Should foreign workers' wages reflect their home country earnings?

A group of Nepalese people arrive at Incheon International Airport seeking jobs in Korea, June 20. Newsis

President Yoon Suk Yeol recently reignited controversy over wage differentiation for foreign workers, citing the challenging situations faced by self-employed individuals as a reason.

"Restaurant owners, who are at a critical juncture due to the challenges they face, are raising concerns about the rising labor costs, especially when hiring foreign workers," Yoon said during a cabinet meeting on Monday. "They are calling for immediate measures, suggesting a potential withdrawal from the International Labour Organization (ILO) agreement that mandates equal wages for foreign and domestic workers."

For some time now, Korean small business owners and small and medium-sized enterprises, particularly those heavily reliant on foreign labor, have consistently lobbied for different wages. The prevailing sentiment is that it is reasonable to offer foreign workers lower wages, especially given these workers often earn significantly more in Korea than they would in their home countries.

Over the past years, multiple proposals addressing this issue have been brought forward in the National Assembly. However, all have failed to make progress, being in clear violation of international law. ILO Convention No. 111 prohibits any discrimination based on race, skin color, gender, religion, political opinion, or social status that impairs equality of opportunity and treatment in employment or occupation. Such practice is also against the domestic act on labor standards and employment of foreign workers.

President Yoon Suk Yeol speaks during a cabinet meeting at the presidential office in Seoul, Monday. Courtesy of the presidential office

This previously subdued debate has resurfaced, largely driven by recent government policy recruiting Southeast Asian domestic workers to help tackle Korea's low birthrate. Advocates of this policy, including Seoul Mayor Oh Se-hoon, argue that it would only be effective "if the monthly wages of foreign domestic workers are set to around 1 million won ($736.54)."

"Why would anyone want to pay over 2 million won for foreign nannies who come from different cultural backgrounds and have limited Korean language skills?" Oh said. He cited that foreign domestic workers in places like Singapore and Hong Kong earn less than 1 million won.

The increasing financial pressures faced by the self-employed, proven by climbing delinquency rates, further fuels the allure of these arguments.

However, experts contend that differentiating wages between foreign and domestic workers is not a feasible option for Korea.

For instance, Singapore does not have a minimum wage system altogether, avoiding the debate over the potential discrimination between locals and foreigners. Additionally, neither Hong Kong nor Taiwan are members of the OECD, granting them leeway in setting different minimum wages for foreign workers.

"In OECD countries that have a minimum wage structure, not one excludes only foreigners from its guidelines," said Kim Won-mo, a former special member of the National Assembly's environment and labor committee.

Members of civic groups protest during the Ministry of Employment and Labor's public hearing on introducing foreign housekeepers at a hotel in Seoul, July 31. The women on the right holds a picket saying "We condemn the labor ministry for passing on domestic work to another group of low-wage female workers." Newsis

According to a 2022 report by the Minimum Wage Commission, an institution overseen by the labor ministry, out of 41 surveyed countries, which include 26 OECD member countries and 15 non-members, none set a lower minimum wage solely for foreign workers. Some countries even mandate a higher minimum wage for foreign workers in particular sectors, to prevent jobs from being filled by lower-paid foreign workers.

Experts argue that there's little to gain from retracting the provisions, especially given the anticipated backlash from the global community. Withdrawing from ILO agreements could also jeopardize existing trade agreements, such as the Korea-U.S. Free Trade Agreement.

"By their reasoning, migrants from countries with lower wages than Korea should only receive lower living expenses. Yet, these individuals live in Korea, use its resources, and undoubtedly face standard Korean living costs. Justifying wage differences solely based on their homeland's economic metrics is fundamentally flawed," said an official from the Korean Federation of Trade Unions.

Responding to the criticisms, an official from the presidential office explained, "The comments arose as (the president) tried to share the firsthand accounts he received from his aides to the council member." He added it's premature to assert that Yoon has made any political decision on the matter.