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South Korea: Balancing Labor Demand with Strict Controls
By Young-bum Park
Hansung University, Seoul
Over the last four decades, the Republic of Korea (hereafter South Korea) has transformed from a struggling, developing nation to a prosperous, industrialized country thanks to its export-oriented strategy. GNP per capita increased from US$142 in 1967 to US$12,646 in 2003. The unemployment rate dropped from 8.2 percent in 1963 to 4.4 percent in 1970 and to 2.5 percent in 1989.
Due to its low unemployment rate, by the early 1990s South Korea realized it needed temporary labor to fill unskilled jobs that natives were becoming less and less willing to do. In fact, without foreign labor, it would have been nearly impossible to keep the "tiger" economy growing.
As a country that places a high value on its homogeneity, this also marked the beginning of a tension that continues today: the need for foreign labor versus the desire to remain a purely Korean nation with strict immigration policies.
One result of this tension has been a dramatic rise in the number of undocumented workers even as the number of temporary workers has increased. In addition, the number of refugees from North Korea has grown due to the troubled North Korean economy, a trend that has also attracted much national attention.
South Korea, because of its geostrategic importance, has a long history of conflicts, invasions, and occupations. Its peninsula location is critical, with China and Russia along the northern border and Japan across the Korea Strait.
During the Japanese colonial period in the early 20th century, millions of Koreans left the country for a new life abroad, leading to large Korean communities in China, Japan, and Russia that still exist today. Hawaii, where Koreans worked on sugarcane plantations, was also a major destination in this period.
After receiving its independence from Japan in the wake of World War II, the country was divided into north and south. The Korean War of 1950-1953, a central battle in the fight against communism, caused a population upheaval, most significantly the movement of 10 million people from the north to the south.
Once the war was over, and particularly after the US opened the door to non-European immigration in 1965, South Koreans began migrating to the United States to study or to find a higher quality of life.
In the 1970s and 1980s, millions of construction workers went to the Middle East as employees of South Korean contractors. Most of these workers returned home after a few years with substantial savings.
The Transition from "One-Blood" to Immigration
Despite recent increases in its foreign population, South Korea is still a very homogeneous country. Since foreigners who legally stay in South Korea for 90 days or more are required to register with the authorities, their numbers are easy to track. At the end of 2003, there were 438,000 registered foreigners, just under one percent of South Korea's 45 million people.
But this figure does not include the number of undocumented foreign workers, which rose from 100,000 in 1998 to 289,000 in 2002. By 2002, undocumented workers represented 70 percent of South Korea's total foreign labor force.
Strict migration controls made it increasingly difficult for South Korean businesses to fill low-level jobs with legal, temporary workers, and by the mid 1990s, more and more people from other Asian countries – China, the Philippines, Indonesia, Thailand, Vietnam, and Mongolia – were overstaying their tourist visas and joining the workforce.
They were able to find jobs in small manufacturing companies, construction and restaurants (the latter were usually Chinese of Korean ancestry). Most of them paid large fees to job agencies at home and/or in South Korea.
In the early debates concerning the use of unskilled foreign labor, one of the critical issues was whether the need for labor was a passing or structural phenomenon. After the Asian financial crisis, which hit South Korea in December 1997, it became apparent that without temporary workers, some sectors of the South Korean economy would not be viable.
The unemployment rate jumped from 2.1 percent in October 1997 to 8.6 percent in 1999, leaving two million people jobless. However, few native workers wanted to have so-called "three-D" jobs - difficult, dangerous, and demanding.
Temporary Labor Programs
Skilled workers, including entertainers, researchers and language teachers, are welcome to temporarily work and live in Korea. The main labor migration issue has been and continues to be temporary workers in lower levels of the economy.
Until 2003, South Korea had no official provisions for allowing unskilled labor temporary access to the labor market. Today, South Korea has three ways of handling the need for unskilled foreign workers: an expanded industrial trainee scheme, the employment management scheme, and the employment permit system. In the near future, the employment management scheme will be folded into the employment permit scheme.
Temporary workers from any of these schemes can take jobs mainly in small manufacturing industries, such as cast iron, forging, heat treatment and painting, and dyeing and finishing.
Industrial Trainee Scheme
The industrial trainee scheme was originally intended to upgrade the skills of foreign workers employed by overseas South Korean firms. It was modified in 1993 to ease labor shortages for small firms, particularly in the manufacturing sector.
