MIGRATION, CONTINUED ECONOMIC

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MIGRATION, CONTINUED ECONOMIC DEVELOPMENT, AND CHALLENGES TO SOCIAL DEVELOPMENT IN SOUTH KOREA

Nancy Yeon-Joo Kim

February 2017

As a result of the rapid economic growth after the rise of democracy and capitalism and the decrease in the fertility rate, the unemployment rate in the Republic of Korea (referred to as South Korea hereon forward) has decreased since 1963, and less and less native South Koreans have been willing to fill unskilled jobs. In addition, more Koreans who can afford it emigrate, threatening to decrease the already small labor force, and as a result, threatening to stop the impressive economic growth that the country has been able to achieve since the end of the Korean War in 1953. As a historically and culturally homogenous nation, South Korea had supported strict immigration policies until 2007, when the government publicly acknowledged the economic importance of immigrants (Kalia, 2007). The steady increase in the number of foreigners in South Korea since 1998, however, brings its own challenges to the social development in the country; this ethnically homogenous country is facing increased social tension as foreign population grows. In the recent years, social development has taken center stage in international development for both theorists and practitioners. Social and political stability, freedom, and development are just as important as financial factors, traditionally the focus of international development, in order to achieve sustainable and equitable economic development (Sen, 2000). Social development in general is crucial to South Korea in obtaining an equitable society and economy, and the improvement of migrant employment conditions is directly related to social development of South Korea as foreign population increases in absolute numbers as well as in percentage of the total population. This paper will explore the challenges of economic and social development in South Korea and the impacts of migration on and from these challenges. More specifically, the paper will look at Legislation 6967, one of the earliest immigration policies to establish services and rights of migrant workers, and its effects on development in South Korea.

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Background South Korea has a unique history, which poses unique challenges to maintain its economic development and to continue its social development in the face of increased inflow of migrants. Throughout its history, the Korean peninsula has been invaded on all sides, and it was colonized by Japan from 1910 to 1945. Despite this history of invasion and foreigner presence in its territory, Korea has largely remained a homogenous country, ethnically and culturally. After World War II, the Korean War broke out, and both of what came to be North and South Korea were devastated, socially, economically, and politically. Through political, economic, and educational reforms, however, South Korea has become one of the high-income countries and joined the Organization for Economic Cooperation and Development (OECD) in 1996 (OECD, 2016). The increase in working hours, fast industrialization and westernization, and educational and political reforms quickly changed the population and family planning dynamics. With increased female participation in higher education and the labor force in addition to modernization of South Korea in general, more and more South Korean women are choosing to marry late and have few or no children or even choosing not to marry at all. As a result, the fertility rate is currently 1.3 births per woman, which is one of the world’s lowest according to the UN (Jones, 2009: 3), and this rate is continuing to drop. For comparison, we can look at the fertility rate in Japan and the United States, which are 1.4 and 1.88 respectively. The birth rates in all three countries are too low to maintain the national population without migration. Furthermore, there is a phenomena of South Korean women in rural areas migrating for education or work in urban areas. This in addition to many choosing to get married later or not at

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all leads to commercialization and unprecedented prevalence of foreign brides migrating to South Korea, especially the rural areas (King, 2010: 81). The increasing attainment of higher education and decreasing fertility rate and population growth have led to a decrease in the labor force; the average unemployment rate has continued to drop since 1963. The unemployment rate in South Korea dropped from 8.2% in 1963 to 4.4% in 1970. The unemployment rate was at its record low in 1989 at 2.5%, but has been almost static around 3.5% in the past five years. Even when the unemployment spiked in 1999 at 8.6%, very few native Koreans wanted to take the “three-D” jobs: difficult, dangerous, and demanding (Park, 2004). The low unemployment rate in the past decade translates to the unfilled low-skilled jobs that the native Koreans were and still are less willing to take. As a result, there has been a constant tension between the desire to maintain a homogenous country with strict immigration policies and the need for foreign labor to mitigate the effects of a decreasing labor force to keep the economy growing (Park, 2004). At the same time, the migration to Korea has increased each year since the 1990s according to the Korean Immigration Service (KIS, 2009), a government agency that reports data related to movement in and out of the country as well as services to immigrants. While this might be advantageous to fuel the Korean economy as the fertility rate and population growth decrease, this ethnically homogenous country is facing increased social tension as the stock (the total number present in the country) of foreign population grows. Foreign Population in South Korea South Korea, a predominantly homogenous country, is feeling the growing pains as a recently designated high-income country. It has become a New Immigrant Destination (NID), which is a new migration phenomenon that present distinct challenges from traditional migration destinations (Winders, 2014). To understand this country’s rising status as a migration

