[Feature] Calls grow for lower minimum wage for foreign workers

By Ock Hyun-ju

SMEs take on migrant workers in wake of stiff minimum wage hike in S. Korea

  • Published : Mar 13, 2019 - 16:40
  • Updated : Mar 13, 2019 - 18:38

 The season has come again for South Korea to begin grueling negotiations to set the minimum wage for the next year. This time, the debate involves calls for a lower minimum wage for low-skilled migrant workers.

“When migrant workers first start work here, they can only do 70 percent of what Koreans do. It takes more than one year for them to get used to Korean culture, language and work,” said Lee Ahn-kyu, who runs a foundry plant that employs 23 workers in Gimpo, Gyeonggi Province.

“Should I still pay them the same amount I pay Koreans? It is unfair for the Korean workers,” said Lee, who has eight foreign workers on his payroll. “For a month of work, foreign workers earn what they could spend back home for a year. Isn’t the gap a bit too much?”

Lee would rather hire Koreans, even if he had to pay them more, but Koreans willing to work in such a difficult work environment are hard to find, he said.

Last month, Rep. Yi Wan-young of the conservative Liberty Korea Party submitted a bill that stipulates a lower minimum wage for foreign workers for a two-year probationary period, aimed at easing the burden on small and medium-sized manufacturers struggling with the country’s dramatic minimum wage hike.
Human rights activists condemn Rep. Yi Wan-young of the conservative Liberty Korea Party for submitting a bill stipulating a lower minimum wage for migrant workers at a press conference in front of the lawmaker’s office in Chilgok County, North Gyeongsang Province, on Feb. 22. (Gimhae Migrant Human Rights Center)

SMEs and construction, agriculture and fisheries businesses, which rely heavily on foreign workers, have called for a “graded payment system” under which low-skilled migrant workers would be given a lower minimum wage. They cite foreign workers’ lack of experience and low productivity as justification for such a system.

The idea, however, has been met with strong criticism for discrimination against foreign workers on the basis of nationality, as well as undermining a fundamental principle of the minimum wage: the need to guarantee labor rights equally for all workers.

Experts also express concerns that different minimum wage rates for foreign workers would increase the nation’s dependence on its foreign labor force, worsen working conditions in low-skills sectors and further fragment the country’s labor market. 

For now, the chances of Rep. Yi’s bill passing parliament remain low, due to domestic and international legal hurdles. 

Calls for lower minimum wage for foreigners

The minimum hourly wage in Korea was set at 8,350 won this year, up 10.9 percent from 2018, and President Moon Jae-in plans to raise that to 10,000 won by 2020 in line with his policy goal of achieving income-led economic growth.

The minimum wage hike has triggered complaints from employers, especially SMEs and self-employed shop owners, who say increased labor costs coupled with a reduction in maximum working hours have dealt a heavy blow to their businesses.

Now, the focus of their complaints is turning to migrant workers.

The bill, which was submitted by Yi and 14 other lawmakers, stipulates employers may pay migrant workers 30 percent less than the national minimum wage for the first year and 20 percent less for the second year.

“I presented the bill to ease the burden of labor costs on businesses hiring foreign workers,” Yi said, adding that SMEs were “being pushed to shut down their businesses due to the rapid minimum wage hike.”

Small business owners say a different minimum wage for foreign workers should not be considered discrimination.

“The minimum wage rose too steeply, but the vendor price did not increase at all, which further squeezes SMEs,” said Moon Chul-hong, head of the department in charge of foreign labor at the KBIZ Korea Federation of SMEs.

“The burden on SMEs is too heavy. In the eyes of business owners, a lower minimum wage is not discrimination,” he said. “It rather reflects reality and sets reasonable wages depending on the quality of labor.”

KBIZ estimates the labor productivity of nonprofessional foreign workers on Korea’s Employment Permit System at about 87.4 percent that of Koreans.

According to a KBIZ survey of 1,178 SMEs, the number of firms that asked for governmental permission to hire foreign workers dropped last year. The majority, 65.2 percent, cited “changes in management conditions” such as high labor costs and a sluggish economy.

The average monthly salary for migrant workers stood at 2.31 million won, the survey showed.

The SMEs said they were reluctant to hire foreign workers due to their low productivity, communication barriers, migrant workers’ idleness and the complicated procedures to hire them.

Hong Jong-haak, minister of SMEs and startups, said last year that he would consider the proposal.

