KDI President Participates in the Global Labor Market Conference (GLMC)

• KDI President Dongchul Cho participated as a speaker at the Global Labor Market Conference (GLMC), held in Riyadh, Saudi Arabia, from January 29 to 30. 
  
  During the panel discussion titled "Productivity Improvement: Ignore at Your Peril," experts focused on the impact of productivity growth on economic development and various challenges within labor markets. The panelists pointed out that while increased productivity contributes to economic growth, it does not necessarily guarantee wage increases. They cited the U.S. as an example, where productivity has risen over the past 40 years, yet real wages for workers have remained stagnant. Additionally, they emphasized the need for policies to mitigate income losses when workers lose their jobs.
  
  KDI President Dongchul Cho highlighted the importance of equal employment opportunities for both men and women and expressed a positive outlook on the increasing participation of women in the Saudi Arabian workforce. Referring to South Korea, he noted that while women’s participation in the labor market is expanding, many still face the dilemma of choosing between career and childcare. He stressed the need for institutional support to alleviate the childcare burden at a societal level.
  
  The discussion also underscored the close relationship between productivity and labor conditions. Panelists suggested that investments in technology development and vocational training are necessary to improve both productivity and worker welfare. Moreover, they noted that U.S. economic growth has been significantly influenced by immigration and labor force expansion, with the recent influx of immigrants helping to address labor shortages. However, concerns were raised that potential shifts in immigration policies could slow down labor force growth, making productivity improvement a key issue in the future.
   

  

  
  In the afternoon, a session titled "Country Case Study – South Korea" was held, where discussions centered on the challenges and potential improvements in South Korea’s labor market.
  
  Professor Young-Bum Park of Hansung University analyzed South Korea’s employment trends from 1995 to 2023. He explained that despite experiencing three major crises—the Asian financial crisis, the global financial crisis, and the COVID-19 pandemic—the overall employment situation remained stable. However, he pointed out that highly educated young workers continue to avoid employment in small and medium-sized enterprises (SMEs), leading many SMEs to hire foreign workers instead. He also noted that the wage gap between large corporations and SMEs in South Korea is wider than in Japan and that the seniority-based wage system leads companies to encourage early retirement.
  
  KDI President Cho remarked that South Korea’s labor market has an imbalance where older workers' wages exceed their productivity, while younger workers face the opposite situation. From a corporate perspective, laying off older employees may seem more appealing, but in reality, many retirees struggle with financial instability. He emphasized the need for policies that allow older workers to participate in the labor market in a stable manner, which would help prevent a loss of talent and improve labor market efficiency.
  
  Munirul Nabin, Senior Lecturer at Deakin University, highlighted the rigidity of South Korea’s labor market and its resulting dual structure. He noted that the gap between regular and non-regular workers is severe, with the conversion rate from non-regular to regular employment among young workers at only 4.8%, leading to significant job mismatches.
  
  In response, Workforce Policy Consultant David Barnes of DNBGlobal Consulting suggested that South Korea adopt a skills-first hiring approach, citing IBM’s example of prioritizing skills over academic degrees. He emphasized that in an era where retraining and adaptability are crucial, hiring practices must evolve accordingly.
  
  Meanwhile, economist Andy Xie argued that South Korea needs to reinvent its industrial paradigm, similar to China. He pointed out that China actively participates in globally emerging industries and drives innovation, whereas South Korea faces limitations due to its rigid labor market system and conglomerate-centered policies.

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  Written by:
  Hae Won Jeon, Senior Research Associate, Research Outcome Dissemination Unit, 044-550-4036, natalie@kdi.re.kr