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The pros and cons of labour regulation in South Korea

12 0
yesterday

The growth of marginal part-time work in South Korea is a by-product of making existing protections work but also points to the need for better design of labour regulation.

In South Korea, marginal part-time work has risen sharply. Employers have stronger incentives to keep hours just below a 15-hour weekly threshold now that worker protections and compliance with paying benefits and social insurance are being more strongly enforced. The result is a widening labour-cost discontinuity that has unintentionally expanded very short-hour employment and excluded more workers from the protection system. This highlights the trade-offs inherent in threshold-based labour regulation.

South Korea is notorious for its long working hours but this new trend. From 2012–24, the share of marginal part-time workers outside the public sector — those contracted for fewer than 15 hours per week — rose from 3.7 per cent to 8.5 per cent.

These workers are systematically excluded from South Korea’s basic worker protection schemes, including the weekly holiday allowance, paid annual leave, national health insurance, employment insurance, the national pension and severance pay. Their growing numbers mean that more workers are being left behind.

One explanation for this growth is in institutional design. Workers below the 15-hour threshold are exempt from these schemes, making them up to 40 per cent cheaper to employ. This structure creates strong incentives for employers to keep workers just below the cut-off. Contracts specifying 14 hours,........

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