Artificial Intelligence and the Labour Market in Korea

1. Overview

Korea’s population is ageing, threatening economic growth

Fertility has been declining in OECD countries, including in Korea which now has the lowest fertility rate in the world (OECD, 2024[1]). At the same time, people are living longer: life expectancy at birth exceeds 80 years in more than two‑thirds of OECD countries, with Korea once again towards the top of the ranking (83.6 years).

These opposing trends in fertility and longevity mean people are getting older. Across the OECD, the old-age dependency ratio, defined as the ratio of seniors to the working-age population, has increased from 19% in 1980 to 31% in 2023, and it is projected to increase further to 52% by 2060 (above 75% in Korea). At the same time, the working-age population in the OECD is projected to decline by 8% between 2023 and 2060–and by up to 46% in Korea (Figure 1.1) ( (OECD, 2025[2])).

Figure 1.1. Korea is projected to have the largest decline in working age population in the OECD by 2060

Projected percentage change in the working age population (aged 20‑64 years), 2023‑2060

Note: The medium scenario of the population projections is used. OECD: Weighted average of OECD countries.

Source: Secretariat’s calculations based on United Nations (2024), World Population Prospects 2024, https://population.un.org/wpp/.

Without further policy action or changes in behaviour these trends will weigh significantly on economic growth and the capacity of OECD countries to maintain their living standards. In most countries, a combination of boosting migration, closing the gender gap in employment, and raising the employment rates of old-age people, would be sufficient to avoid a fall in the employment-to-population ratio (OECD, 2025[2]). Additional interventions will be needed if Korea wants to maintain living standards.

Artificial Intelligence could be part of the solution, but adoption in Korea is still low

Artificial Intelligence (AI) (see Box 1.1) could help reverse at least part of the drop in GDP growth resulting from population ageing. AI is a new General Purpose Technology (GPT), comparable to earlier digital technologies such as the internet and personal computers, or previous breakthrough innovations like the steam engine and electricity. These past inventions have led to periods of accelerated economic growth. Similarly, it has been estimated that AI could result in growth in total-factor productivity of between 0.25‑0.6 percentage points (p.p.) per year (0.4‑0.9 p.p. for labour productivity) (Filippucci, Gal and Schief, 2024[3]). In addition, through its impact on automation, AI could help address skills and labour shortages (OECD, 2025[2]), and it could help extend working lives by improving the quality of jobs (OECD, 2023[4]).

Box 1.1. What is Artificial Intelligence?

The OECD defines an AI system as “a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments. Different AI systems vary in their levels of autonomy and adaptiveness after deployment” (OECD, 2024[5]).

AI can be seen as a General-Purpose Technology (GPT) (Brynjolfsson, Rock and Syverson, 2017[6]). GPTs are characterised by their pervasiveness, inherent potential for technical improvements and innovational complementarities (Bresnahan and Trajtenberg, 1992[7]). AI has the potential to be pervasive, impacting a broad variety of sectors and occupations. Not only does it improve over time through the expertise of inventors or developers, but also by learning on its own from data and its past predictions. Furthermore, it has the capability to spawn complementary innovations.

The applications of AI are wide‑ranging. Wherever large amounts of data are available, AI has the potential to improve decision making and reduce costs. AI is used in workplaces for various tasks, including coding, drafting emails, improving written text, generating summaries, and translating content. In human resources, AI streamlines recruitment by screening resumes and matching candidates. In marketing and advertising, AI enables personalised content creation and optimises ad targeting. In finance, AI enhances fraud detection and improves financial forecasting. In manufacturing, AI-powered robotics assist production, while predictive maintenance helps prevent equipment failures.

However, adoption of AI in Korea remains low, with estimates ranging from 6.4% to 30.3% (Han, 2023[8]; NIA, 2025[9]; KOSIS, 2025[10]). Evidence from a new OECD survey shows that adoption of AI by SMEs (<250 employees) in Korea (31%) is higher than in Japan (27%), but considerably lower than in some other OECD countries, such as Austria (42%), Ireland (45%) and Germany (51%) (Figure 1.2). Yet the share of employment in SMEs in Korea is particularly high (over 80%).

