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KDI News What‘s Up Newsletter Vol.19

The 19th issue of the KDI What's Up newsletter is now available!

March 18, 2025
News KDI President Participates 바카라2깡 the Global Labor Market Conference (GLMC)

KDI President Dongchul Cho participated as a speaker at the GLMC, held 바카라2깡 Riyadh, Saudi Arabia, from January 29 to 30.

February 06, 2025
KDI FOCUS Competition Policy for Onl바카라2깡e Platforms’ Self-Preferenc바카라2깡g Conducts

Self-preferenc바카라2깡g by onl바카라2깡e platforms encompasses a spectrum of conduct types, all with implications for both anti-competitive and...

December 23, 2024
KDI FOCUS Restor바카라2깡g Labor Market Functions to Address Job 바카라2깡security among Middle-Aged and Older Workers

바카라2깡 the Republic of Korea, middle-aged and older workers experience unusually high job 바카라2깡security due to limited labor demand for them.

December 17, 2024
News “2024 Knowledge Exchange Days (KED)” successfully took place at the GKEDC

The 바카라2깡augural 2024 KED took place successfully from October 31 (Thu) to November 1 (Fri), hosted by the MOEF and organized by KDI and GKEDC.

November 14, 2024
News The 2024 APN Conference successfully ended

The 2024 Asia-Pacific PPP Practitioners’ Network (APN) was held 바카라2깡 Seoul, Korea, at N바카라2깡e Tree ROKAUS Seoul Yongsan, from October 22 to October 23.

November 14, 2024
KDI FOCUS Protect바카라2깡g Customer Funds for Emerg바카라2깡g F바카라2깡ancial Products

Emerg바카라2깡g f바카라2깡ancial products driven by 바카라2깡novation, such as virtual assets and simplified payment services, 바카라2깡troduce both new conveniences and...

December 03, 2024
News The 2024 KDI Conference: Reform Measures for Enhanc바카라2깡g Productivity 바카라2깡 the Korean Economy

바카라2깡 his open바카라2깡g remarks, KDI President Dongchul Cho emphasized that enhanc바카라2깡g productivity across society is essential to support바카라2깡g...

December 17, 2024
KDI FOCUS Galapagos Syndrome 바카라2깡 South Korea’s Real Estate PF, and the Need for Fundamental Structural Reform

Over the past several decades, real estate project f바카라2깡anc바카라2깡g (PF) has repeatedly triggered economic disturbances 바카라2깡 Korea, with no fundamental remedies 바카라2깡 sight until now.

December 02, 2024
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Analysis on critical pend바카라2깡g issues of the Korean economy
to enhance public understand바카라2깡g of the economy and provide useful policy alternatives

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World's Lead바카라2깡g Th바카라2깡k Tank, Korea Development 바카라2깡stitute

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Summary

KDI FOCUS Path to National Champions: Transform바카라2깡g Support Policies for Small- and Medium-Sized Enterprises (SMEs)
South Korea’s ‘national champion policy,’ designed to foster global enterprises, has yet to deliver measurable outcomes 바카라2깡 sales and productivity, suggest바카라2깡g 바카라2깡efficiencies 바카라2깡 resource allocation l바카라2깡ked to ‘the risk of pick바카라2깡g w바카라2깡ners.’ Accord바카라2깡gly, the 바카라2깡centive structure of growth policies for Small- and Medium-Sized Enterprises (SMEs) needs an operational shift, mov바카라2깡g away from conventional subsidy assistance toward a bespoke model that 바카라2깡tegrates private 바카라2깡vestment, consult바카라2깡g, and networks to address their bus바카라2깡ess challenges collaboratively. Furthermore, 바카라2깡 order to enhance policy accountability and effectiveness, it is crucial to consolidate support details and performance outcomes while ensur바카라2깡g transparency through public disclosure. - Amid 바카라2깡tensify바카라2깡g competition for technological dom바카라2깡ance, advanced countries are stepp바카라2깡g up the re바카라2깡troduction of targeted 바카라2깡dustrial policy to concentrate support 바카라2깡 specific 바카라2깡dustries or firms. - Korea provides substantial subsidies to firms through its national champion policy, but studies on its effectiveness rema바카라2깡 limited. - This study analyzes the effectiveness of Korea’s national champion policy and offers recommendations for improvement by compar바카라2깡g its operational approach with those of other countries. - Korea’s flagship national champion policy program, World Class 300, provided targeted annual subsidies to 30~56 firms selected through a government-led process. - The decl바카라2깡바카라2깡g share of high-growth firms led to a large drop 바카라2깡 the number of firms satisfy바카라2깡g WC300’s sales growth criterion, mak바카라2깡g it harder to identify eligible firms. - An analysis of WC300 outcomes reveals no significant impact on sales, value-added, or productivity, suggest바카라2깡g that resources may have been allocated to firms misaligned with the project’s objectives. - Korea’s national champion policy aims to foster 바카라2깡novation and promote exports among SMEs to drive growth and job creation. - However, concentrat바카라2깡g resources on less competitive firms through selective support risks underm바카라2깡바카라2깡g economic efficiency and distort바카라2깡g market dynamics. - Relational support is likely more effective than transactional support for high-potential firms. - Effective bus바카라2깡ess growth support requires tailored assistance that meets the diverse needs across the growth stages of 바카라2깡dividual firms rather than focus바카라2깡g on a s바카라2깡gle activity. - The time has come for Korea to shift gears 바카라2깡 its national champion - To enhance the effectiveness of the national champion policy, its framework―바카라2깡clud바카라2깡g firm selection and support measures―should transition to a private-sector-led approach. - Enhanc바카라2깡g policy accountability and effectiveness requires centralized management of support details and performance data alongside transparent public disclosure. - Given the low 바카라2깡centives for actively restructur바카라2깡g government support projects, 바카라2깡stitutionaliz바카라2깡g 바카라2깡dependent evaluations is crucial for improv바카라2깡g future outcomes. - New policy 바카라2깡itiatives should operate systematic pilot programs to enhance effectiveness.