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destination and the implications of the characteristics of being a NID, we will first look at the historical trends in migration flow to South Korea. Figure 1 shows the number of foreign population for each year since 1997 as it is reported by South Korea’s Ministry of Justice (MOJ) – in red – as well as the percentage of foreigners in the national population of Korea – in green. The percentage was derived by dividing the foreign population data from MOJ by the national population data provided by the World Bank. There is a brief period of immigration downturn around 1997 and a spike in unemployment rate due to the Asian financial crisis (Kim, 2004: 317). But with that exception, there is a steady, almost linear, increase in both the total number of foreigners in Korea and the percentage of foreigners among the national population. Following this trend, the foreign population will make up a larger and larger percentage of Korea in the coming years as the native population decreases due to low fertility rates and more open immigration policies facilitates extending the stay or even settling down in South Korea. Figure 1. Foreign Population in Korea

1,800

5.0% Foreign Population % of Pop.

4.5%

1,600

4.0%

1,400

3.5%

1,200

3.0%

1,000

2.5%

800

2.0%

600

1.5%

400

1.0%

200

0.5%

0 1997

0.0% 2000

2003

2006

2009

2012

Year Source: Republic of Korea Ministry of Justice (1997-2015) & the World Bank (1997-2015)

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2015

% of Tot. Population

Foreign Population (Thousands)

2,000

Although there has been consistent growth of the stock of foreign population in South Korea, the most prominent sending countries have changed since the 1990. The change in the migration population’s demographic reflects the type of migration to South Korea in the recent years and might contribute to the idea that a large percentage of recent migration has been lowskilled labor migration. Table 2. Foreign Population by Top 10 Nationalities 1990

2000

2010

2013

China

22,818

China

92,140

512,705

China

656,846

USA

13,480

USA

25,591

95,578

Viet Nam

122,449

Japan

5,119

Indonesia

18,763

56,057

USA

71,817

Other South

1,842

Philippines

17,932

38,460

Philippines

49,273

Bangladesh

758

Viet Nam

17,554

33,691

Other South

43,163

Germany

743

Japan

15,744

26,829

Thailand

34,372

UK & N. Ireland

644

Bangladesh

8,856

26,707

Indonesia

34,215

Other North

614

Other South

8,316

21,188

Mongolia

27,145

Canada

591

Uzbekistan

4,199

20,206

Uzbekistan

25,887

France

585

Canada

3,703

18,924

Japan

24,244

Source: UN Department of Economic and Social Affairs, International migration flows to and from selected countries (2015)

Table 1 is a list of top 10 origin countries of foreign population in Korea. Even in the past 20 years, there has been a change of more migrants coming from western countries to more migrants coming from East Asian countries. In 1990 six out of ten origin countries were European or North American countries, but since 2010, only the United States of America out of the six northern origin countries in 1990 continue to make the Top-10 list. The total migrant stock from China includes ethnic Koreans, but unfortunately, it is unclear from the UN data which percentage of those migrants are ethnic Koreans. The only sending countries considered “high-income” in 2010 and 2013 are USA and Japan, and it is important to note that even these

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two countries are falling in ranking throughout the years as increasing number of migrants come from smaller, “low-income” countries. Challenges and Possible Solutions Historically, South Korea was a nation of emigration, but since the 1990s, is has become one of the major destinations for unskilled migrants in Asia (Oh, 2015: 551). As mentioned above, this country has emerged as a NID although it continues to send out its nationals to core, traditional migration destinations such as Europe and the United States. Some of the dominant features of a NID is the lack of institutional infrastructure to meet the needs of immigrants and the fact that immigrants in NIDs are often younger than native-born population (Winders, 2014). This framework is particularly relevant to South Korea as the government is encouraging emigration partly as a result of the aging population. Wang-Bae Kim also notes this phenomenon in South Korea as well where “family-unit migration seldom occurs, since most migrants arrive at a relatively young age” (Kim, 2004: 325). The fact that most migrants come alone challenges the traditional strategy of integration. Another important concept is that the NIDs often are the destination of migration from the “periphery” to the “semi-periphery.” As we will see with Legislation 6967, one of the most prominent immigration policies in South Korea is restricted to low or low-middle income countries among its neighbors in Asia. Furthermore, the unskilled and low-skilled labor migration promoted by this policy is “different from that of immigration (whereby immigrants eagerly seek to settle and obtain citizenship with their families), which occurs between core countries and the periphery” (Kim, 2004: 325). Staying true to the characteristic of a NID, the migration to South Korea is unique in its periphery to semi-periphery movement.