This trainee scheme was considered to be temporary since the trainees were to return to their home countries after one year. But the number of trainees has increased for two reasons.
First, the trainee working period was extended to three years (one year of training and two years of employment). Second, the sectors eligible for using trainees expanded to include other areas, such as fishery and construction.
In 2002, the government increased the number of industrial trainees under the foreign trainee scheme by 20,000 to 145,000.
Employment Management Scheme
The undeniable presence of undocumented foreign workers caught the government's attention, and, in June 2002, it recognized the need to give worker status to unskilled foreign labor for the first time.
The government calls this work permit initiative the employment management scheme. Although it was implemented at the same time as the increase in industrial trainees, this scheme is limited to foreign workers in the service sector who have Korean ancestors (these are mainly Chinese Koreans).
Due to its limited scope, the employment management scheme did not significantly decrease the number of undocumented workers. Finally, in July 2003, the government introduced a new employment permit system for guest workers.
Employment Permit Scheme
Under the employment permit scheme, qualified Korean employers (those with less than 300 employees in the areas of manufacturing, construction, and service are given priority) can enter into employment contracts with foreign workers who should be in good health and under the age of 40.
Employers who wish to employ unskilled foreign labor must first demonstrate that they have spent at least one month attempting to find Korean workers by requesting help from public employment centers.
These workers come to South Korea through government-to-government agreements. The government has signed Memorandums of Understanding (MOUs) with the governments of eight countries, including the Philippines, Sri Lanka, Vietnam, Thailand, and Indonesia.
After the maximum three-year employment period, foreign workers have to leave South Korea and stay outside the country for a one-year period before they are allowed to return for another three-year period. Family members of foreign workers are not allowed to enter, a restriction purposely designed to dissuade foreign workers from permanently settling in South Korea.
When the employment permit scheme was introduced, it gave many undocumented foreign workers the opportunity to apply for a permit, depending on how long they had been in the country illegally. At the same time, undocumented workers who did not qualify for a permit were given a chance to leave the country without paying any fines. This amnesty boosted the registered foreign population 73.4 percent between 2002 and 2003.
Not surprisingly, some undocumented workers who did not qualify for a permit have decided to stay, though it will be difficult for them to continue working and to avoid deportation. The government has publicized its intentions to enforce the scheme's deportation provision and to use the police to catch undocumented workers.
As of 2004, the proportion of undocumented workers in the total foreign workforce is still around 40 percent.
Refugees from North Korea
The majority of Korea's "refugees" come from North Korea, and their numbers have been increasing: 148 in 1999, 312 in 2000, 583 in 2001, 1,139 in 2002, and 1,281 in 2003. Officially, North Koreans are not considered refugees under South Korean law. They are citizens of the Republic of Korea since North Korea is still considered part of the Republic's territory.
Because the border between north and south is heavily guarded, most North Koreans first escape via the Chinese border, then try to defect to South Korea by traveling through countries in the region, including Thailand, Burma, and Mongolia. Some North Koreans enter or attempt to enter diplomatic compounds in China, a tactic China has sought to discourage by increasing border security and forcing North Koreans to return home.
Estimates vary widely, but about 100,000 to 300,000 North Koreans are living in or hiding in China. For many years, the United Nations High Commissioner for Refugees (UNHCR) has been concerned about the fate of North Koreans in China, which is a signatory of the 1951 Refugee Convention. However, the Chinese government considers North Koreans illegal migrants and not refugees. In addition, the government has repeatedly denied UNHCR access to the China-North Korea border region.
After North Koreans enter South Korea, the government asks them their reasons for defecting. Economic well-being has become increasingly important, with 40.7 percent of North Koreans in 2000 and 60.2 percent in 2003 citing it as their reason for leaving.
In 2003, other reasons for defecting included accompanying others (15.0 percent), discontent with the communist regime (9.6 percent), and worrying about being disciplined (6.2 percent); the latter is the same as persecution.
The North Koreans who successfully reach South Korea receive special assistance to help them settle and adjust to life in the south. This assistance includes an "adjustment program," which lasts two months, as well as adjustment capital.
The adjustment program is mainly an introduction to South Korea's economic and social systems. The adjustment capital varies by the number of household members. For example, a four-person household receives a lump sum of between US$30,000 and US$57,000. In addition, North Koreans receive support for renting a home, called "key money." Currently, key money assistance totals US$6,000.
Since the government's efforts to help North Koreans find jobs are not always successful, many have started their own businesses.
