Rising unemployment rate
In February 2021, South Korea's unemployment rate dropped to 4% from an estimated 4.8%. Still, for a country that used to be one of Asia's economic powerhouses, the situation is quite alarming. Moreover, South Korea ranks poorly among OECD (Organization for Economic Co-operation and Development) countries in terms of employment. It is currently 24th out of 31 countries assessed due to a gloomy economy and labour market weaknesses since the start of the COVID crisis.
Today, South Korea has an active population (aged 15 to 64) of 65.9% only while neighbouring Japan ranks 3rd with an active population of 77.3%. Regarding those aged between 15 and 24, the employment rate is 25.2%.
Irregular employment is another serious issue for the South Korean labour market. In fact, the number of irregular positions has been on the rise for a whole year. Currently, more than one-third of the positions available are either temporary, part-time or secondment positions. Job security stands at 11.8% only. In August 2020, 36.3% of employees in South Korea were hired on an irregular basis. In February 2021, however, there were a total of 26,365,000 employees in South Korea, all types of contracts combined.
Wholesale and retail trade, real estate and food are some of the most affected sectors, with a 7.3% drop in employment. In contrast, there was a 2.7% gain in sectors like fisheries, agriculture and forestry.
The ageing population is yet another serious concern for South Korea since several years. There is an urgency to renew the workforce, but current border closures and travel restrictions around the world are making it even more difficult to recruit foreign skills.
How is South Korea addressing these issues?
South Korea recognises the vital contribution of foreign professionals to its economy. One of the measures to address all these issues is the introduction of a digital nomad visa. This visa mainly aims at attracting and retaining foreign professionals in the IT sector. It will allow digital nomads to settle and work in South Korea while remaining employed by companies based outside the country, provided they meet the income criteria.
Dubai, in the United Arab Emirates, Caribbean Islands, Croatia and many other European countries have already implemented a similar visa to boost their economy. The South Korean digital nomad visa will initially be valid for one year but should be renewable for another year. Foreign professionals who are unable to return to their home country due to disease outbreaks or natural disasters will be allowed to stay in South Korea for one more year.
To attract a significant number of foreign professionals, the South Korean government is also looking into tax incentives. South Korea is world-renowned for its high expat income tax. The government is also looking into measures to encourage foreign professionals to settle in cities other than Seoul, which currently has the highest concentration of expatriates. Other cities and regions are finding it hard to attract foreign skills.
Besides, the South Korean government is about to ease restrictions on the number of foreign professionals that companies in specific sectors can employ. Emerging sectors, such as bioscience and artificial intelligence (AI), will thus be able to recruit more foreign talent and expand. This also applies to Research and Development (R&D). It's worth noting that candidates having intellectual rights can get additional points when applying for a visa.
What about other sectors in South Korea?
The global health crisis has impacted virtually every sector of the South Korean economy, as in most countries. To address the labour shortage in certain sectors, such as manufacturing, the government plans to amend foreign workers' re-entry conditions. They will only have to wait a month before returning to South Korea, compared to three months, as is currently the case. They will also be allowed to extend their stay for another year if they are unable to return to their home country due to disease outbreaks or natural disasters.
