Foreign worker wages in Korea quadruple in 10 years amid labor shortage

Foreign workers at a construction site [Photo by Kim Jae-hoon]

Foreign workers in South Korea’s construction industry are paid three to four times more than they were a decade ago due to a recent sharp rise in the minimum wage and a labor shortage.

About half of the 110 workers at a site for subway construction under the Geomdan New Town project in Incheon are foreign natives.

“Most of the construction sites have more foreign workers than Koreans because Koreans don’t want to do laborious work,” said a civil engineering team leader at a subcontractor for a large construction company responsible for the project.

With the minimum wage going up sharply in recent years, wages paid to construction workers have also skyrocketed.

Like Koreans, foreign workers are paid 1.5 times the minimum wage for hours worked over eight hours a day and double on holidays.

“Foreign workers work all the hours they can because they have a clear purpose here,” said the leader surnamed Kim. “In some cases, foreign workers are paid more than Koreans.”

For workers from Southeast Asia, the salaries they receive per month in Korea are often equivalent to annual salaries in their home countries.

“I was told that if you’re from Cambodia, your salary in Korea is three times that of a lawyer in that country,” Kim said.

He added that a foreign worker from Thailand went back home after five years of work here and sent him a photo of himself having a three-story house and running a farm.

Korean workers are reluctant to take on difficult construction tasks. This makes many Korean construction companies eager to hire even one more foreign worker, even if it means paying the same wage as a local.

[Image source: Gettyimagesbank]

Under Korea’s current foreign workforce quota system, construction companies are facing a chronic labor shortage.

According to data, the demand for construction workers was 1.75 million last year, but the supply was only 1.54 million, showing a huge gap.

“Even when we apply to the government for foreign workers, we only receive about 75 percent of the applications, so there is always a shortage of workers,” Kim said.

The government’s quota for E-9 visas for non-professional laborers in the construction industry is only 2,000 to 3,000 per year, despite the severe shortage. As a result, it is not uncommon for ineligible visa holders to work on construction sites.

“Under the employment permit system, we are currently allowed to hire 0.4 foreigners per 100 million won ($75,000) when the average amount of an annual construction project is more than 1.5 billion won,” said a construction company official.

“Relaxing these strict standards will help construction companies get out of the chronic labor shortage.”

“Koreans don’t want to do formwork, which is essential for construction, because it is hard work,” said a site manager only named as Park, at an apartment project near Ttukseom Station in Seoul. “The government should take steps to expand employment for foreigners with residency status.”

“The current work permit system is rigid with very few quotas for the construction industry despite the high demand for workers,” said Lee Kyu-yong, a research fellow at Korea Labor Institute.

Lee suggested that it is necessary to establish a separate foreign labor supply system for the construction industry, given that there are many ethnic Koreans and temporary workers.