Large Korean companies have expanded their use of fixed-term workers roughly four times faster than regular employees over the past five years, according to government data. The finding supports concerns that the number of fixed-term workers could grow further if the government extends the current two-year limit on their employment. Companies have strong incentives to hire more fixed-term workers, as their wages are lower than those of regular employees.
According to the employment type disclosure status of companies with 300 or more workers, released annually by the Ministry of Employment and Labor on Wednesday, the number of fixed-term workers rose 43% from 937,000 in 2021 to 1.336 million last year. The figure has grown by an average of 100,000 each year.
The growth in fixed-term workers far outpaces that of regular employees, who are hired without a set end date. The number of regular employees rose 11% from 3.172 million in 2021 to 3.534 million last year. Fixed-term workers increased about four times faster than regular employees. The trend also shows a clear gender gap. Fixed-term workers account for 33% of all female employees, exceeding the 24% share among men. The gap between women and men widened from 6 percentage points in 2021 to 9 percentage points last year.
Two main factors explain why companies are hiring more fixed-term workers. The first is lower wages compared to regular employees. According to the Ministry of Employment and Labor's 2024 Employment Type Survey, non-regular workers, including fixed-term workers, earned just 66 when regular employees' wages were set at 100. Non-regular worker wages have remained in the 60-70 range since 2016. From a corporate standpoint, fixed-term workers are preferable because their labor costs are lower than those of regular employees. In fact, according to the Korean Industrial Relations Association's report on "A Survey of Short-Term Fixed-Term Contract Practices and Policy Improvement Measures," 36% of 851 fixed-term workers surveyed cited "low cost burden" as the top reason for using fixed-term contracts, the highest response rate.
Another factor is that fixed-term workers are effectively easier to dismiss than regular employees. Fixed-term workers must be converted to regular employees (open-ended contract workers) after two years of service. However, companies have avoided this by letting fixed-term workers go before they reach the two-year mark. The conversion rate from fixed-term to regular employment has stalled in the 10% range. From 2014 to 2024, the conversion rate for fixed-term workers whose contracts expired has never exceeded 20%. The conversion rate for fixed-term workers with more than two years of service remains in the 20% range.
The rise of fixed-term workers serves as a warning for the labor market. Fixed-term workers are classified as non-regular workers, along with part-time, daily, dispatched, and subcontracted workers. Because fixed-term workers face low job security and unstable working conditions, the Act on the Protection of Fixed-Term and Part-Time Employees was enacted in 2007. The law's intent was to provide protection significant enough to warrant limiting the employment period to two years.
The Ministry of Employment and Labor plans to improve the fixed-term worker system through a survey of current conditions and social dialogue with labor groups, management, and experts. This comes after President Lee Jae-myung repeatedly pointed out that the Fixed-Term Workers Act is not functioning as intended. At a meeting with the Korean Confederation of Trade Unions (KCTU) on Nov. 10, President Lee said, "This law was meant to encourage conversion to stable employment, but it has effectively become a law banning employment beyond two years."
Labor groups are strongly opposing discussions to extend the employment period as part of the ministry's proposed improvements. Concerns are amplified by the fact that the increase in fixed-term workers is concentrated among women, a vulnerable group in the labor market. Labor groups have also rejected alternatives that would raise fixed-term workers' wages in exchange for extending the employment period. The Federation of Korean Trade Unions (FKTU) said in a recent statement, "The conversion rate from fixed-term to regular employment has stalled because companies are using fixed-term workers as a permanent labor force. The grounds for using fixed-term workers should be restricted, and the employment costs for non-regular workers should be raised." The KCTU also said in a statement, "It is common sense to hire regular employees for ongoing, continuous work. The Fixed-Term Workers Act and the Dispatched Workers Act, which only mass-produce non-regular workers, should be abolished."