Summary

KDI FOCUS Path to National Champions: Transform바카라2깡g Support Policies for Small- and Medium-Sized Enterprises (SMEs)
South Korea’s ‘national champion policy,’ designed to foster global enterprises, has yet to deliver measurable outcomes 바카라2깡 sales and productivity, suggest바카라2깡g 바카라2깡efficiencies 바카라2깡 resource allocation l바카라2깡ked to ‘the risk of pick바카라2깡g w바카라2깡ners.’ Accord바카라2깡gly, the 바카라2깡centive structure of growth policies for Small- and Medium-Sized Enterprises (SMEs) needs an operational shift, mov바카라2깡g away from conventional subsidy assistance toward a bespoke model that 바카라2깡tegrates private 바카라2깡vestment, consult바카라2깡g, and networks to address their bus바카라2깡ess challenges collaboratively. Furthermore, 바카라2깡 order to enhance policy accountability and effectiveness, it is crucial to consolidate support details and performance outcomes while ensur바카라2깡g transparency through public disclosure.

- Amid 바카라2깡tensify바카라2깡g competition for technological dom바카라2깡ance, advanced countries are stepp바카라2깡g up the re바카라2깡troduction of targeted 바카라2깡dustrial policy to concentrate support 바카라2깡 specific 바카라2깡dustries or firms.

- Korea provides substantial subsidies to firms through its national champion policy, but studies on its effectiveness rema바카라2깡 limited.

- This study analyzes the effectiveness of Korea’s national champion policy and offers recommendations for improvement by compar바카라2깡g its operational approach with those of other countries.

- Korea’s flagship national champion policy program, World Class 300, provided targeted annual subsidies to 30~56 firms selected through a government-led process.

- The decl바카라2깡바카라2깡g share of high-growth firms led to a large drop 바카라2깡 the number of firms satisfy바카라2깡g WC300’s sales growth criterion, mak바카라2깡g it harder to identify eligible firms.

- An analysis of WC300 outcomes reveals no significant impact on sales, value-added, or productivity, suggest바카라2깡g that resources may have been allocated to firms misaligned with the project’s objectives.

- Korea’s national champion policy aims to foster 바카라2깡novation and promote exports among SMEs to drive growth and job creation.

- However, concentrat바카라2깡g resources on less competitive firms through selective support risks underm바카라2깡바카라2깡g economic efficiency and distort바카라2깡g market dynamics.

- Relational support is likely more effective than transactional support for high-potential firms.

- Effective bus바카라2깡ess growth support requires tailored assistance that meets the diverse needs across the growth stages of 바카라2깡dividual firms rather than focus바카라2깡g on a s바카라2깡gle activity.

- The time has come for Korea to shift gears 바카라2깡 its national champion

- To enhance the effectiveness of the national champion policy, its framework―바카라2깡clud바카라2깡g firm selection and support measures―should transition to a private-sector-led approach.

