Research Cluster

Democracy Cluster Future of Science and Technology Cluster Economic Security Cluster Population Cluster Global Korea Cluster Carbon Neutrality Cluster Balanced Regional Growth and Resilience Cluster [Expired]Pandemic Cluster

TF Project

[Expired]Foundational study for the advanced revision of the Korea-U.S. nuclear cooperation agreement [Expired]Preparation for Four Geopolitical Risks [Expired]Labor market reform tasks for restoring the dynamism of the Korean economy [Expired]Problems and Improvement Plans of Korean Education [Expired]Questions for the future of science and technology in Korea [Expired]Security and Economic Cooperation between Korea and Japan [Expired]The future of population for a sustainable society [Expired]Directions for sustainable future healthcare reform [Expired]Healthcare system improvements for the establishment of the primary care physician system [Expired]Avian influenza pandemic risk assessment and preparedness [Expired]The stagnant growth crisis: national strategy for economic prosperity

 

[Expired]Research on the outlook for key sectors of population change and response strategies [Expired]Exploring the public education system and its functions in population decline era [Expired]Policy advisory service for enhancing the future competitiveness of nuclear energy [Expired]Establishment of KEPCO's medium-to-long-term response strategy [Expired]Future agricultural and rural development strategies & response tasks for the Korea rural community [Expired]Rewriting Democracy [Expired]In the Era of Technological Competition, Korea's Future Prospects [Expired]Developing a nationally-unified response system to address frauds involving multiple victims [Expired]Changes in international politics and the rise of the global south [Expired]Research on identifying policy agendas and research issues for the national AI strategy

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Title Decline in Korea's Economic Growth and the Need for a More Flexible Labor Market Hit 223
Publication 2025-07-15

Institute for Future Strategy Issue Brief, July Vol. 38
“Korea’s Growth Slowdown and the Need for a Flexible Labour Market”

This issue brief provides an in-depth analysis of the recent decline in Korea’s economic growth rate, focusing on three key factors: capital input, labour input, and total factor productivity (TFP). It identifies structural shifts in labour supply due to population ageing, the disconnect between seniority-based wages and productivity, and disparities in employment protection between regular and non-regular workers as major constraints on productivity growth.

In response, the brief proposes enhancing productivity through greater flexibility in labour market institutions and rational adjustments to working hours. It further presents empirical evidence showing that the expansion of flexible work arrangements can simultaneously strengthen corporate competitiveness and improve workers’ quality of life. Based on this, the brief suggests policy measures to help Korea respond to the structural challenges it will face in the future.

Keywords
Korean economy, growth slowdown, labour supply structure, productivity, working hours, flexible work arrangements

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