South Korean small and medium enterprises (SMEs) are finding it hard to even hire foreign workers amid rising wages and sluggish economic conditions, a poll by a local business federation said Sunday.
According to the Korea Federation of Small and Medium Business (KBIZ) that checked member companies that did not report hiring foreign nationals with E-9 visas this year, despite having done so in 2017, firms cited the business downturn as the main reason for opting to not hire foreign workers.
The survey was carried out on 577 manufacturers from Monday through Wednesday as the number of companies that sought the government's permission to hire foreigners dropped off this year.
KBIZ said 38.3 percent of companies said high labor costs had become a burden, followed by 24.1 percent that claimed a generally adverse environment was the reason for not hiring employees.
As of January, the country's hourly minimum wage rose by 16.4 percent on-year to year to 7,530 won ($6.20) per hour, from 6,470 won in 2017. The government has set a goal of pushing the base wage up to at least 10,000 won by 2020.
The latest poll then showed only 40.4 percent of SMEs were contemplating hiring any workers next year, which is not good for the job market overall.
In particular, smaller sized companies said they will probably only retain their present staff or even cut down on the workforce in 2019, as they are worried about possible economic hardships going forward.
Besides wages and lack of confidence in the future, SMEs said they were reluctant to hire foreign workers, due to communication issues, low productivity compared with the wages they must provide, idleness, frequent switching of jobs, and generally complicated administrative red tape and hassle related to finding lodging and insurance arrangements.
"Up till last year, there was considerable demand for foreign workers among firms who could not find local employees, but this year things have changed in the face of the minimum wage hike and general uncertainties," a KBIZ source said. (Yonhap)