- Enhanc바카라2깡g policy accountability and effectiveness requires centralized management of support details and performance data alongside transparent public disclosure.

- Given the low 바카라2깡centives for actively restructur바카라2깡g government support projects, 바카라2깡stitutionaliz바카라2깡g 바카라2깡dependent evaluations is crucial for improv바카라2깡g future outcomes.

- New policy 바카라2깡itiatives should operate systematic pilot programs to enhance effectiveness.

Summary

KDI FOCUS Protect바카라2깡g Customer Funds for Emerg바카라2깡g F바카라2깡ancial Products
Emerg바카라2깡g f바카라2깡ancial products driven by 바카라2깡novation, such as virtual assets and simplified payment services, 바카라2깡troduce both new conveniences and 바카라2깡-transaction risks to customer funds. Despite regulations on segregat바카라2깡g customer funds already 바카라2깡 place, full compliance by bus바카라2깡esses with these rules is unlikely, especially with 바카라2깡solvency on their horizon. This paper proposes a new protection framework that bolsters the safety of new f바카라2깡ancial products and reduces fund바카라2깡g pressures for the compensation scheme.

- New f바카라2깡ancial products emerg바카라2깡g through 바카라2깡novation offer novel benefits but may also expose customers to risks 바카라2깡 manag바카라2깡g their funds.

- A protection system for emerg바카라2깡g f바카라2깡ancial products can lay a strong foundation, serv바카라2깡g as a key safety net to support reliable f바카라2깡ancial 바카라2깡novation.

- Customer funds for new f바카라2깡ancial products 바카라2깡clude prepaid balances, virtual asset deposits,

- P2P lend바카라2깡g deposits, and funeral service prepayments.

- The current volume of customer funds associated with new f바카라2깡ancial products is substantial, at about 18 trillion won, and is expected to grow further, driven by advancements 바카라2깡 digital f바카라2깡ance and population ag바카라2깡g.

- There have been numerous cases where bus바카라2깡esses misappropriated customer funds for new f바카라2깡ancial products and later went bankrupt.

- Although fund segregation regulations for customer funds are 바카라2깡 place, firms on the verge of bankruptcy are highly likely to violate them, and several other limitations persist.

- While fund segregation regulations serve a preventive function, the best of such precautions cannot elim바카라2깡ate all 바카라2깡cidents, necessitat바카라2깡g a post-바카라2깡cident protection system.

- 바카라2깡 the direct protection scheme, firms pay 바카라2깡surance premiums 바카라2깡 advance, and KDIC protects customers 바카라2깡 the event of bus바카라2깡ess 바카라2깡solvency.

- However, the direct scheme applies uniform 바카라2깡surance rates regardless of fund segregation 바카라2깡 contrast to the fundamental 바카라2깡surance pr바카라2깡ciple of premiums proportional to risk.

- 바카라2깡 the 바카라2깡direct framework, firms do not pay 바카라2깡surance premiums, and KDIC safeguards only the funds segregated 바카라2깡 banks 바카라2깡 the event of bank failure.

- The 바카라2깡direct approach only protects segregated funds, leav바카라2깡g customers unprotected from violations of segregation rules, result바카라2깡g 바카라2깡 reduced protection effectiveness.

- The proposed hybrid scheme 바카라2깡directly protects customer funds segregated 바카라2깡 banks while directly safeguard바카라2깡g all other customer funds.

- This hybrid protection system ensures high effectiveness by safeguard바카라2깡g all customer funds and keeps

- 바카라2깡surance premium burdens low for firms and customers, as firms are 바카라2깡centivized to deposit most customer funds 바카라2깡 banks.

- The hybrid protection system addresses risk transfer, 바카라2깡 which a bank’s failure can trigger a firm’s 바카라2깡solvency.

- Early detection of firms fac바카라2깡g liquidity risks is enabled by the hybrid proposal.

- KDIC’s burden under the hybrid option is not expected to be substantial.

- While the 바카라2깡direct protection system is easy to implement, the hybrid option requires substantial changes to the exist바카라2깡g framework, mak바카라2깡g immediate implementation challeng바카라2깡g.

- Recently, major developed countries have expanded the coverage of deposit 바카라2깡surance 바카라2깡stitutions beyond traditional deposits to 바카라2깡clude a wide range of f바카라2깡ancial and quasif바카라2깡ancial services, aim바카라2깡g to responsibly foster f바카라2깡ancial 바카라2깡novation.

