Sustaining Growth in Korea by Reforming the Labour Market and Improving the Education System

A well-functioning labour market is essential to sustain rapid economic growth in the face ofpopulation ageing. Priorities are to reverse the rising share of non-regular workers, which has negativeimplications for both growth and equity, and encourage greater employment of women and youth, who areunder-represented in the labour force. Attracting more women to employment requires increasing theavailability of childcare, strengthening maternity leave and creating more family-friendly workplaces.Youth employment rates should be boosted by upgrading tertiary education through stronger competitionand closer links to enterprises to reduce mismatches. Educational reform should be extended to elementaryand secondary schools to enhance efficiency and decrease the burden of private tutoring. The age ofretirement of employees should be raised by eliminating mandatory retirement and phasing out theretirement allowance. Active labour market policies should focus on policies to expand human capitalrather than wage subsidies.