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Korea and the Global Competition for Labour

On my recent visit to South Korea and Japan, the topic of foreign migrant labor came up more than on any previous visit. An architect friend in South Korea said that construction would be almost impossible without foreign labor. A Japanese friend in Tokyo said that the service industry would face a severe shortage of workers without foreign labor.

As the COVID-19 pandemic recedes, interest in other long-standing issues has reasserted itself. In 2021, South Korea joined Japan as one of the few nations with a declining population, a milestone Japan crossed in 2011. Though at different demographic stages, both nations are facing existential questions about how to maintain social and economic vitality in the future.

The discussion of foreign migrant labor often focuses on “3D” work that is considered “dirty, dangerous, and difficult” that an increasingly educated workforce seeks to avoid. Foreigners from poor countries are willing to endure the hardship for the higher wages that South Korea and Japan offer. They are expected to stay for a limited time before returning home. This paradigm developed from limited labor shortages that developed in both countries in the late 20th-century as higher levels of education demoted the value of blue-collar work.

What worked then and appears to be working now, however, might not work in the future. As more nations face aging populations and declining workforces, competition for labor of all sorts will heat up. Many new industrialized and developing nations are already experiencing aging and will see their populations peak around 2050. China, the best-known example, is aging rapidly and is expected to begin an extended population decline this year.

For South Korea, this means two things. First, the flow of foreign migrant labor willing to do “3D” work may begin to slow unless conditions improve. Higher wages would help, but more than that, many foreign migrants are looking for a path to establish roots and create their new lives in their adopted country. This explains the enduring appeal of countries, such as the US and Canada that have a long tradition of accepting immigrants. Instead of looking foreign workers as temporary migrants, South Korea should view them as immigrants who contribute to the vitality of society.

Second, the term “foreign migrant labor” implies “3D” work, but the global market for highly skilled white-collar workers is also heating up. A range of industries from tech to medical science compete aggressively for workers on a global scale. Companies in these industries hire the most talented graduates from universities worldwide, which makes it difficult for smaller local companies to attract talent. Like their “3D” counterparts, however, these high-flying white-collar workers are interested in more than money; they are interested in career development and a good quality of life.

In response to globalization in the 1990s, South Korea has gone through various spurts of interest in attracting highly skilled white-collar workers to the country. Today, foreigners are found in universities and public and private research institutions to a degree unimaginable a generation ago. The problem is less the number than the turnover. Many, particularly those in tech and science, find themselves pulled by opportunities elsewhere and end up leaving early. As global competition for highly skilled workers increases, this trend will only exacerbate.

The problem affects South Korean workers as well. The country has long suffered from a brain drain as Koreans who got advanced degrees in the US preferred to stay instead of returning home. Improved economic and social conditions in South Korea beginning in the 1990s attracted many Koreans back home. Emigration to the US slowed at the same time. In recent years, however, the trend has reversed as more South Korean advanced-degree holders are staying in the US or moving to a third country. Greater competition for talent among companies puts them at an advantage; many also cite the competitive educational system in South Korea as a reason for staying away.

In the end, the discussion about foreign migrant labor in South Korea is about more than foreigners or the supply of labor. It is really a discussion about how to attract and keep people, foreigners and Koreans alike, in an era of increased mobility and labor market competition. To compete in the global race for labor, South Korea needs to become a place where people can put down roots and build rewarding lives for themselves and their family. To many, of course, it already is, but complacency only breeds the stagnation that Koreans want to avoid.

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