting the Competitiveness of the National Semiconductor Industry," also introduced by Representative Park.

Scope of Exemptions Narrowed to Yet-to-Be Designated Mega-Regional Special Zones

The latest plan limited the scope of working-hour exemptions to core semiconductor R&D personnel "within mega-regional special zones." The bill serving as the legal basis for mega-regional special zones was introduced just three days prior to the announcement. According to materials released on the same day by relevant ministries, including the Office for Government Policy Coordination, the government introduced the Mega-regional Special Zones Act on October 20. The government stated it would "pursue related procedures to designate mega-regional special zones across nationwide regions in the first half of next year."

Until the Mega-regional Special Zones Act passes the National Assembly and zones are designated, no areas exist where the working-hour exemptions can be applied. The target timeline set by the government for designating the zones is the first half of next year. The government described the regulatory exemptions contained in the Mega-regional Special Zones Act as "around 320 provisions, the largest ever in a single piece of legislation." Exemptions cited by the related ministries as examples in the semiconductor sector included a fast-track process for establishing semiconductor advanced national industrial complexes, special safety standards for high-pressure gas used in semiconductor manufacturing, and deregulation related to export logistics. Separately, the government stated it would introduce a demand-responsive regulatory sandbox allowing the "waiver or relaxation of regulations for a certain period upon application by enterprises or local governments."

The Ministry of Trade, Industry and Energy's press release stated that if semiconductor clusters are designated as mega-regional special zones, "the government plans to incorporate provisions into the Mega-regional Special Zones Act allowing the batch processing of additional permits, beyond the deemed authorizations permitted under the Semiconductor Special Act." Both the batch processing of permits and working-hour exemptions are tied to the bill introduced on October 20 and the special zones targeted for designation in the first half of next year.

President Lee also emphasized a regional decentralization strategy on the day. President Lee said, "Because we have entered an era where decentralization and equitable distribution enhance efficiency far more than the concentration of opportunity and capital, we are intensively pursuing balanced national development and regional development strategies." President Lee also remarked that young people in regional areas should not have to leave for the capital area in search of jobs.

President Lee also called for actions that could be taken prior to the passage of legislation during the same meeting. According to Policy Briefing, while requesting swift and thorough legislative review of the Mega-regional Special Zones Act from the National Assembly, President Lee said, "There must be things that can be done even before the enactment of the law," adding, "I hope the Regulatory Rationalization Committee will promptly and preemptively improve such matters." In the announcement that day, working-hour exemptions for semiconductor R&D personnel were classified not as a pre-enactment task, but as an agenda item to follow the designation of mega-regional special zones.

Remaining Tasks Focus on Streamlining Bonded, Chemical, and High-Pressure Gas Procedures

Bonded area and customs clearance tasks were assigned to the Korea Customs Service. The press release stated that "95% of our country's semiconductor exports are manufactured, processed, and exported from bonded factories." Noting that "currently, bonded factory licenses must be obtained for each semiconductor fab and renewed every 5 to 10 years," the government said it will designate entire industrial complexes as comprehensive bonded zones going forward. Currently, tax payments are deferred only for foreign machinery and equipment installed at bonded construction sites, while foreign construction equipment such as analytical instruments and measuring devices can only be used after paying taxes. The government decided to defer payment on construction equipment as well. It will also allow repair parts for manufacturing equipment produced by foreign subsidiaries to be stored in advance at domestic bonded factories, and allow authorized economic operator (AEO)-certified premier bonded factories located far from airports and seaports to transport pre-approved items first and file export declarations en route. The government stated that "currently, testing and inspecting R&D prototypes made in semiconductor bonded factories externally requires individual advance removal approval for each case," and pledged to simplify this procedure for premier bonded factories with autonomous management capabilities.

Chemical substance procedures will focus on reducing inter-agency redundancies. Regarding approvals and reports for subcontracting hazardous chemical substances—previously handled separately by the Ministry of Employment and Labor and the Ministry of Climate, Energy and Environment—the government decided to deem subcontracting reporting under the Chemicals Control Act satisfied if subcontracting approval is granted under the Occupational Safety and Health Act. For high-pressure gases, technical reviews and modification permits for installing multiple cylinder cabinets will be processed in batches, and mutually non-reactive gases will be permitted to be stored together. Materials from relevant ministries stated that a special notification on high-pressure gas would be "enacted by January of next year."

