Reasons for the Increase in Foreign Worker Employment in SMEs? ... Due to 'Labor Cost Burden'

KEF Survey: 48% Responded 'Labor Costs'... 45%P Surge Compared to Last Year

A survey conducted among domestic small and medium-sized enterprises (SMEs) revealed that the number of respondents citing 'labor cost burden' as the reason for employing foreign workers has significantly increased compared to last year. This is interpreted as an increase in workplaces hiring foreign workers due to low labor costs amid worsening management difficulties caused by prolonged high interest rates and sluggish domestic demand.

On the 3rd, the Korea Employers Federation announced these findings through the results of the 'Status of Foreign Worker Utilization and Policy Awareness Survey,' conducted on 600 companies in major industries with fewer than 300 employees.

In this survey, 48.2% of respondents answered that the reason for employing foreign workers was 'relatively low labor costs.' Compared to last year's survey, where only 2.9% responded with 'relatively low labor costs,' this represents an increase of more than 45 percentage points. Last year's survey showed that over 90% of companies chose to employ foreign workers due to 'difficulty in recruiting domestic workers.'

In this year's survey, 'relatively low labor costs' accounted for 48.2%, followed by 'difficulty in recruiting domestic workers' at 34.5%. Other reasons included the possibility of employment exceeding two years (6.8%) and low turnover rates (6.5%).

Reasons for Employing Foreign Workers in Small and Medium Enterprises. Provided by the Korea Employers Federation

Regarding difficulties experienced when employing foreign workers, burdens related to wages themselves (64%) and indirect labor costs such as accommodation fees (28%) were mentioned. Communication difficulties (18.8%), work slowdowns (18%), and low skill levels (8.7%) were also cited as challenges.

Additionally, domestic SMEs considered maintaining the current level of foreign worker introduction in Korea as appropriate. The number of foreign workers introduced through the E-9 visa was about 56,000 in 2020 but increased nearly threefold to 165,000 this year.

Meanwhile, 27.8% of respondent companies answered that they are 'currently unable to employ a sufficient number of foreign workers,' with the main reason being 'employment quota limits per workplace (40%),' which accounted for the highest proportion.

Lim Young-tae, head of the Employment and Social Policy Division at the Korea Employers Federation, emphasized, "Despite the significant increase in the overall scale of foreign worker introduction, individual companies' labor shortages have not been sufficiently resolved," adding, "A flexible foreign labor supply system is necessary to ensure no difficulties in workforce supply and demand when entering a phase of economic recovery."

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