South Korea's Labor Productivity Ranks 24th Among 37 OECD Countries

Korea Productivity Center Releases Results of International Labor Productivity Comparison

South Korea's labor productivity ranked 24th among 37 member countries of the Organisation for Economic Co-operation and Development (OECD).

The Korea Productivity Center (KPC) released a report titled "International Comparison of Labor Productivity" on September 15. This study was conducted to assess South Korea's current labor productivity, identify its structural limitations through international comparison, and suggest areas for improvement, with the goal of increasing the practical use of labor productivity statistics among domestic economic stakeholders.

According to the research, as of 2023, South Korea's hourly labor productivity stood at 51.1 dollars, ranking 24th out of 37 OECD countries. This figure is 61.1% of the United States (83.6 dollars), 61.3% of Germany (83.3 dollars), and 100.1% of Japan (51.0 dollars). The productivity gap with major countries has been steadily narrowing.

Per capita labor productivity reached 95,351 dollars, placing South Korea 21st among 37 OECD countries-a relatively higher ranking compared to hourly labor productivity.

In the manufacturing sector, per capita labor productivity was 158,335 dollars, ranking 6th among OECD countries. In the service sector, it was 75,225 dollars, ranking 27th. While manufacturing productivity is 122.0% of the OECD average, the service sector lags behind at 68.9% of the OECD average. South Korea's service sector labor productivity is 49.4% of its manufacturing sector, representing the largest gap among OECD countries except Ireland.

The reasons for South Korea's labor productivity remaining in the lower-middle tier of the OECD are identified as a lack of competitiveness in the service sector and insufficient investment in intangible assets, resulting in an imbalance in capital investment. While manufacturing productivity exceeds the OECD average, the service sector is dragged down by a high proportion of traditional face-to-face businesses and weaknesses in high value-added areas such as finance, ICT, and professional services.

Additionally, although South Korea's capital investment is among the highest in the OECD, it is heavily concentrated in construction and equipment, with investment in intangible assets lagging behind advanced countries, limiting overall productivity growth. The KPC Productivity Research Center emphasized in the report that for South Korea to rise into the top 10 in labor productivity, it is essential to expand high value-added service industries, shift investment toward intangible assets, increase service exports, and strengthen global linkages.

Park Sungjoong, Chairman of KPC, stated, "South Korea's labor productivity has improved over the past decade due to reduced working hours and increased value-added, but stagnation in the service sector remains a structural limitation." He added, "Going forward, the expansion of high value-added service industries, investment in intangible assets, and the development of export-oriented service sectors through global linkages are key tasks for South Korea to become a leading nation in labor productivity."