Applications open Monday for permit system as Labor Ministry frets over shortfall

Slump curbs demand for foreign workers even as direct-hiring costs mount

Language, skill gaps and job-hopping: employers say better matching should come before more permits

Foreign workers who arrived through Incheon International Airport wait for a bus in 2023. [Yonhap]
Foreign workers who arrived through Incheon International Airport wait for a bus in 2023. [Yonhap]

"We do not have the capacity to hire even one more person. The employment permit system has become so burdensome that we almost have to beg foreign workers to come work for us."

The head of a small and medium-sized enterprise in South Gyeongsang Province said this, describing his dilemma over whether to apply for foreign workers this year. The number of foreign workers staying in Korea under the employment permit system has hit a record high this year. But applications from companies seeking to hire new foreign workers have actually been declining. The slump has cut order volumes and, with them, companies' capacity to hire, while the added costs of training foreign workers pose a substantial burden.

The Ministry of Employment and Labor will accept applications for the fourth round of this year's new employment permits for foreign workers (E-9 visa) from Monday to Sept. 29. The employment permit system allows small and medium-sized enterprises unable to find domestic workers to hire foreign workers in non-professional jobs with government approval. This round will allocate a total of 12,357 workers — 9,020 in manufacturing, 1,906 in agriculture and livestock farming, 897 in fisheries, 394 in construction and 140 in the service sector.

When applications exceed the supply, assignment priority is typically decided by a scoring system for each workplace, but no such competition has taken place this year. A Labor Ministry official said, "In the first three rounds this year, applications fell short of or barely filled the recruitment quota, and every workplace that applied received foreign workers." The official added, "Right after the COVID-19 pandemic, labor shortages worsened and applications briefly rose, but they have been declining again recently. We are worried that the fourth round will also fall short."

On the ground, industry sources point to the manufacturing slump as the reason behind the weak demand for foreign worker allocations. The head of a manufacturing company in Busan said, "We have relied heavily on foreign workers in fields Korean workers tend to avoid, such as machining, surface treatment and welding," adding, "Business conditions in those sectors have worsened recently, so companies are actually cutting back on staff." Another SME head said, "In the past, competition for scores was fierce and many companies could not get foreign workers. Nowadays, I understand that if you apply, you are almost guaranteed to get one."

For employers, the array of regulations that come with hiring foreign workers is also a burden. Employers must handle everything from housing and insurance to various reporting requirements and helping workers adjust to the workplace. One employer said, "We employ four foreign workers, and this year alone we have already undergone a second inspection. We even installed system air conditioners and induction stoves in the dormitory and provide one room per person," adding, "I have seen many cases where foreign employees make excessive welfare demands and cause difficulties."

Because of this burden, some on the ground say hiring foreign workers through staffing agencies is preferable to using the employment permit system. Direct hiring requires employers to handle everything from recruitment to training, housing and daily life management. Going through a staffing agency, by contrast, reduces that workforce management burden. Some argue this could create a "paradox of expansion" — the more the employment permit system's quota grows, the greater the demand for illegal or indirect hiring becomes.

There are also problems with the skill levels of foreign workers. According to data provided by the Innobiz Association, employers said, "In manufacturing and production jobs, foreign workers need considerable time to learn the actual work and skills involved," adding, "During this period, companies must bear the costs of training and management while also accepting the lower initial productivity of new workers."

It is also difficult to gather enough information at the hiring stage to control costs. Employers cited in the Innobiz Association data said, "During the hiring process through the employment permit system, companies have limited choice in selecting workers well-suited to the actual worksite, and it is difficult to determine in advance a worker's job experience, skill level or job fit."

Complaints are especially pointed regarding the gap between Korean-language test scores and actual communication ability. One employer said, "Of the roughly 30 foreign workers I have worked with, only about five or six could communicate smoothly in Korean," describing finding a foreign worker who communicates well in Korean as "a matter of luck." The employer added, "I have heard from workers that some pay for exam answers in advance in their home countries to pass the Korean-language test."

Another concern is that skilled workers are more likely to move to other jobs. E-9 visa holders can change workplaces once they meet certain requirements. One employer said, "When a worker we spent years training into a skilled worker moves to another workplace, we have to hire someone new and start the training all over again." The Innobiz Association data also cited workplace difficulties in cases where a company trains a foreign worker for three to four years. The worker then leaves before the company can recoup its training costs.

The government aims to expand the use of foreign labor this year. It raised the cap on additional hires per workplace for manufacturers outside the Greater Seoul area from 20 percent to 30 percent. But industry voices say the priority should not simply be letting companies hire more workers. Instead, they say cutting recruitment and management costs should come first. They also call for improving the matching system so companies can select workers with the skills and language ability they need.


snsd@heraldcorp.com
hong@heraldcorp.com