Manufacturing sectors run by South Korea’s SMEs face labor shortages

Manufacturing sectors run by South Korea’s SMEs face labor shortages [Photo by Lee Seung-hwan]

Manufacturing sites run by small- and mid-size enterprises (SMEs) in South Korea are struggling to stay afloat as they suffer from labor shortages and aging workforce.

According to the Ministry of Employment and Labor and the Federation of Korean Industries (FKI) on Wednesday, there were 226,000 unfilled jobs as of October last year, of which 96.9 percent were positions at small businesses with fewer than 300 employees.

“There are many SMEs that are thinking about shutting operations due to labor shortages,” said an unnamed official from a molding company based in Geoje, South Gyeongsang Province.

Two employees in their 20s left the company late last year even though the employer persuaded them to stay by offering more overtime pay from this year.

“It would be of great help in filling in the jobs and continuing operations if the government abolishes the quota system for foreign workers,” the official said.

The FKI, in the meantime, analyzed that the transportation warehouse industry saw the largest growth in the number of workers in their 20s and 30s over the past five years from 2017 to 2022. The industry encompasses delivery drivers.

“Many young people prefer to work as delivery drivers than to work at small factories that offer low wages as it allows them to earn as much as they work and have more personal time,” said an unnamed official from the FKI.

The FKI analyzes that the overall perception on delivery work has improved after the pandemic due to a growth in delivery demand and pay.

With young people leaving factories, especially those located far away from the capital area, workforce at manufacturing sites is aging. The phenomenon is raising concerns as it can affect production of key industry areas such as materials, components and equipment.