are in the MOST Phase I website (1994-2003).
The MOST Phase II website is available at: www.unesco.org/shs/most.
Korea, once a major labour-exporting country, is discussing opening its labour market to foreign labour. The labour shortage problem is more serious with labour-intensive industries such as clothing, small and medium industries and the construction industry.
The Korean labour market has been near full employment since the mid 1980s. Unemployment rates have been around 2.5 per cent. For example, in 1995, the unemployment rate was only 2 per cent. With this tight labour market, some industries have found it hard to locate Korean workers and immigrant workers have trickled into the country.
B. Migration and Government Policies
Until the mid 1980s, Korea was one of the major labour-sending countries in Asia. Nearly two million Korean workers went overseas for temporary employment since 1963.
The oil-producing Middle Eastern countries received most Korean migrants. From 1963 to 1989, 61 per cent of the Korean migrant workers went to the Middle East. However, with a slow-down in the economies of Middle Eastern nations, the overseas migration of Korean labour has decreased since the mid 1980s. In 1990, about 56,000 Korean workers went abroad, a reduction of 72 per cent compared to 1982, the peak year for overseas migration of Korean workers. The downward trend in Korean labour exports will likely continue in the future. Most of the Korean workers overseas worked for Korean construction companies which successfully penetrated into the Middle Eastern market. (1) However, Korean workers seem to have lost the incentive to go abroad for employment due to Korea’s rapid wage increase since the late 1980s. As of 1991, Korean workers constituted less than 20 per cent of the total labour force of the Korean overseas construction firms.
Over the past few years, the admission of foreign workers has become an important issue in the Republic of Korea. Although Korea has had a long history of relative isolation, the shortage of labour in certain occupations and jobs has drawn foreign workers into the country in increasing numbers. They have grown from a few thousand in the early 1980s to current estimates of anywhere from 60,000 to 100,000. Almost all of these workers are working in the country illegally. Because of their illegal status, most receive wages and other terms of employment that are significantly inferior to those of Korean workers in the same occupations.
The growing presence of foreign workers in Korea is closely related to the tightening of the labour market and the consequent wage explosion. Their presence is still very small, insignificant in comparison to other industrialised countries, but the growth has been rapid, and likely to continue if state policy permits it. If the unfilled vacancy estimates of the Ministry of Labor truly reflect labour shortages, then the number of potential jobs for foreign workers are already double to triple the present number of foreigners overstaying in the country plus those who have been admitted as trainees. For small-scale manufacturing alone, the labour shortage amounted to 120,220 in September 1993. For the entire economy, a 4 per cent shortage rate for production workers translates to about 250,000 workers.
The immigration law of the Republic of Korea continues to restrict the admission of foreign workers to a few categories. Legal status is offered only to those who will be engaged in reporting, technology transfer, business, capital investment, education and research, and entertainment, or for employment that is recommended by a government minister. Current immigration law does not allow unskilled foreign labour to enter Korea, except as ‘trainees’. The trainee system is originally intended to upgrade the skills of foreign workers employed by overseas Korean firms. As labour shortages became more intensified, the Korean government began to use the trainee system as an instrument to accept unskilled foreign labour. The trainee system is considered to be temporary since trainees are to return to their home countries after a maximum of two years.
It is believed that a large number of unskilled foreign workers have entered Korea for the purpose of employment in the last few years. Most undocumented workers enter the country on the short term visas which are issued mainly to foreign tourists and to foreign nationals of Korean ancestry. Immigration authorities learn their actual activities in the country after their stay extends beyond the period authorised by the immigration authorities.
Until mid 1995, there appeared to be no consensus on the issue of foreign labour within the Government and among different social sectors because of differences in views on the probable social and economic impact. The Ministry of Trade, Industry and Resources agreed with business sector’s claim that the importation of foreign labour was necessary to ease the current labour shortage problem. On the other hand the Ministry of Labor and the Ministry of Justice opposed unskilled migrants. The trade unions have opposed the importation of foreign labour because of fears that foreign workers could depress working conditions of Korean workers and displace marginal workers.
