expected impacts current status and issues background goals and strategies ways to improve foreign...

Expected ImpactsExpected Impacts

Current Status and IssuesCurrent Status and Issues

BackgroundBackground

Goals and StrategiesGoals and Strategies

Ways to Improve Foreign Workforce Policy

Ways to Improve Foreign Workforce Policy

Ways to reduce Illegal WorkersWays to reduce Illegal Workers

Composed of foreign workers who entered under the Employment Permit System(with E-9 visa) and ethnic Korean with foreign nationality who entered under the Employment Management System(with H-2 visa)

※ Industrial Trainee System(1993-2006) was abolished and unified into the Employment Permit System

Foreign workers who are employed for simple tasks that do not require professional skills and expertise in the fields of manufacturing, construction and other industries

Small and medium-sized enterprises continue to face labor shortageSmall and medium-sized enterprises continue to face labor shortage

Demand for labor increases as economy growsDemand for labor increases as economy grows

SMEs(with 300 or less employees) 2.9%(04) 3.5%(05) 3.2%(06) 3.7%(07)

Labor shortage rate by company size

Total With 300 or lessemployees

With 30 or less employees

3.2%3.7%

4.2%

Changes in labor population

81.6%75.0%

66.5%62.6%

20102010 20202020 2030203020002000

Aged from 25 to 49

Aged from 15 to 24

Demand for manual workers is expected to grow by 1.5% every year for the next 10 years(mid to long-term prospect for labor supply and demand)

Labor forces continue to decrease due to low birth rate & aging populationLabor forces continue to decrease due to low birth rate & aging population

Ⅰ. BackgroundⅠ. Background

Introduction of foreign workers addressed some of labor shortages in SMEs but falls short of meeting changes in labor demand by companies

Introduction of foreign workers addressed some of labor shortages in SMEs but falls short of meeting changes in labor demand by companies

Issues of high employment cost and complicated employment procedures were raised in managing the current foreign workforce policy

Issues of high employment cost and complicated employment procedures were raised in managing the current foreign workforce policy

Thus, unskilled foreign workforce policy should be pursued

1. considering supply and demand conditions of national labor forces

2. utilizing foreign workers efficiently in the areas that face labor shortages

3. minimizing social costs.

Thus, unskilled foreign workforce policy should be pursued

1. considering supply and demand conditions of national labor forces

2. utilizing foreign workers efficiently in the areas that face labor shortages

3. minimizing social costs.

Ⅰ. Background

6.5%

4.6%2.9% 3.2%

’05’05 ’06’06 ’07’07’04’04

5.6% 6.2%7.4%

Labor shortage rate of SMEs

5.5%

Shortage rate of skilled workers

Shortage rate of manual workers

Ⅱ. Current Status and IssuesⅡ. Current Status and Issues

Current Status

Foreigners residing in Korea number 1.15 million(as of late July 2008)

Foreign workers who are employed including skilled, unskilledand illegal workers number 720,000

General foreign workers are mainly employed in the manufacturing sector while ethnic Koreans with foreign nationality are mainly employed in the construction sites and restaurants

Total number of foreigners (1,156,287)

Number of foreign workers(720,210)

Skilled(35,291)Skilled(35,291) Unskilled(446,981)Unskilled(446,981) Illegal aliens(237,938)

Illegal aliens(237,938)

Foreign workers(150,840)

Foreign workers(150,840)

Ethnic Koreans with foreign nationality(296,141)Ethnic Koreans with foreign nationality(296,141)

Students(436,077)Students(436,077)

-Average wage is set around \1,140,000 including minimum wage(\850,000) and overtime pay

Issues

Labor Market AspectLabor Market Aspect

Numbers of foreign workers to be introduced are determined reflecting the short-term labor shortage only

Comprehensive long-term response is yet to be established

Concerns are raised about the possible replacement of domesticWorkers as increasing number of ethnic Koreans with foreignnationality are introduced

Economic AspectEconomic Aspect

Excessive cost burden not reflectingproductivity

Complicated employment·report proceduresand too frequent request of changingworkplaces

Ⅱ. Current Status and Issues

Productivity Wage

89% 87%

97%

Productivities etc. compared to domestic workers

Total employment cost

Issues

Social AspectSocial AspectInsufficient employment & sojourn support service for employers and workers-Unresolved conflict between employers and workers leads to the decrease in productivity and workers’ maladjustment to workplaces

Increase in the number of illegal workers Increase in social cost including crime·childbirth·medical service and conflicts

Appropriate number of workers

needs to be received

from short & long-term

perspective

Appropriate number of workers

needs to be received

from short & long-term

perspective

Comfortable living conditionneeds to be created &crackdown on illegal workers should continue