Figure 1.2. AI adoption in SMEs is lower in Korea than in other countries

Percentage of SMEs reporting usage of generative AI or other forms of AI

Source: OECD (2025[11]), Microdata from the OECD SME Survey on Generative AI.

To encourage adoption, AI should be safe and trustworthy

While AI has the potential to bring many benefits, including to the workplace, employers will be hesitant to adopt AI, and workers reluctant to use it, if the risks are not adequately addressed, including risks to: worker safety and health, data protection and privacy, as well as bias and discrimination.

Korea is only the second country in the world, after the EU, to adopt comprehensive AI legislation. The Basic Act on the Development of Artificial Intelligence and the Establishment of Trust (“AI Basic Act” henceforth) was approved in January 2025 and will be enforced from January 2026 onwards. The AI Basic Act refers to the need to “minimise risks and build trust”. The AI Basic Act covers important principles such as transparency and explainability, as well as safety and reliability of AI. Firms using “high-impact AI” will be expected to provide users with advance notice. They will also need to: develop and implement a risk management plan, a user protection plan, ensure human supervision and oversight, and maintain documentation on safety and reliability measures – although details on how this should be done are still left open.

Korea also has comprehensive data protection legislation. The Personal Information Protection Act (PIPA) offers similar rights and protections as the GDPR in the EU, including in the case of fully automated decisions where the PIPA, unlike the GDPR, specifically mentions the use of AI. When personal data is collected and processed, the consent of individuals is required. While the meaningfulness of consent in the context of an employer-employee relationship has been questioned, given the power imbalance between the two parties, in Korea, an interesting solution to this challenge appears to have been found: if there is a trade union (labour union) in the workplace, consent is deemed to be given when the union agrees, while in workplaces without unions, the condition is met when more than half of all workers express their agreement.

Despite these legislative efforts, Korea’s approach to regulating AI is based more on principles than on detailed prescriptions and regulations. This may encourage innovation, but it also makes enforcement more difficult. The AI Basic Act is deliberately less restrictive than the EU AI Act and aims to combine ethical AI and safe practices with domestic innovation. While the EU AI Act is closer to a product safety regulation, the AI Basic Act contains strong elements of an industrial policy. Other principles, like the guarantee of human rights, and bias and discrimination, are not included in the AI Basic Act but are covered by the Korea Guidelines for Ethical Standards of Artificial Intelligence instead.

Going forward, it will be important to develop specific guidance on the use of AI in the workplace. Indeed, while some companies in Korea (26.2%) have developed their own guidelines for the use of AI, the majority have not (Figure 1.3). The AI Basic Act defines “high-impact AI”, similar to “high-risk AI” in the EU AI Act. However, the use of AI in employment (a high-risk case in the EU AI Act) is only alluded to briefly in the AI Basic Act when it mentions AI that involves “Judgment or evaluation that has a significant impact on an individual's rights and obligations, such as hiring.” It is not clear, therefore, to what extent some of the AI Basic Act would apply to situations in the workplace other than hiring, nor what steps employers should take to ensure the safe and trustworthy use of AI.

Figure 1.3. The majority of firms in Korea do not have guidelines for the use of AI

Percentage of firms reporting the existence of guidelines, by sector and firm size

Note: The survey targeted firms that use AI, focussing on industries classified under the Korean Standard Industrial Classification (KSIC), specifically: Manufacturing, Information and communication, Professional scientific and technical service, Healthcare. Only firms that utilise AI and have 10 or more employees were included in the survey. HR managers and AI developers provided the survey responses. The survey was conducted over a two‑month period, from 20 October 2024 to 31 December 2024. The survey covered a population of 9 625 establishments, including 3 292 in manufacturing, 3 118 in information and communication, 1 788 in professional and scientific services, and 790 in healthcare. The sample was drawn using a random sampling method, with a target sample size of 200. Ultimately, the study achieved valid responses from 145 firms, whose data were incorporated into the final analysis.

Source: Survey on AI Utilisation and Labour Market Changes conducted by the Korea Labor Institute (2024).