This lack of consensus led to the ambivalence shown by the authorities in implementing the current immigration law. When the Korean government offered amnesty to undocumented foreign workers in June 1992, those who reported to the authorities were allowed to stay in the country until December 31, 1992. Some 61,126 foreigners were registered, out of about 68,000 who had overstayed. The Government, however, changed its mind and allowed them to stay for another six months. When the second deadline approached the 9,145 remaining foreign workers were allowed to stay for yet another six months. Then, as the third deadline came, another six-month extension was granted. Of the 61,126 foreign workers who reported to the authorities in June 1992 some 22,035 were of Chinese nationality, 18,903 were Filipinos, 8,950 were Bangladeshis, 5,036 were Nepalese and 6,112 were of several other nationalities.
By the end of 1995 the total number of foreigners working illegally in Korea may have reached 80,000 or more. According to the immigration authorities, the number of foreigners who had overstayed their visas at the end of January 1996 reached 84,385. Because of their illegal status, their working and living conditions are inferior, and they are often exploited by their Korean employers. Undocumented foreign workers are now covered by the government-run industrial accident insurance coverage on equal terms with Korean workers, reflecting the Korean government’s growing concern about the social rights of the foreign workers. However, some critics still doubt the effectiveness of this measure, since illegal foreign workers can be deported if they request treatment from accidents.
In mid 1995, when the Ministry of Labor argued the need for introducing the employment permit system, all the government ministries concerned seemed to agree at least that Korea needed some foreign workers. Since then, the critical foreign policy issue has been the procedure of foreign labour import. The Ministry of Trade, Industry and Resources claimed that the foreign trainee system should be maintained in order to prevent the cost of foreign labour from being increased by introducing the employment permit system. One of the key issues is which authority controls the foreign labour import procedure since there exist few differences in the contents between the two systems.
C. Foreign Trainee System
The legal admission of ‘trainees’ was originally intended to help Korean firms with overseas operations or subsidiaries to bring to Korea their foreign employees for skills upgrading. As the labour shortage intensified, the Korean Government has used this immigration regulation to accept unskilled foreign labour. (2)
During the last half of 1993, up to 10,000 foreign trainees were allowed for up to one year to work in small establishments in selected industries which the authorities considered essential for Korea’s sustained economic development. Originally, these trainees were only allowed to stay in Korea up to one year. By December 1993 their number had swollen to over 20,000, and their period of stay was extended to two years. In August 1994, the Korean government decided to bring another 10,000 trainees for the garment/footwear sector, which was experiencing serious labour shortages. In the footwear sector, big enterprises also became qualified for the import of foreign labour. In 1995, the government decided that another 40,000 foreign trainees would be brought into Korea. Finally, in January 1996, President Kim promised to allow another 1,000 foreign trainees for seashore fishery industry which also experienced labour shortages. It is known that the foreign trainee system for the seashore fishery sector is expected to be run by the Korea Fishery Federation.
The foreign trainee system for the manufacturing sector is managed by Korea International Training Cooperation Corps (KITCO) under the Korea Federation of Small Business (KFSB). When it was first introduced in 1992, foreign trainees were brought through a somewhat closed procedure. The detailed information, such as qualifications for the application, the number of available trainees and so on, was not revealed to the public. Business associations in the ten selected manufacturing sectors were given the authority to manage the procedure of the import of foreign labour. They implemented the system as they saw fit. At that time, all the concerned ministries agreed that foreign trainees would be brought only once.
When the system was expanded in 1993, KITCO was established. KITCO sets the following rules concerning the qualifications of using foreign labour: (1) the company should belong to small manufacturing business sectors whose labour shortage rate is above 5 per cent (food, tobacco, and printing were excluded before 1996); (2) the company should have operated for one (three before 1995; two before 1996) or more years; (3) the number of permanent employees should be between 5 (9 before 1996) and 301 excluding the footwear sector; (4) the company should be registered with Ministry of Trade, Industry and Energy; and (5) the company should have accommodation facilities. Also, companies located in industrial complexes or non-Seoul areas, companies recommended as promising small business, members of KFSB, and companies which export more than 50 per cent of their turnover, were given some advantages. The maximum number of foreign trainees per firm was 10 per cent of the workforce with the limit of 20 trainees.
In 1994, KITCO added additional requirements such as (1) the company must establish an automation plan which will ease the labour shortage; and (2) domestic capital must be more than 50 per cent in the company with foreign capital.
