"Skilled Talent Development Remains Out of Reach"... SMEs Face Growing Concerns in the AI Era

98.2% of SMEs Plan to Maintain or Increase Foreign Workforce
Issues of Short-Term Stays and Manual Labor Among Foreign Workers
Difficulties in Cultivating Skilled Talent Needed for AI Transformation
Need for Flexible E-7-4 Visa Transition and Enh

Small and medium-sized enterprises (SMEs) in South Korea are struggling to cultivate skilled talent necessary for artificial intelligence (AI) transformation. Foreign workers, who have become key personnel in SME workplaces, face limitations due to short legal stay periods, frequent job changes, and a focus on simple labor tasks, making it difficult for them to handle new data-related technologies. Experts advise that the process for foreign workers to convert to skilled worker visas (E-7-4) should be made more flexible, and that digital transformation training for incumbent foreign workers should be strengthened.

According to industry sources on September 18, the employment rate of foreign workers in domestic SMEs has been steadily increasing due to severe labor shortages. In a "2025 Employer Survey on Foreign Worker Employment" conducted by the Korea Federation of SMEs, 93.8% of responding companies stated that they hired foreign workers through the employment permit system because it was difficult to recruit domestic workers. Additionally, 98.2% said they plan to either maintain (60.0%) or increase (38.2%) the number of foreign workers they employ in the future. More than half (55.5%) responded that demand for the employment permit system will increase over the next three years.

As foreign workers have become essential personnel in industrial sites, the concerns of SMEs are deepening. With the pace of digital transformation accelerating, the current structure of hiring foreign workers-characterized by short-term stays and simple labor-creates structural obstacles to cultivating the talent needed for AI transformation. Smart factories in the manufacturing sector, which integrate AI, focus on the automation of equipment, processes, and logistics. Sensors equipped with Internet of Things (IoT) technology collect equipment, process, and logistics data in real time, which AI then analyzes to automatically predict demand and equipment anomalies, allowing robots to carry out tasks. According to industry insiders, skilled personnel who can analyze and interpret data on-site and make quick decisions when problems arise are essential for these processes.

An HR manager at an SME specializing in automotive surface treatment said, "Large companies are establishing dedicated R&D departments for digital transformation and hiring many data-driven production managers needed for AI training. In contrast, SMEs cannot afford to hire external talent and must rely on internal staff. With the proportion of foreign workers steadily increasing due to labor shortages, cultivating such skilled personnel feels like an unattainable dream."

Experts emphasize the need to strengthen digital transformation training for foreign workers and to apply more flexible policies for converting them into skilled workers who can stay long-term. The maximum legal stay for E-9 visa holders, who enter through the employment permit system, is four years and ten months at a time. After staying in their home country for at least three months, they can return to South Korea for another four years and ten months. In contrast, those with E-7-4 visas, who meet certain conditions and points, can stay virtually indefinitely, making this visa a key requirement for cultivating foreign talent.

No Minseon, a research fellow at the Korea Small Business Institute, said, "To efficiently utilize foreign workers needed for AI transformation, it is necessary in the mid- to long-term to provide flexibility in converting to E-7 visas so that these workers can ensure sustainability. We also need to strengthen digital transformation training for current foreign employees and actively consider how to utilize domestic senior workers who could potentially replace foreign labor."

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