This paper analyses the increasing dualism in the Korean labour market and the need to encourage greater labour force participation. Although the rising proportion of non-regular workers lowers labour costs and increases employment flexibility, it has a negative impact on both equity and efficiency over the
long term. Relaxing employment protection for regular workers and increasing the coverage of the social safety net for non-regular workers would help limit the extent of dualism. Population ageing is projected to be exceptionally rapid in Korea, leading to a significant decline in the workforce by mid-century. Steps to boost the participation of women through family-friendly policies are a priority. It is also important to encourage employees to stay at firms beyond the age of 50. Making the wage system more dependent on
productivity and less on seniority and implementing a company pension system in place of the retirement allowance would help maintain the employment of older persons.
This Working Paper relates to the 2005 OECD Economic Survey of Korea
(www.oecd.org/eco/surveys/korea).
The Labour Market in Korea
Enhancing Flexibility and Raising Participation
Working paper
OECD Economics Department Working Papers
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