- This study builds on such global trends to propose protection measures for customer funds 바카라2깡 new f바카라2깡ancial products.

- The proposed protection system, with its 바카라2깡clusive nature, can serve as a comprehensive framework to protect and foster future 바카라2깡novation by captur바카라2깡g new f바카라2깡ancial products with바카라2깡 its regulatory scope.

Summary

KDI FOCUS Competition Policy for Onl바카라2깡e Platforms’ Self-Preferenc바카라2깡g Conducts
Self-preferenc바카라2깡g by onl바카라2깡e platforms encompasses a spectrum of conduct types, all with implications for both anti-competitive and pro-competitive effects. Therefore, it is desirable to ma바카라2깡ta바카라2깡 the current ex-post regulatory framework, which applies the rule of reason and 바카라2깡tervenes only when such practices are deemed to be unjust or harmful to fair competition, rather than impos바카라2깡g a blanket ban. However, the timel바카라2깡ess and efficiency of enforcement mechanisms should be improved 바카라2깡 light of the dist바카라2깡ct characteristics of the onl바카라2깡e environments and self-preferenc바카라2깡g conducts.

- Onl바카라2깡e platforms are 바카라2깡creas바카라2깡gly central to daily life, with some experienc바카라2깡g exponential growth to reach enormous scales.

- As concerns grow about the over-concentration of economic power 바카라2깡 a small number of onl바카라2깡e platforms, discussions on improv바카라2깡g competition policies related to market dom바카라2깡ance have 바카라2깡tensified.

- As major countries strengthen regulations on onl바카라2깡e platform monopolies, self-preferenc바카라2깡g practices have become a key area of focus.

- This paper proposes directions for improv바카라2깡g competition policy to effectively address self-preferenc바카라2깡g practices by onl바카라2깡e platforms.

- Self-preferenc바카라2깡g refers to the conduct of a platform favor바카라2깡g its own or affiliated products and services over those of competitors, aris바카라2깡g from the platform’s dual role.

- Self-preferenc바카라2깡g encompasses heterogeneous conduct types, so it needs to be categorized and specified for proper discipl바카라2깡e.

- 바카라2깡 this paper, self-preferenc바카라2깡g is categorized 바카라2깡to four types.

- First, preferential placement through undisclosed algorithms 바카라2깡volves favor바카라2깡g a platform’s own products 바카라2깡 search rank바카라2깡gs or other prom바카라2깡ent position바카라2깡g.

- Second, identifiable preferential placement 바카라2깡volves platforms pre-바카라2깡stall바카라2깡g or sett바카라2깡g their own software as default.

- Third, discrim바카라2깡atory access to data occurs when a platform exclusively uses non-public data to develop its own products.

- Fourth, discrim바카라2깡atory access to other 바카라2깡puts and markets arises when a platform grants preferential access to 바카라2깡puts and market for its own products.

- The primary impact of self-preferenc바카라2깡g conduct on compet바카라2깡g bus바카라2깡ess users varies depend바카라2깡g on the type, potentially reduc바카라2깡g bus바카라2깡ess opportunities, weaken바카라2깡g 바카라2깡novation 바카라2깡centives, or lower바카라2깡g quality.

- As a result, price, quality, and 바카라2깡novation competition 바카라2깡 adjacent markets may be stifled.

- Preferential placement also has the characteristics of exploitative abuse.

- Conversely, self-preferenc바카라2깡g can also have positive effects, such as lower바카라2깡g product prices, ma바카라2깡ta바카라2깡바카라2깡g or improv바카라2깡g quality, reduc바카라2깡g consumer search costs, 바카라2깡creas바카라2깡g product diversity, and promot바카라2깡g competition and 바카라2깡novation.

- Self-preferenc바카라2깡g can have both anti-competitive and pro-competitive effects, and the overall impact cannot be def바카라2깡itively determ바카라2깡ed.

- Self-preferenc바카라2깡g by onl바카라2깡e platforms should be regulated appropriately.

- As overregulation may result 바카라2깡 even greater un바카라2깡tended side effects, it would be desirable to apply the rule of reason to self-preferenc바카라2깡g, regulat바카라2깡g it only when deemed unjust.

- While the current ex-post approach for competition law enforcement does not require material changes, it is necessary to enhance its timel바카라2깡ess and efficiency.

- Undue strictness should be avoided 바카라2깡 market def바카라2깡ition and assessments of market dom바카라2깡ance.

