Employment Outlook: South Korea
Slated to be on the world stage as host of the 2018 Winter Olympic Games, South Korea needs international talent and more women in the workforce in order to grow its economy, meet the demands of its people and combat its long-term challenges.
By Mary Anne Thompson, Founder and President, Goinglobal
South Korea boasts well-educated citizens, low unemployment and prowess as a world leader in information technology, automobile production and shipbuilding. However, the regional political landscape is characterized by serious tensions with and escalating threats from North Korea. The deterioration of relations between the two countries was underscored recently when South Korea was forced to withdraw 53,000 workers from a jointly run factory in the North Korean town of Kaesong. This situation has had more effect internationally than locally, and it has thus far not affected job recruiting, but it remains a major concern for the government and people of South Korea.
Job sentiment has been relatively flat this year as economic growth remains slow. South Korean businesses closely watch the US and Europe for hoped-for signs of recovery. Many companies downsized last year, and hiring is cautious this year. Permanent contracts are scarce.
The country’s young people are disproportionately unemployed. Most of the jobs go to middle-aged or older people, and the country’s inflexible labor system makes it difficult to fire people. South Korea’s women are also under-employed.
The country faces long-term challenges: a rapidly aging population, an inflexible labor market, and overdependence on manufacturing exports to drive economic growth. In spite of South Korea’s domestic and international challenges and its stubbornly low economic growth, consumer sentiment is rebounding as the Bank of Korea lowers interest rates and the government introduces a stimulus package intended to spur growth and create 40,000 jobs. Continued growth will require more international workers and women to join the workforce among other solutions.
Part-time Jobs Increasing
The South Korean government is creating more part-time jobs in an effort to increase employment.
Unemployment is only 3.2 percent, compared to 7.5 percent in the US and 27 percent in Spain.
Foreign workers
The number of immigrants has increased dramatically in the last decade, to 1.5 million, or 2.8 percent of the population. Although Korea’s quota system for foreign workers is still rigid, it is easing, and that trend is likely to continue.
South Korea’s visa system distinguishes foreign professionals from factory workers and other immigrant workers. Moreover, South Korea requires different types of visas for foreign professionals to work in specialties, including management, research, education and technical training.
Visa procedures are easing for foreigners involved in foreign direct investment (FDI). Domestic Korean companies are now recruiting science and engineering professionals from China, India and Russia as well.
In addition, South Korea offers special tax support to foreign engineers and workers. Foreign engineers are entitled to a 50-percent reduction of income tax on income earned either from a South Korean firm in South Korea or a foreign company exempted from corporate tax by the Foreign Investment Promotion Act. Other foreign workers can also receive special exemptions or reductions.
Women
Women’s rate of participation in the workforce is one of the lowest in East Asia. However, more women are joining or returning to South Korea’s workforce as the government introduces measures to encourage more participation. In fact, women in their twenties now outnumber men in that age group in the workforce.
Women are now beginning to climb the male-dominated corporate ladder. Although the vast majority of decision-makers and leaders in South Korea’s businesses continue to be men, more women are being promoted to CEO and other senior positions, according to executive recruiter Heidrick & Struggles.
Talent Shortages
Competition is high for skilled professionals, especially those with international experience and bilingual skills. In addition, demand for specialists in human resources is increasing dramatically. South Korea’s employers will focus on hiring specialists rather than generalists.
International talent needed
Multinational companies in South Korea are still generating demand for professionals with global experience. Employers are experiencing increased demand for bilingual professionals able to perform both strategic and conventional duties. South Korea’s recent free trade agreements with the US and Europe are creating increased interest from MNCs, and South Korean businesses are adopting more Westernized environments.
Bilingual skills
The level of English proficiency is generally lower than that in many other Asian countries. Professionals with bilingual skills, particularly in English, are difficult to find. Candidates with these skills are likely to be able to command higher salaries.
Salaries
Most salary levels for South Korean employees are likely to remain stable this year, according to recruiter Robert Walters. However, bilingual professionals with international experience will likely receive large salary increases for changing jobs.
In the past, compensation practices in South Korea have traditionally been based on seniority. But in the last few years, businesses have increasingly included performance-based pay and profit sharing in employees pay packages.
Conclusion
South Korea faces a number of challenges both domestically and internationally, but the country is implementing programs and strategies to solve the issues that are hampering its growth. Bringing in foreign workers and bilingual or multilingual professionals, while making women a more prominent force in the work place will move South Korea forward as it prepares for the world stage in 2018 when it will host the Winter Olympic Games.
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