A recent study by the Bank of Korea suggests that an influx of foreign workers leads to increased employment opportunities for South Korean nationals in the long run. (Image courtesy of Yonhap)
SEOUL, Oct. 1 (Korea Bizwire) – A recent study by the Bank of Korea suggests that an influx of foreign workers leads to increased employment opportunities for South Korean nationals in the long run, challenging some common perceptions about immigrant labor.
The report, titled “The Impact of Foreign Worker Inflow on Regional Labor Markets,” was presented on September 30 by Lee Young-ho, a senior economist at the Bank of Korea, in collaboration with Oh Tae-hee and Lee Jangyoun from Incheon National University.
Researchers analyzed data from 2015 to 2022 to estimate the effects of a 1% increase in labor supply due to foreign worker immigration on employment and wages for local workers in various regions.
While the study found no immediate impact on overall domestic employment in the short term, it revealed a positive long-term effect on job creation.
The benefits were particularly pronounced among young workers and in high-growth regions such as Gyeonggi and North and South Chungcheong provinces. However, employment opportunities for middle-aged and older workers showed a slight decline.
Regarding wages, the influx of foreign workers did not significantly affect the overall earnings of South Korean workers, either in the short or long term. Regional differences were observed, with high-growth areas experiencing wage increases for local workers, while low-growth regions saw a decrease.
The Bank of Korea speculates that in high-growth areas, the presence of foreign workers may provide more opportunities for South Korean nationals to transition into specialized roles, potentially leading to higher wages.
“It is crucial to carefully design policies that facilitate the influx of foreign workers who complement the domestic workforce while meeting the labor demands of businesses,” the Bank of Korea emphasized in its report.
The institution also suggested that “educational support and job reassignment could be considered to help South Korean workers who may be in direct competition with foreign laborers transition to more specialized positions.”
This study comes in the wake of recent comments by Rhee Chang-yong, the governor of the Bank of Korea, who told the Financial Times that South Korea needs to attract more foreign workers to address demographic challenges, including a low birth rate.
In a separate regional economic report released the same day, the Bank of Korea noted a slight improvement in regional economies during the third quarter compared to the previous one.
Manufacturing production remained stable, while the service sector saw a modest increase. The outlook for both sectors is positive, with expectations of growth in the coming months.
M. H. Lee (mhlee@koreabizwire.com)
