Issue Balancing labour flexibility and security with a two-sided safety net in Korea

Summary

KEIS warns that as industrial restructuring splits the employment structure, Korea needs a two-sided labour market safety net policy. Quality, stable high-skill jobs must be expanded further, while a safety net that looks after vulnerable workers is also required. Policy design and tailored support should rest on analysis of industrial structure and occupational characteristics. The report adds that flexibility and stability must be balanced, since labour market flexibilisation can improve resource allocation in the short run but may hinder innovation and productivity growth in the long run. It therefore cautions against excessive flexibilisation in terms of productivity and labour market vitality, given the need for stable high-skill jobs.