South Korea's Hottest Import: Foreign Workers

Sharma Sagar is the new face of Korean manufacturing. The Nepalese studied Korean for years, competing with other candidates to be chosen for a government program set up to help South Korea supplement its dwindling labor pool. “I’m earning a lot here, about 20 to 25 times more than back home. I want to stay here as long as possible,” says Sagar, 31, who has been mixing materials to produce vinyl at Homyeong Chemical Industrial, north of Seoul, since he arrived in May. Sagar earns 2.35 million won per month ($2,180) and sends most of it home to his wife.

With its fast-aging population, South Korea has gone from a country where labor was the only abundant resource to one seeking foreigners to help run its plants and farms. Japan has largely rejected imported labor as a solution to its aging workforce, but South Korea is starting to accept it. The number of immigrants has risen sevenfold, to 1.5 million, since 2000. That’s 2.8 percent of the population. Immigrants could make up more than 6 percent by 2030, the government says. “It’s inevitable that we will have to absorb foreign labor to boost our economy,” says Choi Kwang Hae, a director general at the Finance Ministry.

South Korea’s exporters are anxious to supplement their costly, aging workforce with unskilled labor. “Our factory can’t operate without foreign workers,” says Park Kwang Seo, director at Homyeong Chemical, which supplies packaging to Coca-Cola (KO) and coating films to Samsung Electronics. “We need to hire more to meet demand.” The government announced steps last November to ease work visa and citizenship requirements. “The country is still highly susceptible to xenophobia,” says Chung Ki Seon, head of research at IOM Migration Research & Training Centre, which studies immigration policies worldwide. “But Japan gives us a clear lesson on what will happen if we keep the door closed.”

Chung says the change in attitude toward immigrants “came from foreign women who married Koreans and gave birth here.” Manila-born Jasmine Lee, a member of the ruling New Frontier Party, became the first immigrant Korean lawmaker in 2012. She wed a Korean in 1995 and gained citizenship in 1998, after the birth of their first child.

Some companies say the government needs to encourage more immigrant labor. “We can’t find enough Korean workers, especially young men,” says Homyeong’s Park. “The quota system on foreign workers is still too rigid.” The quota for low-skilled workers this year is 62,000, up from 57,000 in 2012. At Homyeong, Ngo Tien Thanh from Vietnam expects to be promoted to middle manager, becoming the first non-Korean at the company to supervise local and foreign staff. Says Thanh: “My friends are really envious of me.”

The bottom line: If Korea continues to import foreign workers for its factories, immigrants’ share of the population could be more than 6 percent by 2030.

BusinessWeek.com