US Think Tank: "Korean Economic Freedom Ranks 14th Among 184 Countries"

High Ratings for Fiscal Soundness, Property Rights, and Business Environment
Failing Grades for Labor Market, Taxation, and Integrity

A study revealed that South Korea ranks 14th out of 184 countries worldwide in terms of economic freedom. The country scored in the top tier in areas such as government fiscal soundness, property rights, and business environment, while labor market, taxation, and integrity were rated in the lower-middle tier.

The Korea Employers Federation announced on the 6th that it analyzed the '2024 Index of Economic Freedom' report released by the U.S. think tank Heritage Foundation on the 26th of last month and obtained these results.

Since 1995, the Heritage Foundation has published this report analyzing the level of freedom in business and personal economic activities in various countries. The report evaluates 12 items across four categories: ▲ Rule of Law (property rights, integrity, judicial effectiveness) ▲ Regulatory Efficiency (business environment, labor market, monetary policy) ▲ Government Size (tax burden, government spending, fiscal health) ▲ Market Openness (trade freedom, investment freedom, financial freedom). Each item is scored and assigned one of five grades (Free, Mostly Free, Moderately Free, Mostly Unfree, Repressed). This year’s report was compiled by analyzing data from the OECD, World Bank, International Labour Organization (ILO), and others up to June of last year.

Score of Korea evaluated in the 2024 Economic Freedom Index Report (Provided by Korea Employers Federation)

According to the report, South Korea received an overall score of 73.1 points, earning a 'Mostly Free (70?79.9 points)' rating. It ranked 14th among 184 countries evaluated. Singapore topped the list with 83.5 points, followed by Switzerland (83.0 points), Ireland (82.6 points), and Taiwan (80.0 points). In the Asia-Pacific region, South Korea ranked fifth among 39 countries, behind Singapore, Taiwan, New Zealand (6th), and Australia (13th). The United States and Japan ranked 25th and 38th, respectively. China (151st) and North Korea (176th) remained near the bottom.

Specifically, the government’s fiscal soundness received the highest score of 91.6 points. Property rights (88.3 points) and business environment (85 points) also scored above 80 points, earning a 'Free' rating.

The lowest scoring category was the labor market, which received 57.2 points and was rated 'Mostly Unfree (50?59.9 points).' This placed South Korea 87th among the countries evaluated. Compared to the Group of Seven (G7) countries, South Korea scored lower than the United States (77.7 points), Japan (68.6 points), and France (60.5 points), but higher than Germany (53.7 points). Since this category was introduced in 2005, South Korea has consistently been rated as 'Mostly Unfree' or 'Repressed (below 49.9 points).'

The Heritage Foundation commented, "South Korea’s labor market is dynamic but still faces regulatory rigidity, and strong labor unions increase costs for companies."

Additionally, the taxation category scored 59 points, also rated as 'Mostly Unfree.' The score declined compared to the previous year, lowering the rating. The Heritage Foundation explained, "South Korea’s top individual income tax rate is 49.5%, and the top corporate tax rate is 27.5%, with the tax burden reaching 29.9% of GDP."

Other categories such as integrity (69.2 points), investment (60 points), and financial freedom (60 points) also received low scores. Investment and financial freedom barely qualified for the 'Moderately Free (60?69.9 points)' rating.

Jung-Yeon Bae, head of the Korea Employers Federation’s International Cooperation Team, stated, "To enhance economic vitality, labor reforms should be pursued to increase labor market flexibility and improve labor-management relations."

This content was produced with the assistance of AI translation services.