Korea’s regional areas face worsening labor shortages: BOK report

[Photo by Lee Seung-hwan]

The manufacturing sector in regional areas in South Korea is struggling with a labor shortage amid the rapidly aging population and changing perception of the working environment, a report showed Tuesday.

According to a report on the assessment of the regional labor market released by the Bank of Korea, the labor shortage has worsened after the pandemic.

The Bank of Korea used the job openings-to-applicants ratio from labor administration statistics to examine the imbalance in the local labor market. A higher ratio indicates a shortage of manpower compared to the labor force required by companies.

Comparing the figure in the third quarter this year to the same period in 2019, 15 out of 16 metropolitan cities and provinces experienced a shortage of labor.

Despite a 36.6 percent increase in job openings across all industries during the same period, job seekers increased by only 14.7 percent.

The labor shortage is more severe in the manufacturing sector, where job openings increased by 45.5 percent after the pandemic, while job seekers decreased by 2.1 percent, indicating an imbalance in labor supply.

“Not only the young people under 30 but also those in their 40s are avoiding jobs in manufacturing, leading to a decrease in job seekers,” the central bank said.

The decreasing population of individuals in their 40s, the prime working age, is identified as another reason behind the shortage.

According to Statistics Korea, the population in their 40s stood at 7,909,000 as of last month, down 139,000 from a year ago and the steepest fall in more than 4 years.

The year-on-year fall in the population in their 40s in the first 11 months of this year was 120,000, following the decline in the youth population between the age bracket of 15 and 29 at 178,000.

As the aging population becomes more severe, there is also a worsening shortage of senior care workers.

The growth rate of recruitment in care services over the past 4 years stood at 133.9 percent, overwhelming the overall industry growth rate of 36.6 percent.

According to a survey conducted by the central bank on 570 companies nationwide regarding the pre- and post-pandemic labor situation, 15.3 percent of responding companies said that they are in a “labor shortage situation” this year. This is an increase compared to 12 percent of companies facing a labor shortage in 2019.

Many manufacturing companies rely on foreign labor for their operations, but they say cultural differences and the scarcity of long-term, skilled workers contribute to a more severe perceived labor shortage.

Some suggest increasing communication-skilled international students or semi-skilled foreign workers domestically and strengthening automation for simple manufacturing as measures to handle any impact from the labor shortage.