OECD Employment Outlook 2026: Korea
Table of contents
These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2026. This edition has a special focus on geographic disparities in jobs and incomes.
The OECD labour market remains resilient, with employment and labour force participation rates at record highs (72.1% and 76.7% in Q1 2026 on average across countries, respectively) and unemployment low by historical standards (4.9% in May 2026). However, there are increasing signs of weakening, including rising unemployment in many countries, slowing employment growth, and easing labour shortages. Due to the new surge in energy prices, real wages are expected to fall in many countries.
The Korean labour market has remained resilient despite signs of weakening across the OECD. The unemployment rate stood at 2.8% in May 2026, well below the OECD average and broadly unchanged from a year earlier. Unemployment also remains substantially below pre‑pandemic levels (around 4%).
Employment and labour force participation have continued to increase, although at a more moderate pace in recent years than during the post-pandemic rebound. The employment rate for people aged 15‑64 has risen steadily from the pandemic low to reach 70% in Q1 2026. While this remains slightly below the OECD average, labour force participation has also continued to rise, reaching 72% in Q1 2026, around 3 percentage points (p.p.) above its pre‑pandemic level.
At the same time, labour market tightness has eased over the past year. The number of vacancies per unemployed person fell from 0.2 in Q4 2024 to 0.17 in Q4 2025, well below the post‑pandemic peak of 0.29 reached in 2023. This suggests that labour shortages have continued to subside from the elevated levels observed after the COVID‑19 crisis, partly driven by weaker hiring demand.
Labour productivity growth has remained comparatively strong in Korea since the COVID‑19 crisis, placing it alongside countries such as the United States, Poland and the Slovak Republic where productivity gains have exceeded long‑term trends. Maintaining strong productivity growth will become increasingly important as rapid population ageing places growing pressure on labour supply and potential output over the longer term.
Real wages in Korea had largely recovered from the post‑pandemic inflation shock before the recent rise in energy prices. By Q1 2026, real hourly wages were around 5.7% above their Q1 2021 level, making Korea one of few OECD countries where purchasing power had clearly surpassed pre‑inflation levels. Based on the assumption that disruptions stemming from the conflict in the Middle East are sizeable but limited to a relatively short period of time, OECD projections suggest that real wages in Korea will further increase by 0.7% year-on-year in 2026. Real wage growth is expected to strengthen further in 2027, with real compensation projected to increase by 2.3% relative to 2026.
Regional disparities in labour market outcomes are large across the OECD. In over half of OECD countries, employment rates across small regions vary by more than 20 p.p. These disparities do not simply reflect differences in who lives where, but also in the economic opportunities that regions have to offer, and they translate directly into disparities in living standards.
In Korea, regional disparities in employment rates are significantly narrower than in most OECD economies: the gap between regions in the top and bottom quintiles of employment rates stands at 6.5 p.p., compared to an average of 11.4 p.p. across countries where data are available.
Still, where people live strongly shapes their chances of finding work. In 2023, the latest year for which data are available at such granular geographical scale, the unemployment rate in the worst-performing region, Incheon, stood at 3.2%, almost twice as that of the best-performing one, Jeju-do (1.9%).
High-value‑added service jobs in Korea are heavily concentrated in the region of Seoul, where they account for 21.6% of regional employment. The remaining regions, whether metropolitan or not, show much lower shares of such jobs.
Since the early 2010s, regional disparities in employment rates have narrowed by 13.9% relative to the national average, in line with most OECD countries. This reflects positive labour market developments in low-employment regions.
Non-compete clauses (NCC) – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets. they covered about 30% of workers in 2025 and are increasingly used beyond highly specialised jobs. While firms may use such clauses to protect trade secrets or investments, evidence suggests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine productivity growth.
In Korea, according to employers, between 25% and 35% of private‑sector employees are currently bound by a non-compete agreement, compared with an average of 20% to 30% across the surveyed OECD countries.
Firms in Korea also report an upward trend in the use of non‑compete clauses, suggesting growing reliance on contractual restrictions in the labour market.
As in several other OECD countries, non‑compete clauses in Korea extend well beyond highly specialised occupations where the traditional justification – protecting sensitive information or high-value investments – appears strongest. Between 16% and 41% of workers without access to confidential information report being covered by a non‑compete clause, as do between 5% and 37% of low‑paid workers.
In addition, about 65% of surveyed firms report knowledge of either no-poaching agreements, wage‑fixing arrangements, or both occurring within their industry, compared with 48% on average across the surveyed countries.
The comparatively widespread use of these contractual restrictions may weigh down on labour mobility and wage growth, potentially slowing knowledge diffusion and productivity growth over time.
Contact
Ha-Young JEON (✉ ha-young.jeon@oecd.org)
Glenda QUINTINI (✉ glenda.quintini@oecd.org)
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The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris, https://doi.org/10.1787/7e710f54-en.
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