It is found that real wages, including housing expenses, of foreign workers are 20 percent higher than that of Korean workers, despite foreign employees' lower productivity.
According to a survey called “Investigation on Requests of Foreign Workforce and Difficulties in Utilization,” which was given to 774 small and medium-sized enterprises (SMEs) conducted by the Korea Federation of Small Business (KBIZ), 74.9 percent of the respondents said that they hired foreign workers because it was difficult to employ Korean workers.
Based on basic and minimum wages, the payroll cost per foreign worker amounted to 1.92 million won (US$1,598), which is 19.9 percent higher than that of Korean workers. This is largely due to “indirect labor costs.” These companies spent an extra 16.4 percent of their payroll to offer foreign workers housing and meals for free.
As the SMEs also feel burdened with having to provide imported workers with free housing and meals, in addition to the same minimum wage as Korean workers, the wage system needs to be reformed, including allowances in kind like costs for board and lodging being included in the minimum wage.
Also, most SMEs said that foreign employees have lower productivity than Korean workers.