Next Year, 100,000 Foreign Workers Will Be Short... Rushing Only to Increase Quotas

To Alleviate Labor Shortage in SMEs
10,000 More E-9 Quotas Added This Year
But Large Temporary Gaps Inevitable
As Next Year's Expiring Workers Leave

Fundamental Measures Needed, Not Short-Term
Remove Proportional Limits on Hiring Nationals
and Improve Visa Status Conversion System

[Asia Economy Reporter Donghyun Choi] Company A, a semiconductor parts manufacturer located in Icheon-si, Gyeonggi Province, employs 39 foreign workers out of 104 employees. As a manufacturing company with 51 to 100 domestic insured workers, Company A can secure 30 foreign workers through the Employment Permit System, with 15 workers each on the Visit Employment (H-2) and Non-professional Employment (E-9) visas. The remaining workforce is hired under Overseas Korean Visa (F-4) or Permanent Resident Visa (F-5). Although every possible method is being utilized to secure foreign labor, finding workers remains extremely difficult. In recent years, when the IT industry rapidly expanded, Company A needed additional foreign workers to increase production but struggled with recruitment due to a sharp decline in foreign arrivals caused by COVID-19. Especially through the E-9 visa, they were barely able to find the desired workforce. Many workers’ 4 years and 10 months stay period was nearly expired, and designated placement was not allowed.

Domestic small and medium-sized enterprises (SMEs) are struggling to secure foreign labor. The Employment Permit System, introduced in 2004 to alleviate labor shortages in SMEs, fails to adequately reflect on-site conditions, but the government is focusing only on increasing quotas limited to certain industries, making it urgent to establish more fundamental measures.

On the 31st of last month, the government held the 34th Foreign Workforce Policy Committee chaired by Visit Gyu, Director of the Office for Government Policy Coordination, and approved the ‘2022 Foreign Workforce Quota Expansion Plan.’ Through this, the new E-9 foreign workforce entry quota was increased from 59,000 to 69,000. In response to repeated demands from the SME sector for labor shortage solutions, the E-9 quota, which had remained in the 50,000 range annually for the past five years, was expanded to the 60,000 range for the first time.

However, increasing the E-9 quota by 10,000 alone is expected to be insufficient to address the shortage of foreign workers in SMEs. It is estimated that about 100,000 workers will be lacking next year alone. In March, the government extended the stay and employment period by one year for foreign workers (E-9, H-2) whose stay and employment activities in Korea expire between April 13 and December 31 this year. The government estimated that 132,000 workers were eligible for this extension. If these workers, along with those whose stay expires normally next year, leave all at once, there is a risk of a temporary large-scale labor gap. An official from the Korea Federation of SMEs said, "Considering the inflow and outflow of workers this year and next, it is estimated that about 100,000 foreign workers will be needed next year," adding, "We plan to request cooperation from the Ministry of Employment and Labor to maintain an emergency system until next year, not just a short-term measure, based on the government’s recently announced foreign worker supply and demand plan."

If the E-9 visa quota for next year is assumed to be similar to this year, about 138,000 foreigners will have the opportunity to enter and work in Korea under the E-9 visa from this year through next year. However, not all of them can enter Korea. In 2020, when the COVID-19 pandemic occurred, only 6,688 people, or 11.9% of the 56,000 E-9 quota, entered the country. In 2021, only 10,501 people (20.1%) out of 52,000 entered. Although entry procedures were simplified this year, as of the 26th of last month, only 42,344 people (61.3%) out of 69,000 had entered, still not fully utilizing the quota. This is because flights have not yet returned to pre-COVID-19 levels, and about 50,000 people who have obtained E-9 visas are still waiting to enter. A Ministry of Employment and Labor official said, "Due to COVID-19, a significant number of people who have been issued E-9 visas are still waiting to enter, but starting this month, we will simplify procedures to allow 10,000 people to enter monthly."

The government plans to minimize the foreign labor gap by confirming next year’s E-9 quota early in October and supporting immediate entry from January next year. Additionally, the foreign worker entry process will be shortened from 84 days to 39 days to facilitate rapid entry, and the E-9 quota for manufacturing and agriculture/livestock industries will be increased by 6,600.

However, the SME sector unanimously agrees that rather than simply expanding the E-9 quota, various restrictive conditions stipulated in the Employment Permit System need to be improved. A representative example is the regulation that limits foreign worker employment proportionally to the number of domestic workers hired by the company. This varies by industry; for mining and manufacturing, if the number of domestic insured workers is between 101 and 150, the maximum number of foreign workers allowed is 20. The shipbuilding industry, which recently entered a ‘supercycle’ (period of super-boom), believes that allowing foreign worker employment up to 50% of domestic workers is necessary to ease the situation.

There is also a need to improve the ‘Skilled Worker Status Conversion System.’ This system allows foreign workers who entered under E-9 or H-2 visas and meet skill and continuous employment criteria (over 5 years) to convert to a Specific Activity Employment Visa (E-7), enabling them to stay in Korea without a stay period limit. At the 4th Emergency Economic Ministers’ Meeting held on the 8th of last month, the government announced it would establish a separate ‘E-9→E-7’ conversion quota limited to the shipbuilding industry next year. An executive from parts manufacturer B in Ulsan said, "Instead of increasing quotas only for specific industries, the continuous employment criteria for conversion should be lowered so that many industries can utilize it," adding, "Although the system exists, the requirements are so strict that it is hardly used."

There were also calls to allow designated placement for E-9 visas. Currently, SMEs hiring foreigners through E-9 must submit related documents to the Ministry of Employment and Labor and can only hire from the workforce recommended by the Employment Center. Companies cannot directly designate and hire desired workers. If there is a desired worker, they must repeatedly request re-placement until placement is made. An executive from shipbuilding company C in Jeonnam said, "Even if our staff recommends foreign workers with the skills we need, we cannot bring them because designated placement is not allowed," adding, "Improvement is needed so that necessary workers can be hired in the right place at the right time."

This content was produced with the assistance of AI translation services.