The growth potential of the Korean economy has been waning since the 1990s due to the fall in fertility and the closing of a catch-up phase of economic growth, calling for greater efforts to boost productivity across the economy.
Of particular concern in this regard are the service sector and the small- and medium-sized enterprises. To create quality jobs in these sectors, it is necessary to promote competition in professional and other tightly regulated services, and to facilitate the consolidation of small and very small firms into larger ones.
At the same time, flexibility-increasing structural reforms are needed in the product market and the labor market. In the former, competition policy should be reinforced, protective measures for domestic firms and industries abolished, and further deregulation, external liberalization, and privatization pursued. In the latter, employment protection should be lowered especially for regular employees, and labor unions should throw away their silo views in return for a broader perspective on the economy-wide growth and employment.
Equally important is the improvement of the public education system to facilitate school-to-work transitions. The accountability of schools and teachers to students should be strengthened while their autonomy extended.
Lastly, concerted efforts across all policy areas are needed to fight the increasing poverty and worsening income distribution. The roots of the problem can be found in the intensifying competition in the global export market with low-wage countries and the accompanying de-industrialization of the Korean economy, which have placed low-skilled workers at a disadvantage. In response, active labor market policies to enhance their employability should be expanded in coverage and improved in service delivery.
All these mandates are hard to implement, and require a wise political leadership to build up a social consensus.
견실한 경제성장과 안정적 사회발전을 위한 정책제언(Policy recommendations for a robust economic growth and an integrated social development)
|Series Title; No||연구보고서|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Macroeconomics
Industry and Technology < General