Social dialogue can facilitate the AI transition

In translating the above laws and principles into practical guidelines in the workplace, social dialogue will be critical. OECD research has shown that social dialogue and collective bargaining can play a key role in supporting workers and firms in the AI transition, and in fostering fair and dynamic labour markets (OECD, 2023[4]), and also that the outcomes for workers when AI is adopted in the workplace are better when employers consult them about the use of AI (Lane, Williams and Broecke, 2023[12]).

At the national level, social dialogue in Korea is still in its infancy. Discussions on AI and technology issues take place in the National Artificial Intelligence Commission, which is composed of ministers, heads of public institutions, academics, and presidents of technology companies – however there is no specific focus on the labour market. The latter topic is discussed separately in the Economic, Social and Labour Council, which recently launched the “AI and Labour Research Association”, composed of worker and employer representatives, officials from the ministries of labour and Industry, as well as professors and researchers.

At company level, the Labour Standard Act stipulates that employers in Korea need the consent from workers (from the union if there is one, if not from the majority of workers) when they intend to alter the rules of employment in a way that is unfavourable to employees (i.e. leads to a deterioration in working conditions). However, there is uncertainty surrounding how AI adoption impact working conditions and what this means for the obligation of employers to consult workers.

In practice, worker consultation on AI adoption in Korea appears limited. A survey of workers in Korea showed that 56.3% were not involved in discussions around AI adoption in their workplace and only 6.9% said their firms engaged in discussions with unions or labour management councils (Figure 1.4). As expected, these discussions are far more common in large firms. In the few cases where workers were consulted, the most common topics covered were: AI’s impact on the number of jobs, changes in specific occupations, emerging training needs, and methods of data collection and use. A case from Korea further illustrates how the involvement of workers in AI adoption and maintenance appears limited (Box 1.2).

Figure 1.4. Few workers in Korea say their employer consults unions or councils on the adoption of AI

Percentage of employees saying employers consult unions or councils on AI adoption, by firm size

Note: “Yes” indicates that a labour union or works council exists and is consulted. “No” indicates that a labour union or works council exists but is not consulted. “None” indicates that no labour union or works council exists. The survey targeted individual employees who use AI in firms operating within four industries classified under the Korean Standard Industrial Classification (KSIC): Manufacturing, Information and Communication, Professional, Scientific and Technical Services, and Healthcare. Employees using AI provided the survey responses. The survey was conducted over a two‑month period, from 20 October 2024 to 31 December 2024. The sample was drawn using a random sampling method, with a target sample size of 600. Ultimately, the study achieved valid responses from 426 employees, whose data were incorporated into the final analysis.

Source: Survey on AI Utilisation and Labour Market Changes conducted by the Korea Labor Institute (2024).

Box 1.2. Case study: AI adoption processes in an electronic parts manufacturer in Korea

A firm producing multilayer ceramic capacitors (MLCC), power inductors, chip resistors, tantalum, camera and IT modules, semiconductor package substrates, and others, applies AI to the quality inspection of finished products in the MLCC production process. As product quality is a key competitive factor in the MLCC market, strict quality control is essential. To address yield losses caused by the limitations of visual inspections conducted by human workers, the firm introduced an AI model.

At the AI development stage, production workers contribute minimally to AI development, while AI developers and manufacturing technology team members play dominant roles. The production workers were expected to provide domain knowledge to aid in AI development, but instead, some manufacturing technology team members, who possess high domain expertise and extensive work experience, took on this role. As a result, the production workers had little involvement in AI development. At the improvement stage, AI developers again dominate the process of re‑teaching AI. As the data used for AI training drifts over time, due to changes in product designs or work methods, regular re‑learning of AI is necessary. AI for machinery-operating tasks is updated daily, while AI for product quality inspection is updated weekly. Interestingly, the re‑learning process is automated within the AI algorithm itself. As a result, production workers play a very limited role in AI improvement.

