More foreign workers needed to avoid labor shortage

2024 has dawned, but South Korea is still reeling from a combination of internal and external crises, including a demographic shock, which raises the risk of the country’s growth momentum losing steam. In order for Korea to become a pivotal country amid these crises, it is urgent to set a bold ‘Triple 5’ goal of maintaining a population of 50 million, achieving a per capita income of $50,000, and attaining G5 nation status.

The core challenge is to prevent the rapidly progressing population decline and secure the labor force. An analysis by Maeil Business Newspaper and the Federation of Korean Industries (FKI) on Tuesday showed that increasing the influx of foreign labor by six times the current level could delay the collapse of the population to below 50 million for about 19 years.

According to data from Statistics Korea, the annual net inflow of foreign labor to Korea is estimated to be between 53,000 and 55,000 from 2024 to 2050. Even in a scenario where the total fertility rate (the expected number of births per woman throughout her lifetime) does not improve, gradually increasing the current net influx of 50,000 foreign workers to 300,000 by 2050 would delay the population falling below 50 million to 2052 from 2033. Specifically, the total population would remain at 50.16 million until 2051 before declining to 49.97 million from 2052.

The population shock will come sooner if there is no such labor supply. Even in an optimistic scenario assuming a gradual recovery of the fertility rate, the population is projected to fall below 50 million by 2041. The challenge is that even if the fertility rate increases immediately, it will take time before births lead to an expansion of the working-age population (15-64 years old), which is the main source of economic activity.

“We need a new system for population issues that explores the usage of immigrant labor,” Jeon Young-soo, a professor at Hanyang University’s Graduate School of International Studies, said.