The Bank of Korea Changes the Term "Labor Income Share" to "Employee Compensation Ratio"

[Asia Economy Reporter Seo So-jeong] The Bank of Korea announced on the 16th that it will change the current term 'labor income share' to 'employee compensation ratio' and plans to reflect this change in the Bank of Korea Economic Statistics System (ECOS) by the end of this month.

The Bank of Korea stated, "The current term 'labor income share' may be misunderstood as including the labor income of self-employed individuals," and added, "Considering that the current indicator is calculated as employee compensation relative to factor cost national income (employee compensation + operating surplus), the term will be changed to 'employee compensation ratio.'"

Additionally, the Bank of Korea decided not to publish the new labor income share indicator and the retroactive mixed income data (1975?2009) for the time being. They explained that the labor income share indicator is highly sensitive to estimates of mixed income and the proportion of mixed income considered as labor income, and that consensus within academia and other sectors has not yet been sufficiently reached.

The Bank of Korea added, "We plan to continue related research through collaboration with academia in the future," and "Once sufficient consensus is formed, we will announce the new labor income share indicator."

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