In site development, a fast-track process was introduced to concurrently handle permitting, compensation, and design for semiconductor industrial complexes. The press release pointed out that "currently, the formulation of industrial complex plans, various permits and approvals, compensation, and design and construction are carried out sequentially." An amendment to the Industrial Sites and Development Act, which serves as the legal foundation, was proposed on July 30. Related ministerial materials stated they would "shorten the time required from industrial complex planning to operation by half, from a maximum of over 10 years." For administrative support, the presidential Special Committee on Strengthening Semiconductor Industry Competitiveness will serve as a pan-governmental coordination channel, and the "Semiconductor Innovative Growth Support Team," launched under the Ministry of Trade, Industry and Energy on October 20, will provide continuous support for corporate grievances and investment implementation.

President Calls for Evaluating Regulatory Reform by Investment and Job Outcomes Rather Than Number of Cases

During the meeting, President Lee presented both a perspective on regulation and criteria for evaluating performance. "Those administering regulations easily assume they are naturally necessary because they are customary tasks written in statutory codes," President Lee said, adding, "From the viewpoint of those subject to regulations, they are often irrational." President Lee emphasized, "In the realm of regulatory rationalization, the views of those subject to regulation or those in neutral positions are far more critical than those of the regulatory authorities." According to Policy Briefing, President Lee said, "While the number of regulations reformed matters, how much investment, start-ups, and jobs were generated by changing those regulations is equally important." He added, "I will see on-site changes through to the end so that regulatory rationalization can give wings to growth, plant the seeds for regional futures, and invigorate people's livelihoods."

In February of this year, the chairmanship of the Regulatory Rationalization Committee was transferred from the Prime Minister to the President. The government described this as an upgrade after 28 years. The first plenary meeting was held on April 15, and approximately 100 people attended the second meeting. In this second meeting, held eight months after the committee's elevation, the issue of working hours for semiconductor R&D personnel was deferred to an agenda item following labor-management consultations.

Sources (KST)

• Ministry of Trade, Industry and Energy Press Release (Policy Briefing) · 2026-10-23 14:00 · Semiconductor competition shifts to a battle of 'time,' redesigning the time for investment, research, and support through semiconductor regulatory rationalization · https://m.korea.kr/briefing/pressReleaseView.do?newsId=156786328&gubun=pressRelease&pageIndex=1&repCode=
• Policy Briefing · 2026-10-23 · President Lee: "Boldly reform outdated regulations blocking new industries... Strengthen necessary regulations" · https://m.korea.kr/news/policyNewsView.do?newsId=148974225&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Policy Briefing (Joint Ministerial) · 2026-10-23 · Government pursues enactment of 'Mega-regional Special Zones Act'... Incorporating record-high 320 regulatory exemptions · https://m.korea.kr/news/policyNewsView.do?newsId=148974194&pageIndex=1&cateId=&repCode_P=&smenu=EDS01
• Ministry of Trade, Industry and Energy Reference Material · 2026-01-29 · "Special Act on Strengthening and Supporting the Competitiveness of the Semiconductor Industry" passes National Assembly · https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/171480/view
• Ministry of Trade, Industry and Energy · 2026-01-29 · Semiconductor Special Act passes National Assembly plenary session · https://www.motir.go.kr/kor/article/ATCL8764a1224/155119069/view
• Ministry of Government Legislation National Participation Legislation Center National Assembly Legislative Tracking · Bill No. 2200634 Special Bill on Strengthening the Competitiveness of the Semiconductor Industry (Introduced on 2024-06-19 by Representative Ko Dong-jin and 28 others) · https://opinion.lawmaking.go.kr/gcom/nsmLmSts/out/2200634/detailRP
• Ministry of Government Legislation National Participation Legislation Center National Assembly Legislative Tracking · Bill No. 2201494 Partial Amendment to the Government Organization Act (Introduced on 2024-07-08 by Representative Park Soo-young and 17 others) · https://opinion.lawmaking.go.kr/gcom/nsmLmSts/out/2201494/detailRP