Falling Labor Productivity

Blunted manufacturing competitiveness setback to economy

The Korean manufacturing sector's labor productivity has sharply weakened since the 2009 global financial crisis, a private think tank said Monday.

According to the Korea Economic Research Institute, the nation's per capita labor productivity grew at an annual rate of 28 percent between 2010 and 2017, ranking the country 28th out of 41 countries surveyed.

The rate was lower than that of major competitors such as China (8.6 percent), Japan (4.

1 percent), Germany (4 percent) and France (2.9 percent).

It was far below the average 35 percent of all the countries.

The disappointing figure came in stark contrast to the 7 percent rise Korea recorded in the 2002-09 period, fifth-highest following China, Poland, Slovakia and Romania The average growth rate of the 41 countries stood at 34 percent in the pre-crisis period.

Consequently Korea's unit labor cost, a measure of the average cost of labor per unit of output, rose at an annual rate of 22 percent in the 2010-17 period while the average rate of the 41 countries dropped to 17 percent. Only two countries ― China and India ― recorded faster growth in unit labor costs than Korea after the worldwide financial crisis.

Everyone knows that the growth of labor productivity is a prerequisite to wage hikes. In Korea, however, wages have tangibly risen since the financial crisis while labor productivity growth has dwindled.

The minimum wage growth has eclipsed that of labor productivity.

...