Undermined Competitiveness
The efficiency of the South Korean labor market is continuing to decline, laying a burden on local companies.
According to the Korea Economic Research Institute (KERI), South Korea placed 73rd in the World Economic Forum's labor market efficiency rankings for 2017, a drop of 49 notches compared with 2007.
The WEF rankings are divided into 10 indicators, including pay and productivity, country capacity to attract talent, country capacity to retain talent, flexibility of wage determination, reliance on professional management, and effect of taxation on incentives to work.
South Korea fell in each of the 10 between 2007 and last year, especially in cooperation in labor-employer relations, redundancy costs, female participation in labor force, and hiring and firing practices. When it comes to cooperation in labor-employer relations, its ranking dropped from 55th to 130th during the period with South Africa, Haiti, and Uruguay coming in 137th, 133rd, and 131st, respectively.
Besides, South Korea slid from 107th to 112th in redundancy costs. According to the KERI, the legal firing cost in the South Korean labor market corresponds to pay equivalent to 14.8 weeks whereas the OECD average is 7.8 weeks. South Korea dropped from 23rd to 88th as far as hiring and firing practices are concerned.