According to the Bank of Korea on December 10, foreign workers are entering the South Korean labor market at a particularly high rate these days although the absolute ratio of foreign workers in the market is still relatively low in comparison to those of many other countries.
In 2015, the size of foreign worker inflow into the South Korean market more than doubled that of 2000. During the same period, the size showed little change in Japan and the United States and the rate of increase of the British labor market was lower than that of the South Korean market.
More and more foreign workers are likely to enter the South Korean labor market over time as low fertility and population aging are simultaneously going on in South Korea. “The number of foreign workers in the country needs to reach 500% of the current level for the country to maintain its current industrial structure in 2050,” said Lee Byung-hoon, who is a sociology professor at Chung-Ang University.
The Bank of Korea also explained that foreigner workers can have different effects on the income per capita of South Korea depending on their education and vocational skills. According to the central bank, low-skilled workers are likely to have a negative effect on the income per capita by having low-wage jobs in most cases. The European Commission is predicting that the presence of refugees in Europe will reduce the region’s GDP per capita by 0.1 percentage point from its previous estimate for the period of 2017 to 2020. A similar decline in wage for a similar reason is already occurring in South Korea, too. Meanwhile, local and foreign workers showed little difference in wage when the latter are highly-educated workers from Australia, Canada, etc.
“It can be said that foreign workers’ effect on the South Korean economy hinges on the South Korean government’s immigration policy,” the central bank pointed out, adding, “It would be well advised to focus on the attraction of highly-educated foreign workers into high-value added and professional sectors.”