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Saturday, March 16, 2019, 13:13
Calls grow for lower minimum wage for foreign workers in S. Korea
By The Korea Herald/ANN
Saturday, March 16, 2019, 13:13 By The Korea Herald/ANN

SEOUL –The season has come again for South Korea to begin gruelling 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 South 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.

The minimum hourly wage in South Korea was set at 8,350 won (US$7.38) this year, up 10.9% from 2018, and President Moon Jae-in plans to raise it to 10,000 won by 2020 in line with his policy goal of achieving income-led economic growth

“Should I still pay them the same amount as South Koreans? It is unfair for the South Korean workers,” said Lee, who has eight foreigners on his payroll and pays them about 3 million won per month on average.

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 to ease the burden on small- and medium-sized manufacturers struggling with the country’s dramatic minimum wage hike.

SMEs and other businesses in the construction, agricultural and fisheries sectors, which rely heavily on foreign workers, have called for a “graded payment system” – a system in which low-skilled migrant workers would be eligible for a lower minimum wage – citing their lack of experience and low productivity.

Lee would rather hire South Koreans, even if he had to pay them more, but the number of South Koreans willing to accept such a difficult work environment are scarce, he said.

“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?” he asked. “A lower minimum wage for foreigners until they get used to the work could be helpful.”

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The idea has met with strong criticism from people who call it a discriminatory policy. They say it targets foreigners for discrimination on the basis of nationality and undermines a fundamental principle of the minimum wage – the need to guarantee labor rights equally for all workers.

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

Calls for a lower minimum wage for foreigners

The minimum hourly wage in South Korea was set at 8,350 won (US$7.38) this year, up 10.9 percent from 2018, and President Moon Jae-in plans to raise it to 10,000 won by 2020 in line with his policy goal of achieving income-led economic growth.

The minimum wage hike triggered complaints from employers, especially SMEs and self-employed shop owners, who say the increased labor costs, coupled with the reduction in maximum working hours, 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 that 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

The bill, which was submitted by Yi and 14 other lawmakers, stipulates that 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, saying 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 cannot 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 the reality and sets reasonable wages depending on the quality of labor.”

KBIZ estimates the labor productivity of nonprofessional foreign workers on the EPS at about 87.4 percent that of South Koreans.

According to a KBIZ survey of 1,178 SMEs, the number of firms that asked for the government’s 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, the migrant workers’ idleness and the complicated procedures of hiring foreigners.

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 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 South 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 are already treated badly, underpaid and often not properly paid for overtime work in many cases… Rather than shifting responsibility to foreign workers, the South Korean government should improve procedures so that foreigners can better adjust to the work environment here

Shekh al-Mamun, Bangladeshi official, Migrants’ Trade Union, South Korea

“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 as members.

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

“Rather than shifting responsibility to foreign workers, the South Korean government should improve procedures so that foreigners can better adjust to the work environment here,” he said. “Offering vocational training could be an option.”

South Korea has signed an agreement with 16 countries in Southeast and Central Asia to fill low-skilled jobs, which are shunned by South Koreans due to the 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 on the Employment Permit System.

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

“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 South 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 South Korean society has done to foster equality for all human beings.”

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

Legal hurdles, adverse impact on the labor market

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

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

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

In terms of policy effectiveness, if foreign labor is cheaper, employers would prefer to hire foreign workers official from the Ministry of Employment and Labor on condition of anonymity

“Applying different minimum wage to foreigners would be difficult because it is against the laws, 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 South Koreans from China and central Asia – in the low-skilled sector was about 528,000 as of Jan 31, with the majority being Chinese.

Those on the EPS – who are allowed to work here for three years and extend for another year and 10 months upon their employers’ approval – totalled 277,979 as of Jan 31, according to the Justice Ministry.

The quota for importing workers on the EPS is 56,000 in 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 the workers based on their South Korean language proficiency, remains cautious due to the public backlash over foreigners taking locals’ jobs.

“It is about protecting the principle of equal pay for work of equal value,” said IOM Migration Research and Training Centre Director Chung Ki-seon. “And that principle is to protect locals’ labor rights.”

“Foreign workers would still flock to South Korea even if they are paid less, making the labor shortage in low-skilled sectors chronic and further worsen working conditions for both locals and foreigners,” she said.

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

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