Korea’s labor market continues to remain rigid for 20 years: Analysis

[Source: The Heritage Foundation]

South Korea’s labor market has remained tight for two decades, which could further diminish the country’s economic freedom, according to a recent analysis.

The Korea Enterprises Federation, a representative group of corporate executives, analyzed the 2024 Index of Economic Freedom by the Heritage Foundation in the United States, and found that among the 12 economic freedoms of Korea, its labor freedom score was 57.2 points, placing the country in No. 87 out of the 184 countries surveyed.

In the paper, Korea was considered “mostly free,” ranking No. 14 out of 142 countries. However, its labor score was at the bottom among the 12 economic freedoms, including tax burden, business freedom, and government spending.

Regulatory rigidities on employment and work conditions are one of the factors behind such a low labor freedom score, according to the paper.

”The labor market is dynamic, but regulatory rigidities are still present, and powerful trade unions add to the cost of conducting business,“ the paper said.

Korea‘s tax, investment, and financial sectors also earned low grades, with Tax Burden being considered ”unfree,“ which suggests its tax environment has become less attractive over time.

According to the paper, the top individual income tax rate is 49.5 percent, and the top corporate tax rate is 27.5 percent. The tax burden equals 29.9 percent of GDP, it said.