By Choi Sung-jin
When President Park Geun-hye visited an industrial complex south of Seoul last March, most of the small-business executives there cited the difficulty in securing manpower as their biggest problem.
In a 2015 survey of small and medium enterprises, 60.7 percent of respondents also said they could not find young people willing to work on manufacturing lines.
There are a number of unemployed young people but the gap in wages and welfare programs between these SMEs and large companies is too wide to lure a young workforce.
Filling these voids are immigrant workers. Most of the parts and components makers cannot simply go on without these guest workers, mostly from Southeast Asia and South Asia. These foreign workers serve as the soil for "root industries" – businesses that process raw materials into parts and components – a small-business owner said.
"These immigrant workers are young and highly motivated, playing a key role in jacking up the entire factory's productivity," said another small-business president. "The problem is, the guest workers have to go back to their country after four years and 10 months of permitted work here, when their skills reach considerable levels. Replacing them with new migrant workers takes at least three months."
This is problematic, particularly considering the nation's demographic changes, industry experts said.
According to a report by the Korea Economic Research Institute, the nation's economically active population aged 15-64, which accounted for 73 percent of the total last year, will fall 16.5 percentage points to 56.5 percent in 2040.
To avoid a low-growth pattern caused by the fall in the economically active population, the nation should consider increasing the number of immigrant workers, the experts said. "To maintain the number of people who are in work or economically active at 37 million, which is expected to come in 2017, Korea needs to let in 300,000 new guest workers a year between 2018 and 2030," said Cho Kyuong-yeop, a researcher at KERI.
Migrant workers' effect on production - their contribution to gross domestic product - stood at 20.88 trillion won ($17.4 billion) in 2012, as calculated by the IOM-Migration Research and Training Center using an inter-industry relations table released by the Bank of Korea every five years. The guest workers' contribution, compared with the auto industry's production inducement coefficient of 2.575 in 2013, was equivalent to 770,000 units of the Sonata 2016 model with full options, it said.
"If the government changes its immigration policy toward positively giving permanent residency to immigrant workers, their consumption here would amount to 50 trillion won a year, greatly helping the Korean economy," Cho, the KERI researcher, said. "Now that the number of migrant workers has grown to account for more than 3 percent of the total workforce, the government needs to consider setting up an agency exclusively responsible for their administration from the viewpoint of social integration."
When President Park Geun-hye visited an industrial complex south of Seoul last March, most of the small-business executives there cited the difficulty in securing manpower as their biggest problem.
In a 2015 survey of small and medium enterprises, 60.7 percent of respondents also said they could not find young people willing to work on manufacturing lines.
There are a number of unemployed young people but the gap in wages and welfare programs between these SMEs and large companies is too wide to lure a young workforce.
Filling these voids are immigrant workers. Most of the parts and components makers cannot simply go on without these guest workers, mostly from Southeast Asia and South Asia. These foreign workers serve as the soil for "root industries" – businesses that process raw materials into parts and components – a small-business owner said.
"These immigrant workers are young and highly motivated, playing a key role in jacking up the entire factory's productivity," said another small-business president. "The problem is, the guest workers have to go back to their country after four years and 10 months of permitted work here, when their skills reach considerable levels. Replacing them with new migrant workers takes at least three months."
This is problematic, particularly considering the nation's demographic changes, industry experts said.
According to a report by the Korea Economic Research Institute, the nation's economically active population aged 15-64, which accounted for 73 percent of the total last year, will fall 16.5 percentage points to 56.5 percent in 2040.
To avoid a low-growth pattern caused by the fall in the economically active population, the nation should consider increasing the number of immigrant workers, the experts said. "To maintain the number of people who are in work or economically active at 37 million, which is expected to come in 2017, Korea needs to let in 300,000 new guest workers a year between 2018 and 2030," said Cho Kyuong-yeop, a researcher at KERI.
Migrant workers' effect on production - their contribution to gross domestic product - stood at 20.88 trillion won ($17.4 billion) in 2012, as calculated by the IOM-Migration Research and Training Center using an inter-industry relations table released by the Bank of Korea every five years. The guest workers' contribution, compared with the auto industry's production inducement coefficient of 2.575 in 2013, was equivalent to 770,000 units of the Sonata 2016 model with full options, it said.
"If the government changes its immigration policy toward positively giving permanent residency to immigrant workers, their consumption here would amount to 50 trillion won a year, greatly helping the Korean economy," Cho, the KERI researcher, said. "Now that the number of migrant workers has grown to account for more than 3 percent of the total workforce, the government needs to consider setting up an agency exclusively responsible for their administration from the viewpoint of social integration."
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