[Solutions for Regional SME Manpower]③Utilizing Foreign Manpower Is Not a Choice, but a Necessity

93% of SMEs Plan to Maintain or Increase Foreign Worker Employment
Rising Number of Foreign Students in Non-Metropolitan Areas
Leveraging International Talent for Skilled Positions

Editor's Note
Securing talent is the biggest challenge faced by small and medium-sized enterprises (SMEs) in regional areas. Complaints about the difficulty of finding workers can be heard everywhere, regardless of industry. This is not just a recruitment issue for specific companies. Creating quality jobs in regional areas is at the core of balanced growth between central and local governments. SMEs, which account for over 80% of total employment, must underpin these jobs. Ultimately, the solution to the structural problem of regional extinction that we now face lies in how regional SMEs can overcome the major obstacle of talent acquisition and establish themselves as quality workplaces. The Asia Business Daily seeks solutions based on the stories from the field at regional SMEs.

Food manufacturing company A, located in North Gyeongsang Province, must halt factory operations if it does not have foreign workers. This is because most of the employees working on the production line are foreign workers. The company did not hire foreign workers simply to cut labor costs. When adding accommodation and meal costs to wages, the total expense for a foreign worker is similar to that of hiring a domestic employee. Nevertheless, due to the difficulty of recruiting domestic workers, the company had no choice but to fill the positions with foreign workers. Now, the company’s CEO hopes that these foreign workers will stay long-term and grow into skilled workers.

The use of foreign workers is increasingly being seen as a practical solution to the workforce challenges facing regional SMEs. Foreign workers can fill the labor gaps in regional SMEs. This is not just an issue for demanding manufacturing jobs. By utilizing foreign students, regional SMEs can also more smoothly secure specialized talent.

According to the "2025 Comprehensive Survey on the Challenges of Employing Foreign Labor" released by the Korea Federation of SMEs earlier this year, 82.6% of domestic SMEs cited severe difficulties in hiring domestic workers as the main reason for employing foreign workers, compared to only 13.4% who cited labor cost reduction. This suggests that hiring foreign workers serves as a key solution to structural labor shortages rather than merely a cost-cutting measure. Furthermore, in last year's "Employer Survey on Foreign Worker Employment," 93.2% of respondents said they plan to maintain or increase the number of foreign workers employed.

As of 2024, the number of E-9 non-professional foreign workers employed mainly in small manufacturing businesses reached 337,000, up more than 50% from 218,000 in 2021. Their share among all foreign residents grew from 11.0% in 2019 to 12.7% in 2024, an increase of 1.7 percentage points. Yang Okseok, Head of the Human Resources Policy Division at the Korea Federation of SMEs, stated, "The reason SMEs bear the labor costs of foreign workers is because they see it as an investment in and expectation of long-term skill development. Therefore, it is necessary to ensure a sufficient minimum period of employment for foreign workers so that businesses can operate their workforces stably."

Regional SMEs can also secure specialized talent by hiring foreign students from local universities. According to the Korea Small Business Institute, as of 2024, the number of foreign students registered outside the Seoul metropolitan area was 75,338, an increase of 30,134 compared to 2020. In terms of the types of degrees, the increases were 13,836 for bachelor's, 6,530 for associate's, 5,572 for master's, and 4,196 for doctoral degrees. Notably, among foreign students at non-metropolitan universities, 58.8% of associate's degree holders and 36.3% of doctoral students majored in STEM fields, more than 10 percentage points higher than at metropolitan universities. This is why there are growing calls to strengthen the employment linkage between foreign students and regional SMEs.

The government has also launched several initiatives since last month to expand employment opportunities for foreign students at regional SMEs facing labor shortages. These include projects such as "Leading Universities for Global Talent Employment" and the "K-Export Warrior Academy." The Leading Universities for Global Talent Employment program offers job-matching education, internships, and field training for foreign students in Korea to support their employment at SMEs. The K-Export Warrior Academy provides practical job training in export-related fields, aiming to train foreign students with a deep understanding of local markets as export specialists for SMEs.

Roh Minseon, Research Fellow at the Korea Small Business Institute, said, "As the pace of regional extinction accelerates beyond expectations, it has now become realistically impossible to solve local issues with domestic workers alone. Foreign workers are not an option but a necessity for addressing the workforce challenges of regional SMEs," adding, "There is a need to strengthen support for residency qualifications so that foreign talent can actively fill vacant jobs in regional areas."

Order of Articles: Solutions for Regional SME Workforce

[Solutions for Regional SME Workforce] ① Establishing a virtuous cycle of local education, employment, and settlement

[Solutions for Regional SME Workforce] ② Designing "work-life balance" ... through institutional changes rather than money

[Solutions for Regional SME Workforce] ③ Utilizing foreign talent is not an option but a necessity

[Solutions for Regional SME Workforce] ④ Addressing the "mismatch" as a realistic starting point

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