The Labor Standards Act stipulates that besides wages, additional labor costs are severance pay, official holidays and paid annual leave.The severance pay decided by law is an imported system to guarantee the existence of the worker due to the low level of social welfare in Korea.

• A unilateral abolishment of the system would face opposition from the workers and citizens, and in the current situation of high unemployment it could also trigger labor unrest. It is necessary for the company to make use of the mid-term settlement of severance pay or the severance pension system introduced in 1997, if it wants a more flexible management.
• The contribution paid by the company is around 5.3% and is thus not a great burden. This system is also implemented in most companies in Japan through employment regulations.
• The level of paid annual leave is not so high compared to other countries. Payment for unused paid annual leave might be a burden on the company, but workers can be encouraged to make use of their leave, if the company wants to save the expenses.