South Korea's foreign labour crunch puts older workers back in factories

SEOUL - When Mr Hwang Kwang-jo's factory in Seoul faced a staffing crunch earlier this year after the departure of Nepalese workers and younger locals, he hired a 61-year-old to pick up some of the work.

While the job, which involves handling heavy alloy bars, is less than ideal for workers close to retirement, the pandemic has diminished South Korea's pool of foreign labour, forcing firms to widen the net.

Compounding that challenge is younger Koreans' reluctance to take up blue-collar jobs.

"It is incredibly difficult to fill vacancies. I never received any resumes from those in their 20s," said Mr Hwang, chief executive of Iljin Enterprise, an aluminium moulding plant that usually employs about 35 people. 

The scramble for labour in South Korea, where unemployment hit a near-record low of 2.9 per cent in July, has led to a surge in the number of elderly people in the workforce, with 58 per cent of the job increases driven by people aged 60 and older.

But even that has not been enough to ease staff shortages across the industrial and farming sectors in Asia's fourth-largest economy, setting up new price pressures with inflation already running at a 24-year high.

In South Korea, the world's fastest-ageing society, 33.1 per cent of people aged between 70 and 74 are still working, topping the Organisation for Economic Cooperation and Development's scale measuring the employment for the age group and far higher than the OECD average of 15.2 per cent.

Central bank data shows that more than 230,000 of those aged 60 or older have found jobs at factories and construction sites since early 2020, while younger people have been leaving those sectors.

While South Korea's foreign worker contingent, at 848,000, is relatively small compared with those of other industrialised economies, migrants make an important contribution to the factory sector.

Since early 2020, the monthly inflow of new foreign workers has been about 35 per cent of what the country had in 2019, before the pandemic, government data showed.

Japan is experiencing a similar problem, with strict pandemic controls keeping migrant labour out, prompting an even greater reliance on the elderly population to fill vacancies.

Mr Hwang says that while the physical demands of work at his factory make it better suited for younger foreign and local workers, he does not have much choice.

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"If I cannot get any younger folk or foreign workers, it would be my last choice but I might need to hire more older folk," said Mr Hwang, who recently gave all his crew a raise on top of the 700,000 won (S$737) monthly bonuses he gave his foreign staff.

The government said last week it planned to loosen visa restrictions and cut red tape for foreign workers to help fill vacancies.

For Mr Kim Ji-hwang, a land developer in Danyang, 2½ hours south of Seoul, a staff shortage prompted him to hire 64-year-old Mr Park Jang-young.

Mr Park's new job requires him to clean trucks and equipment at the development site and earns him about 3.7 million won a month, significantly more than his previous job at a carpark.

"I know my boss prefers to find younger folk but young people go to Seoul after graduation - even foreign workers are picky; they have a good network and community to share information about pay, working conditions," Mr Park said. "I will stick to this job unless I get fired - it is good pay, I think, for my age."