Comfortable living conditionneeds to be created &crackdown on illegal workers should continue

Cost reduction, productivity increase, and

stable labor supply is needed

Cost reduction, productivity increase, and

stable labor supply is needed

Ⅱ. Current Status and Issues

labor market aspect Economic Aspect Social Aspect

Controversy over the violation of human rights and damage to the nationalimage

Ⅲ.`Goals and StrategiesⅢ.`Goals and Strategies

Harmonizing with domestic labor market

Strengthening Business competitiveness Reducing social cost

Ensuring Sustainable Growth by Resolving Labor ShortageEnsuring Sustainable Growth by Resolving Labor Shortage

Supplementing domestic labor market

Supplementing domestic labor market

Focusing on employers’ demand


Setting reasonable employment cost


Ensuing user centered employment & sojourn

support


support

Measures to reduce the number of illegal workersMeasures to reduce the number of illegal workers

Government-wide effortsPreventing the occurrence

of illegal workersStrengthening crackdown

on illegal workers

1. Receiving foreign workers according to the mid to long-term vision

2. Managing the number of ethnic Korean with foreign nationality and permitted industries

1. Strengthening employers’ rights to select2. Placing restraints on the workplace changes3. Simplifying employment procedures4. Strengthening employment stability

1. Living and food expenses to be born by workers

2. Improving minimum wage

3. Reducing employers’ burden of mandatory insurances

1. Expanding public service of employment & sojourn support

2. Strengthening post employment service considering characteristics of industry

3. Creating comfortable living condition

Receiving foreign workers according to the mid to long-term vision Receiving foreign workers according to the mid to long-term vision

Aappropriate number of foreign workers are to be received reflecting changesin demographics, domestic labor market condition, and industrial demandAappropriate number of foreign workers are to be received reflecting changesin demographics, domestic labor market condition, and industrial demand

Foreign workforce isexpected to increaseForeign workforce isexpected to increase

Korea UK Netherlands Germany Japan

5.4%3.0% 3.4%

9.3%

0.3%

Proportion of foreign workers to the total employees among OECD member countries

Supplementingdomestic labor market


Expected number of foreign workers(eg.)

present Five years later

Economic growth rate : 5-7%Proportion of foreign workers: 3-4%

10 year-term prospect for labor supply and demand will be drawn up and the appropriate number of workers to be introduced will be determined every year

750,000~750,000~1,030,0001,030,000720,000720,000

Ⅳ. Ways to Improve Foreign Workforce PolicyⅣ. Ways to Improve Foreign Workforce Policy

Foreign workforce is to be managedwith an appropriate numberConsidering domestic labor market

Foreign workforce is to be managedwith an appropriate numberConsidering domestic labor market

Focusing onEmployers’ demand

Setting reasonableEmployment cost

Ensuring user centeredEmployment & sojourn support

Managing the number of ethnic Korean withForeign Nationality and permitted industriesManaging the number of ethnic Korean withForeign Nationality and permitted industries

Number of ethnic Korean with foreign nationality to be received will be determined considering the possibility of replacing domestic workers, business demand, and employment results

Number of ethnic Korean with foreign nationality to be received will be determined considering the possibility of replacing domestic workers, business demand, and employment results

Number of ethnic Korean to be invited by relatives in Korea will be limited (less then 3 persons per 1 relative)

Inducing employment to industries that face labor shortagesInducing employment to industries that face labor shortages

For construction sector, measures requiring specialized trainingbefore employed will be established(Dec. 2008)For construction sector, measures requiring specialized trainingbefore employed will be established(Dec. 2008)

Providing incentives(Inviting family member,

Granting permanent resident status)

Providing incentives(Inviting family member,

Granting permanent resident status)

Service Industry

Construction industry

Service Industry

Construction industry

SMEs in manufacturingin rural area

Agricultural & fishing industry

SMEs in manufacturingin rural area

Agricultural & fishing industry

Ⅳ. Ways to Improve Foreign Workforce Policy






Strengthening employers’ rights to selectStrengthening employers’ rights to select


Ensuring usercenteredEmployment & sojourn support

Supplementing Domestic labormarket



Pool of availableworkers

Pool of availableworkers

SelectionProcess

SelectionProcess

Korean Language Test(KLT) passers

Manual workers: selected based on the job seekers’ roster

Manual workers: current selection process will be maintained

Workers with simple skill: selection training job placement

KLT grade+skill test grade (specified by industry)

Those who departed voluntarily after sojourn period in Korea

Present Present ImprovementImprovement

Strict restriction on workplace changes will be stipulated on the labor contract and highlighted during job orientation

