Feb. 14 (Bloomberg) -- Sharma Sagar is the new face of Korean manufacturing. He’s from Nepal.
Sagar studied Korean for years, competing with other candidates in his native Himalayan homeland to be chosen by a joint-government program that was set up to help South Korea supplement its dwindling labor pool.
“Everyone wanted to come,” said Sagar, who has been mixing materials to produce vinyl at Homyeong Chemical Industrial Co. north of Seoul since he arrived in May. “I’m earning a lot here, about 20 to 25 times more than my friends back home. I want to stay here as long as possible.”
With one of the world’s fastest-aging populations, South Korea has gone from a country where labor was the only abundant resource to one seeking staff to help run the plants and farms of Asia’s fourth-largest economy. While neighboring Japan has largely rejected imported labor as a solution to its aging workforce, South Korea is beginning to accept it. Immigrants have risen sevenfold since 2000, to 2.8 percent of the population, and could make up more than 6 percent by 2030, the government said.
“We should take preemptive structural action to tackle the aging population in order to avert Japan’s path of the so-called lost decades,” said Choi Kwang Hae, a director-general at the Finance Ministry. “It’s inevitable that we will have to absorb foreign labor to boost our economy.”
As the won strengthens and the yen weakens, some of South Korea’s exporters are increasingly looking to hire abroad to cut costs and remain competitive. In the past six months, the won has gained 4.3 percent against the U.S. dollar, while the yen has fallen 16 percent.
“Our factory can’t operate without foreign workers,” said Park Kwang Seo, director at Homyeong Chemical, which supplies packaging to Coca-Cola Co. and coating films to Samsung Electronics Co. “Our business is growing fast and we need to hire more to meet the demand.”
The government announced steps on Nov. 28 to attract more immigrants, including easing visa and citizenship requirements and giving more social support for settlement.
“Demand will increase sharply for foreign labor in each part of our society,” Prime Minister Kim Hwang Sik said in a statement at the time. “We should take pre-emptive action with a comprehensive and long-term perspective to maximize benefits from inflows of foreigners.”
There were 1.45 million foreign residents in South Korea in December, up from 210,249 in 2000, according to the Ministry of Justice. The number will rise to 3.2 million in 2030, according to the ministry.
With a birth rate of 1.24 children per woman in 2011, South Korea will be short 2.8 million workers by 2030, according to a Finance Ministry report released on Dec. 26. The nation’s potential gross domestic product growth would drop to 1.9 percent by 2031 from a 3.8 percent average pace during 2011-2020, the report said.
“Each year, about 1 million to 2 million people enter the U.S., keeping the society young,” Bank of Korea Governor Kim Choong Soo told reporters in Seoul on Jan. 14. “Many other advanced economies have lost much of their vitality as they failed to follow the U.S. when facing an aging population. South Korea should seek a more forward-looking policy for immigrants.”
Until 1990, Korea banned foreign unskilled labor. Rapid economic growth in the 1980s led to a widening income gap with many Asian neighbors and a tighter labor market. With mounting pressure from Korean business, the government introduced the Industrial and Technical Training Program in November 1991 to bring in overseas workers, according to an International Labor Organization report.
“Korea used to be very proud of its tradition of one race with pure blood,” said Chung Ki Seon, head of research at IOM Migration Research & Training Center, set up in 2009 by the government and the Geneva-based International Organization for Migration. “The country is still highly susceptible to xenophobia, but Japan gives us a clear lesson on what will happen if we keep the door closed.”
Chung said attitudes in Korea are changing toward immigrants. “The trigger came from foreign women who married Koreans and gave birth here,” she said.
One such person is Manila-born Jasmine Lee, a member of the ruling New Frontier Party who became the first immigrant Korean lawmaker in 2012. She came to South Korea in 1995 after marrying a Korean in her home country when she was 18 and gained citizenship in 1998 after the birth of their first child.
“We were supposed to come to Korea just to meet and greet his parents -- the meeting and greeting has been lasting for the past 18 years,” she said. “There weren’t many foreign people around then. Everyone was curious who I am and why I’m here.”
Lee said the country needs a “control tower” for immigration policy to coordinate efforts such as education and training. “We don’t have a choice,” she said. “We have companies and factories to manage. If you don’t have people in them, what’s going to happen to the economy?”
Foreign workers now account for about 3.2 percent of South Korea’s workforce, Statistics Korea said in November after its first survey on the subject. More than half came from China and 47 percent of the total work in manufacturing, the agency said.
Many Chinese, like Li Guanghao, are recruited to help companies expand in China.
“I’m the first and only foreign worker in this company,” said Li, 27, who joined Mokyang Chemical Co., a small trading company, after studying at Kyunghee University in Seoul. “I heard many Korean companies demand long working hours and endless nights of heavy drinking, but my company is different. I’m really happy here.”
Four out of five Chinese workers are ethnic Korean, according to Statistics Korea. China has more than 1.8 million people of Korean descent, according to the 2010 census. Many are descendants of immigrants in the 19th and early 20th centuries.
Many imported staff live in company dormitories and get free meals, allowing them to send most of their pay home.
“I miss my family a lot, of course, but I made some friends here and many Koreans are very kind,” said Sagar, who earns 2.35 million won per month and has a wife and an 18-month-old son in Nepal.
Most foreign workers do jobs that Koreans no longer want to do, said Jang Hyun Suk, senior deputy director of the foreign workforce division at the Ministry of Employment and Labor.
“Many South Koreans with college degrees shun difficult, dirty and dangerous jobs,” Jang said in an interview at his office in Gwacheon on Jan. 8. Low-skilled foreign workers earn nearly 10 times more than they do at home, he said.
For higher-level positions there is still resistance to hiring from overseas, though the need to tap foreign talent will increase, said Anthony Modrich, country manager in Seoul for London-based recruitment agency Robert Walters Plc.
Part of that resistance comes from a requirement to adapt to Korean values and language, he said.
“Korean nationals with overseas experience, whether for work or study, are generally a much more attractive option for employers, not only for their language ability but also because of their cultural fit,” he said.
Some companies say the government needs to do more to encourage immigrant labor, especially in unskilled and semi-skilled roles.
“We can’t find enough Korean workers, especially young men,” said Park at Homyeong. “Most of our Korean workers are either in their 50s or female. The current quota system on foreign workers is still too rigid.”
At Homyeong, Ngo Tien Thanh from Vietnam expects to be promoted to middle-manager soon, becoming the first non-Korean at the company who will supervise local and foreign staff.
“I send most of my wages home as the company supports whatever is needed for living here,” said Thanh, who has two children and has been at the company since 2004. “My friends back home are really envious of me.”
To contact the reporter on this story: Eunkyung Seo in Seoul at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Panckhurst at email@example.com