Although this may seem generous, the amount of financial support has, in fact, decreased due to a 1997 law. Many North Koreans believe they do not receive enough money from the South Korean government to adequately help them.
Attitudes towards North Koreans are shifting as well. When there were fewer North Korean refugees, those who entered South Korea were treated like heroes by the government and the people. As their numbers have increased, however, the public has become less enthusiastic and increasingly concerned.
The easiest way for a person to acquire Korean citizenship is by having a Korean spouse or having at least one parent who is a Korean citizen. The number of people naturalizing each year has been rapidly increasing, from 232 in 2000, to 661 in 2001, to 2,785 in 2002, and to 5,985 in 2003.
This increase is largely due to foreign women marrying South Korean men. These women mainly come from Asian countries, particularly China and Vietnam. For example, in 2003, 8,434 foreigners, or 94 percent of the year's total, were granted citizenship because they had South Korean spouses.
In addition, the number of people acquiring South Korean nationality because they have a Korean parent is also increasing, from 432 in 2000, to 800 in 2001, and to 1,555 in 2003. These are the children of Koreans who migrated to China, Russia, and Japan during the Japanese colonial period. They are entitled to citizenship only if they can show proper documents proving one of their parents was a Korean citizen.
For people with no family ties to Korea, it is still possible to become a citizen, but the path is difficult and few foreigners have chosen to pursue it. Foreigners must prove to the authorities that they have a serious desire to become South Korean citizens. Only 291 such foreigners received Korean citizenship in 2003.
The authorities may require five years of residence, proficiency in the Korean language, and understanding of Korean culture and history. Foreigners must pass an interview that tests their language proficiency as well as a written test on culture, history, and customs.
Although prosperity has brought higher living standards to South Korea, a number of middle-class South Koreans continue to emigrate to Asian and Anglophone countries.
In 2003, some 8,300 Koreans went abroad to permanently settle in a foreign country. According to government surveys of emigrants, the most popular destination countries are the US (28.4 percent), followed by China (16.8 percent), Japan (12.6 percent), Canada (10.0 percent), and Australia (5.1 percent). Family reunification provisions are the main reason for the flow to the US, where the Korean foreign born population was over 860,000 in 2000 according to the US Census Bureau.
The number of South Koreans who went abroad in 2003 for education reasons – largely to the US and China – numbered around 500,000.
Most of these South Koreans are searching for a better quality of life for themselves and their children. Among countries belonging to the Organization for Economic Cooperation and Development (OECD), South Koreans work the longest hours. In 2000, South Koreans worked an average of 47.5 hours per week, compared to 35.7 hours in Japan and 34.5 in the US.
Also, competition for places at good universities is very fierce. Normally, South Korean high school students leave for school very early in the morning, returning home at midnight. By living in an English-speaking country and attending a university abroad, many South Korean parents believe their children will gain a mastery of English that will lead to high-paying jobs abroad or at home.
Future policy on unskilled foreign workers will very much depend on the success of the present employment permit scheme, which has already reduced the number of undocumented workers. However, the high proportion of undocumented workers in the total foreign labor force is still significant, likely jeopardizing the employment permit scheme's effectiveness if the proportion does not decrease.
So far, South Korea has not seriously considered integration issues, mainly because the foreign-born population is very small. But integration is likely to receive national attention because of the growing number of foreign spouses and the continued presence of temporary workers, whose numbers are also expected to increase due to the new employment permit scheme.
Another factor in future migration flows is the evolution of the relationship between South and North Korea. If the two Koreas are united in the near future without much preparation, a united Korea may have serious problems integrating the two regions with populations accustomed to very different political and social systems.
The problems and challenges facing a united Korea will be greater than those Germany encountered because the cultural and political exchanges between the two Koreas are still at a premature stage.
Young-bum Park is a Professor at Hansung University in Seoul, South Korea. Previously, he was a Senior Fellow at Korea Labor Institute. He holds a Ph.D in economics form Cornell University.
Ministry of Justice, Republic of Korea, 2004. "2003 Statistical Yearbook of Immigration Management."
Park, Young-bum, 2004. Country Report: the Republic of Korea, Workshop on International Migration and Labor Market in Asia,
held from 5 –6, February, 2004. in Tokyo, Japan, Organized by the Japan Institute for Labor and Training
United Nations High Commissioner for Refugees, 2003. "UNHCR Global Report 2003: East Asia and the Pacific." Available online.
US Committee for Refugees. "World Refugee Survey 2004: South Korea." Available online.
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