Why Does South Korea's Labour Productivity Lag Behind Advanced Nations?
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Synopsis
South Korea faces a significant challenge with its low labour productivity compared to advanced nations. A recent report highlights the implications of pursuing a four-day workweek without first enhancing efficiency, posing potential risks to economic stability. This situation demands urgent attention and strategic reforms to foster a more productive workforce.
Key Takeaways
- South Korea's labour productivity is low compared to advanced economies.
- Current GDP per employed person is US$65,000.
- Four-day workweek discussions are ongoing, raising efficiency concerns.
- Wages have outpaced productivity growth since 2018.
- Recommendations for reforms include flexible hours and better wage systems.
Seoul, Sep 22 (NationPress) A recent report revealed that South Korea's labour productivity is significantly lower when compared to other advanced nations. This raises concerns regarding the movement towards shorter working hours without first enhancing efficiency. According to the findings, co-released by the Sustainable Growth Initiative (SGI) from the Korea Chamber of Commerce and Industry (KCCI) and Professor Park Jung-soo of Sogang University, South Korea's annual labor productivity, defined as gross domestic product (GDP) per employed individual, reached US$65,000 in 2023, placing it 22nd among the 36 member nations of the Organization for Economic Cooperation and Development (OECD).
This figure starkly contrasts with Belgium's $125,000 and Iceland's $144,000, both of which have implemented a four-day workweek system. Meanwhile, countries like France, Germany, and Britain, currently trialing four-day workweek programs, reported GDP per worker at $99,000, $99,000, and $101,000, respectively.
The SGI noted, "Reducing working hours can enhance job satisfaction and provide more leisure time, which could lead to increased consumption. However, for businesses, cutting working hours without boosting productivity will likely reduce output and increase labor costs, thereby adding to financial strains."
The report also highlighted that since 2018, wage growth has outpaced productivity increases amidst a global slowdown and local circumstances, such as rising minimum wages. Annual salaries grew by an average of 4% from 2018 to 2023, while productivity advanced by only 1.7% per year. From 2000 to 2017, both salaries and productivity increased by 3.2% annually.
The SGI emphasized that while shorter working hours could improve work-life balance, the priority should be improving corporate management conditions, especially given South Korea's low productivity and tapering growth. Recommendations included flexible working hours for specific industries, more sustainable wage structures, and policy assistance for small and medium enterprises.
President Lee Jae Myung has suggested establishing a four-day workweek as a long-term national objective, which is a prominent pledge from his presidential campaign.
Point of View
It is crucial to recognize that while the idea of a shorter workweek is appealing, we must prioritize enhancing productivity to ensure a sustainable economic future for South Korea. The balance between work-life quality and corporate efficiency must be achieved for a thriving economy.
NationPress
22/09/2025
Frequently Asked Questions
What is the current labour productivity in South Korea?
As of 2023, South Korea's labour productivity stands at US$65,000 per employed person, ranking 22nd among OECD nations.
What are the potential risks of reducing working hours?
Reducing working hours without improving productivity can lead to decreased output and increased labor costs, placing a financial burden on companies.
How have wages changed in comparison to productivity?
Since 2018, average annual salaries have increased by 4%, while productivity has only grown by 1.7%, indicating a gap in growth.
What recommendations does the SGI suggest for improving productivity?
The SGI suggests implementing flexible working hours for specific industries, creating manageable wage structures, and providing policy support for small and medium-sized enterprises.
What is President Lee Jae Myung's stance on the four-day workweek?
President Lee Jae Myung has proposed adopting a four-day workweek as a long-term goal, which is a central part of his presidential campaign.