During the AI use stage, AI tends to replace human labour in this firm, leaving little room for workers to contribute. The adoption of AI led to the downsizing of hundreds of workers in the quality inspection processes. Most of the affected workers were from subcontractors, while directly employed workers were reassigned to other roles. The machinery-operating processes also face downsizing, with just two workers now handling jobs that previously required dozens of employees. Additionally, two‑thirds of clerical workers who perform simple tasks are expected to be made redundant in the future. However, the firm has been growing rapidly, and AI adoption has not yet led to overall redundancy but rather slowed the increase in the workforce. Notably, new plants were recently built at each of the two domestic factories.

Investing in skills will be critical to make a success of AI

A lack of skills can be a significant barrier to AI adoption and use. Indeed, the greatest barrier to adoption cited by SMEs that have not adopted generative AI in Korea, is a lack of skills among employees (cited by 53%) (OECD, 2025[11]). These findings are consistent with research for other countries, which showed that 40% of employers in the manufacturing and finance sectors said that skills were a barrier to AI adoption (Lane, Williams and Broecke, 2023[12]). At the same time, workers in these same sectors who say they have been trained to work with AI are considerably more positive about the impact of AI on their performance, enjoyment of work, and mental and physical health than workers who did not receive such training (Lane, Williams and Broecke, 2023[12]).

In addition, Korea faces a challenge in retaining AI talent – reflecting a wider brain drain issue which can be traced back to the 1950s, with high-skilled workers seeking better job opportunities and higher living standards abroad. While the Korean Government has introduced AI-focussed education and vocational training programmes, the shortage of AI experts has been persistent with intensified competition and a surge in global demand for AI professionals. This threatens technological progress and productivity growth.

It is therefore encouraging to see the AI Basic Act mention the importance of skills. It stipulates that a “basic” plan will have to be elaborated every three years by the Minister of Science and ICT which must cover: “Matters related to training professional manpower for systematic fostering of the artificial intelligence industry”. The AI Basic Act also states that “The Minister of Science and ICT shall train and support professional manpower related to artificial intelligence.” Korea already has several publicly funded education and training programmes to develop AI skills, including K-Digital Training, a vocational training initiative that aims to provide high-skilled workers in digital and edge‑tech industries and which, so far, has benefited over 5 000 participants in more than 200 courses. However, going forward, the Korean Government should: promote more on-the‑job learning; ensure that training programmes are tailored to the needs of SMEs; and co‑ordinate effectively between ministries. To achieve the latter, Korea may want to set up a specialised, overarching AI agency to co‑ordinate AI education and training (Ministry of Labour and Employment) and industrial policies (Ministry of Trade, Industry and Energy).

It will be important to ensure that training does not focus only on AI technical skills required for developing and maintaining AI, but also on more general skills required to work with AI. Indeed, most workers will be exposed to AI in the workplace, without necessarily needing such technical skills (Green, 2024[13]). In this respect, the K-Digital Beginner-level Skill Training, which provides beginner-level digital skills to participants, is a promising programme, although its coverage is currently limited (22 000+ participants) compared to the number of workers who will be exposed to AI at work. Article 4 of the EU AI Act, which requires providers and deployers of AI systems to ensure a sufficient level of AI literacy of their staff and other persons dealing with AI systems on their behalf, may also serve as inspiration to Korean policymakers.

Special support should be provided to SMEs

Boosting AI adoption among SMEs in Korea could result in significant economic gains, particularly given the large share of employment that they represent. The productivity of SMEs in Korea is only about one‑third of that of large companies (compared to around half in other OECD countries) (OECD, 2024[1]) and AI adoption is also significantly lower among SMEs than it is among larger firms: 27.4% in firms with 50 to 249 employees, compared to 63.3% in firms with more than 250 employees (NIA, 2025[9]). At the same time, SMEs that use AI in Korea are very positive about its impact: nearly half of the SMEs experiencing skills shortages believe that generative AI has helped address them, 4 in 5 say it has increased employee performance, and around 2 in 5 say it has saved money, increased revenue, and helped them compete against larger companies (Figure 1.5).

