OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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The Labour Market in Korea

Enhancing Flexibility and Raising Participation

This paper analyses the increasing dualism in the Korean labour market and the need to encourage greater labour force participation. Although the rising proportion of non-regular workers lowers labour costs and increases employment flexibility, it has a negative impact on both equity and efficiency over the long term. Relaxing employment protection for regular workers and increasing the coverage of the social safety net for non-regular workers would help limit the extent of dualism. Population ageing is projected to be exceptionally rapid in Korea, leading to a significant decline in the workforce by mid-century. Steps to boost the participation of women through family-friendly policies are a priority. It is also important to encourage employees to stay at firms beyond the age of 50. Making the wage system more dependent on productivity and less on seniority and implementing a company pension system in place of the retirement allowance would help maintain the employment of older persons. This Working Paper relates to the 2005 OECD Economic Survey of Korea (www.oecd.org/eco/surveys/korea).


Keywords: employment protection, dualism, wage subsidies, corporate pensions, non-regular workers, industrial relations, labour markets, unemployment insurance, Korea, old workers, Tripartite Commission, labour force participation rates, female employment
JEL: J7: Labor and Demographic Economics / Labor Discrimination; J3: Labor and Demographic Economics / Wages, Compensation, and Labor Costs; J11: Labor and Demographic Economics / Demographic Economics / Demographic Trends, Macroeconomic Effects, and Forecasts; J5: Labor and Demographic Economics / Labor-Management Relations, Trade Unions, and Collective Bargaining
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