2018 OECD Economic Surveys: Korea 2018

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Economic growth picked up in 2017, but reforms are needed to sustain Korea's convergence toward the income levels in the most advanced countries. Its labour productivity is only half of that in the top half of OECD countries, reflecting problems in the service sector. In addition, productivity in small and medium-sized enterprises (SMEs) in manufacturing is only one-third of that in large firms. The segmentation of the labour market between regular and non-regular workers has resulted in one of the highest levels of wage inequality among OECD countries. The employment rate of women is relatively low and the gender wage gap is the largest in the OECD. Korea faces the most rapid population ageing in the OECD area, which is projected to drive up government social spending from 10% of GDP to 26% by 2060. This Economic Survey of Korea assesses the country's recent macroeconomic performance and prospects. It also offers recommendations on how to achieve the government's objective of a paradigm shift from growth led by business groups (chaebols) to a greater role for SMEs and innovative start-ups through wide-ranging reforms to enhance competition, improve corporate governance, promote entrepreneurship and upgrade SME policies. This should be accompanied by labour market reforms to increase employment of women, youth and older persons and to break down dualism to achieve more inclusive growth.


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(Numbers in parentheses refer to the OECD average)

This Survey is published on the responsibility of the Economic and Development Review Committee (EDRC) of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Korea were reviewed by the Committee on 14 March 2018. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 24 May 2018.The Secretariat’s draft report was prepared for the Committee by Randall S. Jones, Jae Wan Lee and Haruki Seitani under the supervision of Vincent Koen. Research assistance was provided by Lutécia Daniel. Secretarial assistance was provided by Sisse Nielsen and Mercedes Burgos.The previous Survey of Korea was issued in May 2016.Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys.


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