S. Korean labor productivity remains at 39 pct of OECD average: paper

South Korea's labor productivity largely fell short of the average level of Organization for Economic Cooperation and Development (OECD) countries between 2000 and 2004, an industry group said Wednesday.

South Korea's labor productivity reached US$10.40 between 2000 and 2004, or 38.6 percent of the OECD average level, the Korean Chamber of Commerce and Industry (KCCI) said in a report based on an OECD figure.

South Korea's labor productivity gap is even greater when compared with the United States with $40 and Japan with $39.90, the industry group said.

"South Korea sees the potential growth rate keep falling. In order to boost economic growth, we think that inputs of labor and capital should be increased, and efforts to improve productivity should be followed," an official at the business group said.

To achieve higher labor productivity, the group suggested seven priorities, including the creation of labor market flexibility, deregulation and investment in research and development.

The report also said the government is urged to ease business-hampering regulations that include a ceiling on conglomerates' equity holdings and investment restrictions in the Seoul metropolitan area.

The "equity investment ceiling," which has been in effect since 1987 and expires at the end of the year, bans 59 of the largest conglomerates with assets in excess of 2 trillion won (US$2.1 billion) from mutual investment and loan-guarantee limits.

The measures also ban the country's 14 largest business groups with assets exceeding 6 trillion won from purchasing stakes in their affiliates or other companies in excess of 25 percent of their net worth.

The business community has argued that the rules make it harder for them to enter new business areas and claim they are unfair since they do not restrict foreign companies. But the Fair Trade Commission, the country's corporate watchdog, has stressed that the rules are needed to prevent the country's conglomerates from making indiscriminate investments that could weaken their core businesses and hinder fair competition in the market.

Seoul, Sept. 13 (Yonhap News)