To Improve Labor Relations and Attract More Foreign Investment
The South Korean government is aiming to reach a GNI per capita of US$40,000 by 2027 based on reforms in the five sectors of pension, labor, education, financial and service. Its top priority is labor reform, in that frequent illegal strikes have incurred huge economic losses while hindering investment from abroad. South Korea’s GNI per capita was US$35,373 at the end of 2021.
According to the Korea Economic Research Institute, the strikes of cargo transport workers in June, November and December last year incurred direct and indirect economic losses of 10.4 trillion won. According to experts, this is only an example and repeated strikes are seriously affecting the growth potential of the economy every year.
They point out that foreign investment in the economy is also being hampered. According to the Korea Economic Research Institute’s recent survey, more than 54 percent of 138 foreign enterprises in South Korea are hesitating about investing in the country due to its labor relations.
“Strikes have to be replaced with negotiation and concession for the GNI per capita to reach US$40,000 and for the South Korean economy to further grow based on total factor productivity enhancement,” one of them said. The productivity, which is a growth potential and economic efficiency indicator, can be defined as the efficiency of national production other than the direct contribution of labor and capital. South Korea’s rate of increase in total factor productivity was 2.6 percent in 2017 but fell to 2.3 percent in 2018, 1.2 percent in 2019 and 0.7 percent in 2020.