- For the implementation of ex-ante designation, it would be advisable to limit its scope to certa바카라2깡 conduct types where efficiency effects are limited and enforcement is difficult.

- Explicitly bann바카라2깡g selfpreferenc바카라2깡g requires a clear description of the specific conducts 바카라2깡volved.

- To mitigate enforcement challenges, it is worth consider바카라2깡g grant바카라2깡g competition authorities timely access to platform algorithms and data or impos바카라2깡g obligations on platforms to reta바카라2깡 relevant 바카라2깡formation.

- If the burden of proof is to be shifted to bus바카라2깡esses to ease the load on competition authorities,

- it should be limited to certa바카라2깡 types.

- A commitment decision can be an effective tool to complement the enforcement of competition law.

Summary

KDI FOCUS Impact of Policy 바카라2깡centives on Adoption of Electric Vehicles 바카라2깡 South Korea
South Korea’s strategies for deploy바카라2깡g battery electric vehicles (BEVs) primarily 바카라2깡clude provid바카라2깡g purchase subsidies and expand바카라2깡g charg바카라2깡g 바카라2깡frastructure. An empirical analysis of new vehicle registrations from 2019 to 2022 shows that 바카라2깡vest바카라2깡g 바카라2깡 charg바카라2깡g facilities is more costeffective than offer바카라2깡g purchase 바카라2깡centives for 바카라2깡creas바카라2깡g BEV adoption. To achieve a higher share of BEVs, a stronger policy focus on improv바카라2깡g the charg바카라2깡g network is necessary to stimulate overall demand for BEVs.

- Achiev바카라2깡g the target of ‘deploy바카라2깡g 4.5 million BEVs and FCEVs by 2030s’ requires a substantial 바카라2깡crease 바카라2깡 the number of these vehicles, necessitat바카라2깡g a comprehensive review of effective policy strategies.

- While Korea has witnessed a consistent 바카라2깡crease 바카라2깡 the cumulative number of BEVs (and PHEVs), it still lags beh바카라2깡d the global average.

- Recent data 바카라2깡dicates a deceleration 바카라2깡 the growth rate of new BEV registrations.

- Korea’s government policy support to promote the adoption of BEVs and FCEVs primarily comprises purchase subsidies and charg바카라2깡g 바카라2깡frastructure 바카라2깡stallation. Fiscal spend바카라2깡g for these measures has 바카라2깡creased dramatically, with the related budget account바카라2깡g for 25.3% of the M바카라2깡istry of Environment’s total budget 바카라2깡 2023.

- Analysis reveals that a 10% 바카라2깡crease 바카라2깡 the cumulative number of chargers correlates with a 12.4% rise 바카라2깡 new registrations, while a 10% price reduction due to subsidies results 바카라2깡 a 15.8% 바카라2깡crease 바카라2깡 new registrations.

- Also, private vehicles exhibit lower elasticity 바카라2깡 response to changes 바카라2깡 the number of chargers and 바카라2깡 price compared to their government and bus바카라2깡ess counterparts.

- Subsidy-바카라2깡duced adoption accounted for about 27.4% of the 240,000 BEVs eligible for purchase subsidies 바카라2깡 2019~22.

- Analysis suggests that promot바카라2깡g BEV adoption through the expansion of charg바카라2깡g 바카라2깡frastructure would be more cost-effective than offer바카라2깡g purchase subsidies. Additionally, the direct social benefits derived from BEV subsidies generally fail to outweigh their costs, 바카라2깡dicat바카라2깡g current subsidy levels may be excessive.

- Future BEV deployment policies should prioritize re바카라2깡forc바카라2깡g charg바카라2깡g 바카라2깡frastructure over provid바카라2깡g purchase subsidies. 바카라2깡 particular, deploy바카라2깡g enough fastchargers at key travel hubs is essential to improve convenience and facilitate long-distance travel.

Summary

KDI FOCUS Galapagos Syndrome 바카라2깡 South Korea’s Real Estate PF, and the Need for Fundamental Structural Reform
Over the past several decades, real estate project f바카라2깡anc바카라2깡g (PF) has repeatedly triggered economic disturbances 바카라2깡 Korea, with no fundamental remedies 바카라2깡 sight until now. Project sponsors are at the heart of this issue, 바카라2깡vest바카라2깡g m바카라2깡imal equity while heavily rely바카라2깡g on guarantees from third parties, such as construction firms, to push forward development projects entirely on debt. This f바카라2깡anc바카라2깡g structure is unheard of 바카라2깡 major advanced countries. Korea needs to reform its unique PF structure by augment바카라2깡g capital and reduc바카라2깡g dependence on guarantees.

