The OECD has urged the Korea to pursue labor reforms and other changes and voiced concerns over the government's decision to raise the minimum wage and corporate taxes.

The OECD on Tuesday warned that the government's strategy of "income-led growth" spurred by boosting public-sector hiring, a minimum wage hike and increased welfare spending, needs to be supported by reforms to raise productivity.

It added that the Korean economy is showing signs of recovery powered by rising exports but continues to suffer from low job growth and snowballing household debt.

The OECD warned that hikes in the minimum wage and corporate taxes "could worsen the competitiveness of Korean businesses."

The International Monetary Fund also said on Nov. 14 that Korea must pursue structural reforms to improve the country's labor productivity.

Meanwhile, the OECD forecast Korea's economy will grow 3.2 percent this year and three percent in 2018. The forecasts are 0.6 percentage point and 0.2 percentage point higher than previous estimates.

