Majority of Foreign Firms in Korea See Labor Relations as Confrontational (Image supported by ChatGPT)
SEOUL, July 28 (Korea Bizwire) — A majority of foreign-invested companies in South Korea view the country’s labor relations as confrontational and its labor market regulations as excessively rigid, according to a new survey released Sunday by the Korea Economic Research Institute (KERI), an arm of the Federation of Korean Industries.
The poll, conducted by Monoresearch and based on responses from 439 foreign firms with over 100 employees, found that 57% of respondents characterized South Korea’s labor environment as antagonistic. Only 7% described it as cooperative.
When asked to compare labor-management cooperation levels with other countries—assuming Korea’s level is 100—respondents rated the U.S. at 122.0, Germany at 120.8, and Japan at 115.0. China trailed at 83.8, the only country deemed less collaborative than Korea.
Additionally, 64% of companies said Korea’s labor market is rigid due to regulations, while a mere 2% considered it flexible. On a similar comparative scale for labor regulation strictness, Korea was rated at 100, while the U.S. scored 87.4, Germany 90.8, Japan 95.2, and China 111.2—placing Korea among the most tightly regulated after China.
The survey also revealed that 81% of foreign firms consider labor-related conditions—such as union relations and regulatory constraints—an important factor in mid- to long-term business planning. Alarmingly, 13% said they had considered scaling back or withdrawing operations from Korea due to stringent rules such as the 52-hour workweek and the Serious Accidents Punishment Act.
KERI warned that such discontent could undermine Korea’s appeal as a destination for foreign investment, noting that the current 3.2% closure rate among foreign firms makes the 13% figure significant.
Among labor union practices in need of reform, 35% of companies cited politically motivated strikes organized in coordination with umbrella unions, while 26% pointed to strikes causing public disruption, and 18% flagged unions’ refusal to negotiate.
Asked about their biggest operational challenges, 34% of firms cited difficulties in adjusting employment—such as layoffs or reassignment—followed by rigid work-hour rules (22%) and inflexible wage structures (12%).
To foster healthier labor relations, respondents recommended strengthening a shared sense of purpose between labor and management (35%) and encouraging unions to move away from confrontational tactics (22%).
The most urgent policy priority, they said, was enhancing labor flexibility through deregulation of working hours and dismissal procedures.
“South Korea’s adversarial labor relations and rigid labor policies are placing a heavy burden on the operational strategies of foreign-invested companies,” said Lee Sang-ho, head of KERI’s Economic and Industrial Division. “These factors are diminishing Korea’s attractiveness as a global investment destination.”
Ashley Song (ashley@koreabizwire.com)