Reason for changing workplace will be notified to new employers

In case workers leave workplace without employer’s fault, the limit on the number of workers allowed to hire of the concerned employer will be eased

Placing restraints on the workplace changesPlacing restraints on the workplace changes


Contract period: renewed every year Signing contract autonomously within 3 year limit

Abolishing mandatory departure of 1 month employment up to five years (3 + within 2)

Applying for employment permit

Selecting agency(in charge of receiving procedure including labor contract)Applying for Certificate for Confirmation of Visa Issuance

Applying for employment permit (The rest will be processed automatically)

※one-stop service is being implemented (to be completed in Feb. 2009)

Creating stable employment conditionCreating stable employment condition

PresentPresent ImprovementImprovement

PresentPresent ImprovementImprovement

To prevent labor force vacuum due to sojourn expiration, employers can apply for employment of foreign workers 4 month prior to the expiration of sojourn period (reported on June, 2008 and implemented from July)

Current receiving period of 37~41days will be reduced to 21~30 days

Simplifying Employment Procedure

Reemployment: 3 year

Requirement (1 month departure) 3 year



Ensuring usercenteredEmployment & sojourn support




Living and food expenses to be born by workers Living and food expenses to be born by workers

Improving standard labor contract stipulating whether living and food expenses to be provided or not

Standard for living and food expenses to be charged will be establishedby Kbiz and to be used by employers

Improving minimum wage systemImproving minimum wage system

Minimum Wage Act will be revised to set reasonable minimum wageincluding the adjustment of the limit on deductible amount for livingand food expenses from wage and probation period. Probation period will be adjusted considering language difficulty and adjustment to the workplace

To be legislated in the first half of 2009 after gathering experts’ opinionsfrom Oct. to Dec. of 2008

Standard will be set at a reasonable rate by labor and management organizations and experts







On voluntary basis


Employers’ burden of mandatory insurances to be reducedEmployers’ burden of mandatory insurances to be reduced

Employers’ burden of insurances will be relieved by allowing them to subscribe Departure Guarantee Insurance and Guarantee Insurance on voluntary basisEmployers’ burden of insurances will be relieved by allowing them to subscribe Departure Guarantee Insurance and Guarantee Insurance on voluntary basis

Employment insurance will be required for helping foreign workers adjust to workplace and providing expanded sojourn support(only for vocational skill development & employment stabilization project 2,500 won/month)

Employment insurance will be required for helping foreign workers adjust to workplace and providing expanded sojourn support(only for vocational skill development & employment stabilization project 2,500 won/month)

Measures of persuading foreign workers to apply for national pension in theirown countries will be pursued to reduce the burden on employersMeasures of persuading foreign workers to apply for national pension in theirown countries will be pursued to reduce the burden on employers

※6 countries including Vietnam and Cambodia are exempted based on the principle of reciprocity

Employers are required to subscribe social insurances and EPS insurancesEmployers are required to subscribe social insurances and EPS insurancesSocial insurances(National Pension, National Health Insurance, Industrial Accident Compensation Insurance), EPS insurances(Departure Guarantee Insurance, Guarantee Insurance)

Departure Guarantee Insurance: 70,700 won/month

Guarantee Insurance: 1,300 won/month






Strengthening post employment service considering characteristics of industryStrengthening post employment service considering characteristics of industry

Expanding public service of employment and sojourn supportExpanding public service of employment and sojourn support

Complaint-window will be open at the job center of the Ministry of LaborComplaint-window will be open at the job center of the Ministry of Labor

Post employment service by HRD Korea will be expanded to every workplacePost employment service by HRD Korea will be expanded to every workplace

Kbiz and Construction Association of Korea will be in charge of delivering Systematic post employment service for manufacturing and construction Industry respectively

Kbiz and Construction Association of Korea will be in charge of delivering Systematic post employment service for manufacturing and construction Industry respectively

Strengthening management and evaluation to enhance the quality of serviceStrengthening management and evaluation to enhance the quality of service


Foreign worker support center will be expanded from current 3 centersForeign worker support center will be expanded from current 3 centers

※To be operated in cooperation with information center for foreign workers of the Ministry of Justice and private sector


Supplementing Domestic labor market



support


support



Supplementing Domestic labor market



support


support

Creating comfortable living environmentCreating comfortable living environment

During stayingIn Korea

AfterDeparture

Enhancing understanding on the Korean culture for job seekersthrough presentations and media

Establishing and running community by sending country andhosting cultural events

Maintaining friendly relations with sending country and promoting Korea’s friendly image through workers

Providing information to the ethnic Koreans about employment situation in Korea

Allowing job placement service for ethnic Koreans to private agencies to facilitate employment Providing training on skills and how to start business to returning workersfor stable readjustment

Before entry

enhancing understanding on the employment and living condition in Korea

Providing support to help workers settle down

Creating network among returnees

Cause and current status of illegal workers

From workers’ perspective

Higher wage compared to their home country, good

living standard, etc..

