More than 2,500 mid-size enterprises have been excluded from the foreign employment permit system, facing the double challenges of labor regulations and a lack of manpower. Experts point out that they are likely to move abroad with time, as their labor costs are sure to rise down the road due to the expansion of the scope of ordinary wages, extension of retirement age, and reduction in working hours. The situation is particularly adverse for the 1,083 companies that have fallen into the category under the new classification rules.
The foreign employment permit allows firms having recruitment difficulties in Korea to hire foreigners based on a work permit granted by the government.
The size of employment is determined on a quota basis every year in each industry. On December 20 of last year, the government held a Foreign Workforce Policy Committee meeting and fixed the number for 2014 at 53,000, which is 9,000 less than the previous year. Most of the potential employees are to be hired in the manufacturing and primary industries. At the same time, the government increased the maximum number to 50 for each of those that moved their places of business back to Korea through a fresh investment of at least 500 million won (US$470,000).
The problem is that mid-size enterprises, including those in their early stages, were counted out of the employment permit system during the course. They are asserting that their manpower management difficulties will be aggravated, with local labor regulations becoming increasingly tighter.
The problem is particularly severe for manufacturers located out of their metropolitan area. According to the Korea Chamber of Commerce & Industry’s recent demand survey on foreign employment, 66.3% of the respondents answered that they are seeking foreign employees due to the difficulties in hiring local workers.