[Editorial] Without Bold Labor and Regulatory Reform, National Competitiveness Will Stall

South Korea ranked 21st out of 70 countries in the 2026 national competitiveness assessment released by the International Institute for Management Development (IMD) Business School in Switzerland. That was up six places from 27th last year. Among the seven countries in the 30-50 Club, which have per capita income above $30,000 and populations of more than 50 million, South Korea ranked second after the United States.
A closer look at the numbers, however, gives little reason for celebration. They expose the weaknesses and limits of the Korean economy. In the same survey, South Korea had previously reached an all-time high of 20th place in 2024. It then fell seven places to 27th the following year amid political turmoil, including Martial Law. This year's 21st-place finish merely means the country has recovered from the shock of political risk and returned to its previous level. In fact, it is fairer to say that several years of progress were wasted.
There are also warning signs in the rankings. Taiwan placed 4th and China 12th, both well ahead of South Korea. Taiwan, in particular, is a direct competitor in advanced industries such as semiconductors. There is no need to rely entirely on the credibility of the IMD survey, but it should be taken seriously as a signal that calls for vigilance.
The common traits of the top five are also worth noting. Singapore, Hong Kong, Switzerland, Taiwan and the United Arab Emirates (UAE) are all small open economies, either with small populations or city-state characteristics. The smaller the scale, the faster policy decisions and institutional reforms can be made. When seeking a Korean growth model, it is worth looking to the competitiveness of small but strong states.
It is encouraging that business efficiency rose 10 places to 34th and infrastructure climbed six places to 15th. The problem is that the economic performance category fell three places, while the price stability segment dropped from 30th to 40th, the sharpest decline. The employment category also slipped from 5th to 7th, marking its lowest ranking since 2020. In other words, while the country's overall competitiveness ranking improved, the price and job conditions that people feel in daily life worsened. As growth indicators improve but lived experience deteriorates, debate over K-shaped polarization is intensifying. The government must not forget that its role is to improve people's livelihoods.
Signals surrounding the business environment are also mixed. The labor market ranking improved from 53rd to 45th, but it still remains in the lower tier. Worse, business conditions in the government efficiency category fell from 50th to 53rd. We have long said we want to make this a country where companies can do business easily, and we have continued to stress deregulation and better business conditions. Yet the actual assessment falls far short of expectations. We need to confront our own problems head-on and ask whether we are still talking about innovation and reform while change on the ground remains slow.
The government has declared this year the first year of a major economic leap forward. It must mobilize all-out efforts to raise global competitiveness by leveraging the Artificial Intelligence (AI) and semiconductor supercycle. To move national competitiveness into the top tier, it is not enough to improve a few isolated areas. A fundamental overhaul of the economic structure is needed for a real leap upward. If labor reform and better business conditions are discussed only in words, the country will simply be left behind in fierce global competition.