From employers’ perspective

Compassionate culture, lack of consistent crackdown efforts

There are 223,229 Illegal workers, accounting for 19.3% of total number of foreigners residing in KoreaThere are 223,229 Illegal workers, accounting for 19.3% of total number of foreigners residing in Korea

(by status)short-term visitors 48.7%, foreign workers 35.3%, others 16%

Ⅴ. Ways to Reduce Illegal WorkersⅤ. Ways to Reduce Illegal Workers

CauseCause

209,841308,165

211,988

’03’03 ’04’04’02’02 ’06’06 ’08.7’08.7

154,342

223,229

Easy to hire and fire workers, weak punishment for

Illegal employment

From a social and policy perspective

Challenges

It is difficult to pursue effective foreign workforce policy as illegal workers account for half of legal workers

National image is undermined due to the increase in crime committed by foreign workers and controversy over the violation of human rights

Consistent crack down efforts are insufficient as the cooperation mechanism is not well established among Ministries

Ⅴ. Ways to Reduce Illegal Workers

Application for organizing labor union was submitted on June.3rd, 2006, rejected by the Ministry of Labor, lawsuit was filed against the MOL’s decision and is now pending in the Supreme Court

Crimes committed by foreign workers increased by 25% on annual average for the past 5 years

Measures to grant legal status to 180,000 illegal workers were taken in 2003

The trend of ignoring the law is spreading as illegal workers organize labor unions making unreasonable demands

20

Reducing illegal workers from the current 19.3% to 10% in 5 years

Reducing illegal workers from the current 19.3% to 10% in 5 years

It would be manageable when the rate goes below10%Compared to 29% of the US, 20% of Germany, 8% of Japan, and 5% of Taiwan

Improvement Measures

Establishing government-wide strategiesEstablishing government-wide strategies

Establishing ‘5 year Plans to Reduce Illegal Workers’ and report to Foreign Workforce Policy Committee(Prime Minister)

Strengthening cooperation mechanism and sharing information among Ministries


Strengthening management system on the personal information of illegal workers and foreign criminals

Goals

Reducing the number of illegal workers to 200,000 by late 2008 Reducing the number of illegal workers to 200,000 by late 2008

21

Preventing the occurrence of illegal workersPreventing the occurrence of illegal workers

Strengthening immigration procedures including issuing CCVI and Screening at the port of entry

Strengthening monitoring on the sending cost preventing informal cost from arisingImplementing various programs for encouraging voluntary departure

Organizing crackdown squad composed of government officials and crackdown on illegal workers on a regular basis

Illegal workers who take the lead in organizing labor unions and staging illegal strikes will be severely cracked down※At the same time, employers who employ illegal workers will be punished

Strengthening crackdown efforts and punishment for illegal workersStrengthening crackdown efforts and punishment for illegal workers


Social and national consensus needs to be reached for establishing legal employment practice

22

Expected Impacts for each area

Ⅵ.Expected ImpactsⅥ.Expected Impacts

Supporting sustainable economic growth by establishing supply base for high quality foreign labor

Reducing employment cost to meet productivity and saving time and cost taken for following the required procedures

Cost reduction : 208.1 billion won annually(4,160,000 won per company)

Cost to be reduced from sharing housing and food expenses by worekrs:156.6 billion won

Cost to be reduced from streamlining receiving procedure and Improving reemployment procedure: 51.5 billion wonVisiting cost to be reduced, waiting period to be cut, and mendatory eparture of 1 month to be abolished

Housing expense of 100,000 won(1/3 of average housing expenses) will be born by workers

Cutting social cost by reducing illegal workers and establishing global network through foreign workers

23

Efforts will be made to systemetically manage human resources at home and abroad

so that foreign workforce can be utilized to supplement domestic labor market and to meet the industrial labor demand which will

lead to the sharpening of national competitiveness

Efforts will be made to systemetically manage human resources at home and abroad

so that foreign workforce can be utilized to supplement domestic labor market and to meet the industrial labor demand which will

lead to the sharpening of national competitiveness

Efforts will be also made to achieve social integration by creating comfortable living condition

Efforts will be also made to achieve social integration by creating comfortable living condition

expected impacts current status and issues background goals and strategies ways to improve foreign...

Documents

general foreign workers

foreign workers150

foreign nationality296

labor demand

number of foreign workers720

workers maladjustment

manual workers

foreign workforce policyways