Foreign trainees should be between 18 and 35 (between 20 and 50 from March 1993) years old without criminal records. Only fourteen (twelve before 1996) countries are selected for sending their nationals as a trainee. Recruiting agencies are also selected from each sending country. Except China, the Philippines and Bangladesh which send more than 1,000 trainees, only one recruiting agency is qualified to select and send trainees on behalf of KITCO.
Trainees are required to have training at the local recruiting agency more than ten days (six days before March 1995) before they come to Korea. They also have orientation courses at KITCO for less than six days (two days before March 1995) after entering Korea.
Foreign trainees are now covered by a government-run industrial accident insurance and a medical insurance on equal terms with Korean workers. However, before March 1995, they were given a special industrial accident insurance, the benefits of which were inferior to the Korean workers.
As of March 1995, 22,583 foreign trainees were brought into Korea. The first 10,000 foreign trainees, who came under a different system, were sent back to their home countries if they did not flee. Textile (25 per cent), rubber and plastic (9.7 per cent), leather and footwear (8.4 per cent), fabricated metal (7.8 per cent) and automotive and trailer (7.2 per cent) constituted more than 50 per cent. Concerning the size of enterprise, 11–50 employees (36.9 per cent) took the biggest share. Big enterprises with more than 300 employees also had 4.5 per cent of share. Companies in Seoul and Kyoung-gi, next providence to Seoul, took almost 50 per cent of the foreign trainees. China (38.2 per cent), Vietnam (17.4 per cent) and the Philippines (13.3 per cent) sent more than half of the foreign trainees.
The foreign trainee system was originally introduced to help overseas Korean manufacturing firms to train their foreign employees. However, the system has been used to ease labour shortage problems of the Korean small manufacturing firms. Due to improper implementation of this system quite a few problems have occurred.
First, the wages of the trainees are lower than those of undocumented foreign workers. The foreign trainees are admitted through a legalised process, and do a similar job as the undocumented workers, but their wages and working conditions are still inferior to those of the undocumented workers. Even before March 1994, their allowances differed depending on their home country. Now, KITCO set the basic allowance for foreign trainees at 266,420 Korean won, or US$340 per month, which is still considered lower than the undocumented foreigners’.
Second, most foreign trainees come to Korea with the expectation that they could learn or develop some skills and knowledge through training. However, since they are used to substitute simple labourers in sectors which most Korean workers do not want, they often become frustrated.
Third, the foreign trainees have a strong incentive to flee from their workplaces since undocumented workers, whose wages are higher than theirs, are not caught easily. For example, as of November 1994, about 10 per cent of foreign trainees fled from their training companies. There are many job agencies which lure foreign trainees. It is known that, once a deal is completed, 100,000 (125) and 300,000 (375) Korean won (U.S. dollars) are given to the job agency from the trainee and the company, respectively.
Fourth, some designated foreign recruiting agencies are known to charge excessive fees for the trainees. For example, some Chinese agencies charged 3–4 million Korean won (3,750-5,000 U.S. dollars) per trainee.
Finally, the system has brought some diplomatic problems with sending countries. The foreign trainees are used as workers at training companies, however, they are not treated as workers. This dilemma could impose some image problems for Korea and the Korean people, which was exemplified by a serious protest that took place in the most influential catholic church in Seoul.
D. Prospects for the Future and Areas for Further Research
It is highly likely that more foreign workers will enter Korea. However, Korea’s current foreign labour policy, which follows the Japanese model will continue. Some policy makers believe that, by not legalising the import of foreign labour as well as accepting them as trainees, Korea will be able to reduce the possible negative economic and social impacts of foreign workers, but still get their labour. This suggests that illegal rather than legal foreign worker numbers will rise while Korean policy makers discuss how Korea receives unskilled foreign labour.
Substantial research was conducted on the area of the Korean experiences in labour export. Many of the research activities on labour export were funded by Korean overseas construction firms. On the other hand, very few studies were done on the import aspect of migration in Korea. Most of the previous studies on the labour import are very descriptive and deal mainly with whether Korea needs foreign labour for its sustained economic and social development. Some studies include the results of the surveys on the wages and working conditions of foreign workers. Only the few surveys are representative of the foreign workers in their coverage.
The followings are possible research subjects on foreign workers:
(1) Private recruitment agents
(2) Temporary worker schemes
(3) Social and cultural aspects of temporary migration
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