Foreign workers’ labor rights 

Migrant workers and labor activists have denounced the idea of a lower minimum wage for foreign workers as “racial discrimination” and a violation of the principle of equal labor rights.

Migrant workers in Korea are already subjected to poor working environments and discrimination, according to Shekh al-Mamun, a Bangladeshi official from the Migrants’ Trade Union.

Migrant workers call for the repeal of the Employment Permit System, a stop to the crackdown of unregistered foreign workers and ill treatment by employers at a press conference in central Seoul on Dec. 18, International Migrants Day last year. (Migrants’ Trade Union)

“Migrant workers are already treated badly, underpaid and often not properly paid for overtime work in many cases,” he said. MTU, the country’s first migrants’ union launched in 2015, now has about 1,000 foreign workers in its ranks.

“Low labor productivity? It is same for Koreans when they first start to work,” he said.

“Rather than shifting the responsibility to foreign workers, the Korean government should improve procedures so that foreigners can better adjust to the work environment here,” he said, citing vocational training as an example.

Korea has signed an agreement with 16 countries in Southeast and Central Asia to fill low-skilled jobs shunned by Koreans due to low pay and poor working conditions under the Employment Permit System.

Small and medium-sized manufacturers with fewer than 300 employees and companies operating in such sectors as manufacturing, construction, fishing and agriculture can seek permission to hire migrant workers via EPS.

The notion of a lower minimum wage for workers based on their nationality stems from the perception that workers from less developed countries are “less capable” and deserve less, activists say. 

An activist holds up a placard reading “Racism OUT, Liberty Korea Party OUT, Rep. Yi Wan-young OUT” in front of the lawmaker’s office in Chilgok County, North Gyeongsang Province, on Feb. 22. (Gimhae Migrant Human Rights Center)

“It doesn’t make sense what migrant workers do are worth less than minimum wage,” said Kim Hyung-jin, head of the Gimhae Migrant Human Rights Center. “They are doing difficult jobs Koreans are not willing to do.”

Discrimination against migrant workers will eventually lead to more discrimination, Kim said, against people who are on the fringes of society on the basis of physical disability, age and gender.

“It is a regression from what Korean society has done to foster equality for all human beings.”

Asked by The Korea Herald whether a lower minimum wage for foreign workers would constitute discrimination, the National Human Rights Commission of Korea said it had no official position on the matter.

Legal hurdles, adverse impact on labor market

A lower minimum wage for foreign workers would violate local and international laws.

Under Korea’s Labor Standards Act, employers are banned from subjecting workers to discriminatory treatment based on sex, nationality, religion or social status.

Korea also ratified International Labor Organization Convention 111, committing the country to nondiscrimination on the basis of race, color, sex, religion, political opinion, national extractions or social origin.

“Applying different minimum wage to foreigners would be difficult because it is against the law, though the parliament would probably discuss it,” said an official from the Ministry of Employment and Labor on condition of anonymity.

“In terms of policy effectiveness, if foreign labor is cheaper, employers would prefer to hire foreign workers,” he said. “It would run against the EPS’ basic principle that foreigners can only be hired when it is inevitable (to fill labor shortages).”

The number of migrant workers -- including ethnic Koreans from China and Central Asia -- in the low-skills sector was about 528,000 as of Jan. 31, with the majority being Chinese, according to the Justice Ministry. Those on the EPS -- who are allowed to work here for three years and extend for another year and 10 months upon employers’ approval – totaled some 278,000.

The quota for importing workers on the EPS has been set at 56,000 for 2019, with SMEs demanding the government expand the quota for low-skilled foreign workers.

The government, which sets the quota for EPS workers each year and selects workers based on their Korean-language proficiency, remains cautious due to public backlash over foreign workers taking locals’ jobs.

According to IOM Migration Research and Training Center Director Chung Ki-seon, a lower minimum wage for foreign workers could pose as a “short-sighted” and “simple” approach to a complicated labor market.

“It is about protecting the principle of equal pay for work of equal value. And that principle is to protect locals’ labor rights, too,” she said. “Foreign workers would still flock to South Korea even if they are paid less, which would result in further worsening working conditions for both locals and foreigners and making chronic the labor shortage in low-skilled sectors."

“That will eventually lead to heavier dependence on foreign workers and the Korean labor market will be further divided.”

By Ock Hyun-ju (