Figure 1.5. SMEs in Korea are positive about the impact of generative AI

Percentage of SMEs reporting generative AI helped the company

Note: The total reflects the combined results from all countries participating in the survey (Austria, Canada, Germany, Ireland, Japan, Korea, the United Kingdom).

Source: OECD (2025[11]), Microdata from the OECD SME Survey on Generative AI.

It is encouraging to see the AI Basic Act mention “education support related to the introduction and utilisation of artificial intelligence technology for […] employees of small and medium-sized enterprises” as well as “support for funds used for the introduction and use of artificial intelligence technology by small and medium-sized enterprises.” At the same time, Korea should ensure that such support goes hand-in-hand with efforts to consolidate the various other forms of support and protections for SMEs, to reduce the risk that these policies lock resources into low-productive uses and thereby hold back overall productivity (OECD, 2024[1]).

References

[7] Bresnahan, T. and M. Trajtenberg (1992), “General Purpose Technologies “Engines of Growth?””, https://doi.org/10.3386/W4148.

[6] Brynjolfsson, E., D. Rock and C. Syverson (2017), “Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics”, National Bureau of Economic Research Working Paper Series, https://doi.org/10.3386/w24001 (accessed on 25 July 2024).

[3] Filippucci, F., P. Gal and M. Schief (2024), “Miracle or Myth? Assessing the macroeconomic productivity gains from Artificial Intelligence”, OECD Artificial Intelligence Papers, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/b524a072-en.

[13] Green, A. (2024), “Artificial intelligence and the changing demand for skills in the labour market”, OECD Artificial Intelligence Papers, No. 14, OECD Publishing, Paris, https://doi.org/10.1787/88684e36-en.

[8] Han, J. (2023), 인공지능으로 인한 노동시장의 변화와 정책방향 (The Impact of Artificial Intelligence on the Labor Market and Policy Implications), Korea Development Institute (KDI), https://doi.org/10.2139/SSRN.4890349.

[10] KOSIS (2025), Survey of Business Activities 2023 - Technology Development and Utilization: Artificial Intelligence, https://kosis.kr/statHtml/statHtml.do?sso=ok&returnurl=https%3A%2F%2Fkosis.kr%3A443%2FstatHtml%2FstatHtml.do%3Flist_id%3DJ2_7_300_009%26obj_var_id%3D%26seqNo%3D%26tblId%3DDT_1EP1337_1%26vw_cd%3DMT_ZTITLE%26orgId%3D101%26path%3D%252FstatisticsList%252FstatisticsListIndex.do%26conn_path%3DMT_ZTITLE%26itm_id%3D%26lang_mode%3Dko%26scrId%3D%26 (accessed on 18 June 2025).

[12] Lane, M., M. Williams and S. Broecke (2023), “The impact of AI on the workplace: Main findings from the OECD AI surveys of employers and workers”, OECD Social, Employment and Migration Working Papers, No. 288, OECD Publishing, Paris, https://doi.org/10.1787/ea0a0fe1-en.

[9] NIA (2025), 2024 Yearbook of Enterprise Informatization Statistics, National Information Society Agency and Ministry of Science and ICT, Republic of Korea, https://eng.nia.or.kr/site/nia_eng/ex/bbs/View.do;jsessionid=34AFDD692F3F88105EC7F1B30DE3B071.7cc30ba5eea206361634?cbIdx=31975&bcIdx=27694&parentSeq=27694 (accessed on 25 April 2025).

[11] OECD (2025), “Microdata from the OECD SME Survey on Generative AI”.

[2] OECD (2025), OECD Employment Outlook 2025: Can We Get Through the Demographic Crunch?, OECD Publishing, Paris, https://doi.org/10.1787/194a947b-en.

[5] OECD (2024), “Explanatory memorandum on the updated OECD definition of an AI system”, OECD Artificial Intelligence Papers, No. 8, OECD Publishing, Paris, https://doi.org/10.1787/623da898-en.

[1] OECD (2024), OECD Economic Surveys: Korea 2024, OECD Publishing, Paris, https://doi.org/10.1787/c243e16a-en.

[4] OECD (2023), OECD Employment Outlook 2023: Artificial Intelligence and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/08785bba-en.