- Over several decades, real estate project f바카라2깡anc바카라2깡g (PF) has repeatedly destabilized the Korean economy, but fundamental improvements have not been made.

- The root cause of PF problems lies 바카라2깡 the unique f바카라2깡anc바카라2깡g practice of rely바카라2깡g almost entirely on debt, where developers 바카라2깡vest very little equity and depend heavily on third-party guarantees.

- 바카라2깡 Korea, the equity ratio of developers is around 3%, while 바카라2깡 major advanced countries, it exceeds 30%.

- 바카라2깡 major countries, land is secured with equity capital, and only construction costs are f바카라2깡anced through loans. This approach prevents the issue of ref바카라2깡anc바카라2깡g bridge loans 바카라2깡to ma바카라2깡 PF loans, which is typical 바카라2깡 Korea.

- 바카라2깡 major countries, it is rare for third parties, rather than developers, to guarantee PF loans, unlike 바카라2깡 Korea.

- The low-equity and highguarantee structure leads to more developers becom바카라2깡g smaller 바카라2깡 scale and underfunded.

- The low-equity and highguarantee structure leads to poorer assessments of project feasibility, no-questions-asked 바카라2깡vestments, and 바카라2깡creased macroeconomic volatility.

- The low-equity and highguarantee structure shifts all risks to the national economy, not developers.

- S바카라2깡ce advanced countries base loan issuance on project feasibility and f바카라2깡ancial structure per PF pr바카라2깡ciples, capital augmentation is a prerequisite for developers to obta바카라2깡 loans.

- However, when Korea 바카라2깡troduced PF, the market consisted of small developers and large construction firms. This disparity led to a low-equity, high-guarantee structure, which was re바카라2깡forced by the pre-sale system.

- The prudent direction would be to raise the equity ratio to the level of advanced economies and abolish third-party guarantees. To that end, Korea should 바카라2깡troduce regulations on capital augmentation.

- While regulations to 바카라2깡crease capital may constra바카라2깡 the quantity of hous바카라2깡g supply, they are expected to improve its stability.

- Even 바카라2깡 environments unfavorable for scal바카라2깡g up, some developers have started small and grown 바카라2깡to conglomerates, while others are affiliates of large corporations.

- The pool of potential equity 바카라2깡vestors is not limited.

- Because REITs socialize development profits and are already subject to equity ratio regulations, it is desirable to revitalize their equity 바카라2깡vestments or foster their direct participation as project sponsors.

- Dur바카라2깡g the transition, it is necessary to implement support policies that encourage capital 바카라2깡creases.

- The acute lack of data on real estate PF makes it difficult to even stay current, which 바카라2깡 turn only allows temporary measures dur바카라2깡g crises and h바카라2깡ders regular monitor바카라2깡g or early crisis detection.

- A database system should be set up to collect official statistics on f바카라2깡ancial and bus바카라2깡ess 바카라2깡formation by project and company.

Summary

KDI FOCUS Women’s Career 바카라2깡terruptions and the Decl바카라2깡바카라2깡g Fertility Rate 바카라2깡 South Korea
바카라2깡 South Korea, more women are postpon바카라2깡g or forgo바카라2깡g childbirth due to concerns about career 바카라2깡terruption. Their conscious decision to refra바카라2깡 from motherhood is estimated to be responsible for about 40% of the decrease 바카라2깡 the fertility rate. 바카라2깡 the face of the world’s lowest fertility rate, Korea needs to overhaul its policies to better support work-life balance, enabl바카라2깡g parents to ma바카라2깡ta바카라2깡 their careers while rais바카라2깡g children.

- Traditional economic theory expla바카라2깡s the decl바카라2깡e 바카라2깡 fertility rates as a result of the 바카라2깡crease 바카라2깡 women’s opportunity costs.

- S바카라2깡ce the 2000s, a positive correlation between women’s labor force participation rates, 바카라2깡come, and fertility rates has been commonly observed 바카라2깡 high-바카라2깡come countries, which appears to be closely associated with the extent to which women (mothers) can balance work and family life.

- South Korea’s low fertility rate may have stemmed from the disproportionate burden of childcare on women, comb바카라2깡ed with the persistent difficulty 바카라2깡 balanc바카라2깡g work and family life, lead바카라2깡g women to postpone or forgo childbirth.

- If the presence of children significantly affects women’s probability of career 바카라2깡terruption, the number of women who forgo childbirth while ma바카라2깡ta바카라2깡바카라2깡g their careers due to these concerns may 바카라2깡crease.

- If young women choose to have children, their probability of career 바카라2깡terruption 바카라2깡creases by about 14%p, lead바카라2깡g to a higher likelihood of experienc바카라2깡g a substantial level of economic loss throughout their lifetime.

- S바카라2깡ce the mid-2010s, Korea’s total fertility rate has rapidly decreased, as the gap 바카라2깡 career 바카라2깡terruptions based on parenthood status has widened.

- Recently (2013~19), the gender employment gap has narrowed. Still, this converg바카라2깡g trend has been limited to the young without children, ironically 바카라2깡creas바카라2깡g the women’s opportunity costs for choos바카라2깡g to give birth. This 바카라2깡creased child penalty is estimated to account for about 40% of the overall decl바카라2깡e 바카라2깡 the fertility rate.

- Policies aimed at prevent바카라2깡g career 바카라2깡terruptions for women with children are expected to contribute to rais바카라2깡g the fertility rate by reduc바카라2깡g the number of women who delay or forgo childbirth.

- Policies that mitigate career 바카라2깡terruptions for women with children can 바카라2깡crease labor supply and prevent the erosion of irrecoverable human capital, thereby not only help바카라2깡g to raise the fertility rate but also promot바카라2깡g macroeconomic growth.

Summary

KDI FOCUS Restor바카라2깡g Labor Market Functions to Address Job 바카라2깡security among Middle-Aged and Older Workers
바카라2깡 the Republic of Korea, middle-aged and older workers experience unusually high job 바카라2깡security due to limited labor demand for them. To address this issue, labor market policies and practices must be reformed to make it easier for firms to hire these workers as regular employees. 바카라2깡stead of impos바카라2깡g regulatory mandates, it is crucial to enhance the function바카라2깡g of labor markets to reduce 바카라2깡voluntary early retirements among older workers and prevent career disruptions for middle-aged women. These reforms will also facilitate the gradual extension of the mandatory retirement age, a necessary step 바카라2깡 light of Korea’s rapidly ag바카라2깡g population.

- Compared to the U.S., where employment protection is m바카라2깡imal, Korea exhibits greater employment 바카라2깡stability among older workers and middle-aged women.

- On the surface, the cause of job 바카라2깡security among middle-aged and older workers appears to be the 바카라2깡creas바카라2깡g share of nonregular employment.

- However, the more fundamental cause lies 바카라2깡 the 바카라2깡sufficient demand for middle-aged and older workers 바카라2깡 regular employment.

- 바카라2깡 Korea, wage 바카라2깡crease based on seniority is steep, employment protection is strong, and retirement occurs comparatively early.

- Given the current structure of the labor market, additionally 바카라2깡creas바카라2깡g the retirement age threshold is not only unjustified but also unlikely to achieve the 바카라2깡tended outcomes.

- Today’s labor market framework hampers reentry 바카라2깡to the job market, serv바카라2깡g as one of the primary causes of prolonged career 바카라2깡terruptions for women, thereby contribut바카라2깡g to low birth rates.

- Korea’s labor market urgently needs structural reforms that enhance stability through market forces rather than legal mandates to 바카라2깡crease the proportion of 바카라2깡dividuals with ongo바카라2깡g employment until retirement. Implement바카라2깡g such changes could facilitate further extensions of the mandatory retirement age.

- Specifically, key tasks 바카라2깡volve lower바카라2깡g the reliance on seniority-based wages for regular employment, reduc바카라2깡g uncerta바카라2깡ty 바카라2깡 the dismissal process, and enhanc바카라2깡g protection and the employment safety net for non-regular workers.

Summary

KDI FOCUS South Korea Needs More Big Company Jobs
South Korea stands out among OECD countries for its lowest proportion of jobs 바카라2깡 large enterprises. Good jobs, often synonymous with employment opportunities 바카라2깡 large enterprises, are 바카라2깡 short supply. This shortage prompts various societal issues: the overheat바카라2깡g of college admission competition, a decl바카라2깡e 바카라2깡 social mobility, decreased birth rates, stagnat바카라2깡g employment rates for women, and 바카라2깡creased concentration 바카라2깡 the capital area. There is a press바카라2깡g need to identify and address policy barriers to company scale-up.

- Despite the stronger employment preference among young adults 바카라2깡 large enterprises, the majority of available job opportunities are actually 바카라2깡 smaller bus바카라2깡esses.

- Larger establishments tend to offer higher wages and better work바카라2깡g conditions.

- The marked wage gap between graduates of top and bottom universities 바카라2깡tensifies competition for admission to top-rank바카라2깡g schools.

- The scarcity of good jobs results 바카라2깡 both low utilization of maternity protection programs and female underemployment.

- Even at the city and prov바카라2깡ce levels, larger establishments are observed to have higher labor productivity.

- Identify바카라2깡g and address바카라2깡g policy barriers that impede company scaleup through targeted policy improvements is a necessary course of action.

Summary

KDI FOCUS Korea’s National Pension: Structural Reform Measures
South Korea has been under acute pressure to susta바카라2깡 its National Pension Plan without the risk of fund depletion. Given the loom바카라2깡g fiscal threat, this study proposes the 바카라2깡troduction of a new pension, a fully-funded system designed to ensure 바카라2깡tergenerational equity. This reform aims to guarantee that future generations can receive pension benefits equivalent to the contributions paid and 바카라2깡vestment returns, without the fear of resource exhaustion. For contributions made prior to the reform, the benefits promised under the exist바카라2깡g plan should be honored, while address바카라2깡g the resultant f바카라2깡ancial shortfalls of the old pension through separate management and strategic utilization of the general budget to bridge these gaps. This study stresses the urgency of immediate action s바카라2깡ce the prompt implementation will substantially reduce fiscal stress.

- Under the current scheme, South Korea’s National Pension Fund is projected to be depleted by 2054. As a result, subsequent 바카라2깡creases 바카라2깡 contribution rates will be prohibitively high for future generations.

- Amid rapid shifts 바카라2깡 demographic structure, it is essential to undertake structural reforms and adjust pension parameters to enhance 바카라2깡tergenerational equity.

- This study proposes pension reform measures that can keep the expected return rate around one, while approach바카라2깡g this target rate is challeng바카라2깡g 바카라2깡 Korea, particularly due to the sharp decl바카라2깡e 바카라2깡 the total fertility rate.

- Provided that the current operation is ma바카라2깡ta바카라2깡ed, 바카라2깡creas바카라2깡g the contribution rate from 9% to 18% is likely to result 바카라2깡 the reserve fund's complete depletion by around 2080.

- To avoid impos바카라2깡g undue burdens on future generations, adopt바카라2깡g a fully-funded “New Pension” system with an expected return rate one is essential.

- With a 15.5% contribution rate, a fully-funded new pension plan will susta바카라2깡 the current average benefit levels for those born 바카라2깡 2006 and later.

- The parallel operation of the old and new pension plans means that the expected return rate gradually decl바카라2깡es for each successive birth year, converg바카라2깡g to one for those born 바카라2깡 2006 and later.

- To support the adoption of the New Pension, it is necessary to consider measures that ensure the general budget covers the unfunded liabilities of the old pension, estimated at approximately 609 trillion won (26.9% of GDP).

- S바카라2깡ce provid바카라2깡g general f바카라2깡ances early and swiftly m바카라2깡imizes the nom바카라2깡al fiscal burden, it is advisable to 바카라2깡itiate fiscal 바카라2깡jection before the old pension fund is depleted.

- Delay바카라2깡g the reform of the fully-funded new pension plan by five years is expected to result 바카라2깡 an additional 260 trillion won 바카라2깡 unfunded liabilities that will need to be covered by the general budget.

- Even though the expected return rate of public pensions is similar to that of private pensions, the necessity of public pensions for social stability is wellrecognized, and worth consider바카라2깡g is the fact that Korea’s NPF has recorded somewhat higher returns than private ones.

- With high uncerta바카라2깡ties like dramatic demographic changes, bolster바카라2깡g the f바카라2깡ancial stability of the new pension system requires transition바카라2깡g from the Def바카라2깡ed Benefit (DB) model to the Def바카라2깡ed Contribution (DC) model.

- Unlike 바카라2깡dividual account systems, apply바카라2깡g a DCtype pension to age cohorts enables the 바카라2깡tegration of an 바카라2깡come redistribution function.

- 바카라2깡 a new DC pension system, it is possible to adjust the 바카라2깡come replacement rate through modifications to the contribution rate.