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The Legislation 6967 on the Employment of Foreign Workers, which was passed in August, 2003 and implemented in August, 2004 (National Archives of Korea), sought to promote South Korea as a migration destination for laborers, and it also was the first legislation to attempt to protect the rights of migrant workers. Legislation 6967 both establishes an employment permit scheme to encourage more temporary migrant workers to come to South Korea as well as attempting to protect these migrant workers. This national immigration policy still continues to exist and is the second largest entry method for foreigners after the H-2 Visas, which is the Working Visit Visa Program passed in 2005 and implemented in 2007. The H-2 Visa provides wider employment and residential privileges for temporary employment for ethnic Koreans from China and the former Soviet Union. The General Employment Permit (E-9) Visa Program, more widely known as the Employment Permit System (EPS), was a part of the Legislation 6967. The migrant workers can extend their permit up to three years with the same employer and then reapply after a year back in their home country, at which point, they may choose to apply through a different employer. Despite the restrictions on which foreigners qualify to apply for an E-9 Visa, this legislation gave many undocumented foreigners the opportunity to apply for a permit or leave the country without paying any fines. The E-9 Visas allow workers from 15 eligible countries to stay up to three years. There are 15 countries that have signed a memoranda of understanding (MOU) with South Korea as of 2016. Thailand, Vietnam, Mongolia, Sri Lanka, Indonesia, and the Philippines were the first to sign the bilateral agreement in 2004, and then Uzbekistan, Pakistan, and Cambodia signed MOUs with South Korea in 2006. The most recently bilateral agreements were signed in 2007 by China, Bangladesh, Kyrgyz Republic, Nepal, Myanmar, and Timor-Leste (Kim, 2009: 77; Kim, 2015:5).

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Figure 2. Countries that signed MOUs with South Korea

Figure 2 is a world map with South Korea colored in green; in purple are all of the countries that have signed an MOU to send its citizens as migrant workers to South Korea. As it made clearer from the visual, the recent migration patterns and bilateral agreements with the highlighted countries demonstrate the regional nature of South Korea’s role as a NID. As aforementioned, there are 15 countries with this bilateral agreement, and they are all in Asia. As the policy aims to fill the lower-skill sectors, it would make sense that the migrants come from poorer countries rather than countries in North America, Europe, or Oceania. As large numbers of migrants are expected to be hired by Korean employers but temporarily (for up to three years), it also would make sense that both the sending and the receiving country will seek to make the bilateral agreement with another country nearby (supported by the Gravity Model, which states that migration is inversely proportional to the distance between the sending location and the receiving location). I will further explore the relevant theoretical frameworks to explain the migration phenomenon in a later section. 8

The EPS, the most prominent immigration program in South Korea as of now, requires an agreement between governments, which can complicate the role of the state, state sovereignty over the migrants, and possible integration (Bretell and Hollifield, 2015). As a receiving country, South Korea holds more bargaining power and can terminate the MOU by saying that there are too many illegal immigrants as there are no hard rules about the exact proportion or number of illegal immigrants that would constitute a breach of the government-to-government contract. The sending country also has no say over the annual quota for the EPS. South Korea considers: “1) the employer preferences for the nationality of the potential migrant worker, (2) foreign policy considerations, and (3) the size of the illegal migrant population from the country” (Oh, 2015: 563) in setting the annual quota from each country. The most interesting factor is the second one: the rise of nation states and the national establishment of modernity have made immigration as political issue and multilateral issue rather than just the migrant negotiating his or her status with the recipient country (Bretell and Hollifield, 2015). If a sending country violates any of part of the MOU, it can be suspended from participating in the program. For example, Vietnam was temporarily suspended from participating in the EPS due to a high number of Vietnamese migrants overstaying their visa and becoming illegal workers in South Korea (Kim, 2015). There also is another stakeholder with a lot of bargaining power through EPS: the South Korean employers. The employers who hire migrant workers through this program must first be qualified through the South Korean government, and those with less than 300 employees in manufacturing, construction, and service are given priority. Once the qualified employers show that they have spent at least a month looking for Korean workers through public employment centers, they can enter into employment contracts with foreign workers. The fact that the E-9 visas are tied to a specific employer leaves the potential for exploitation of the migrant workers.

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Furthermore, there is political pressure from the small and medium-sized enterprises (SMEs) and the agricultural sector not to strictly regulate migrants from overstaying their visas. The E-9 Visas are temporary, but “in 2011, 38% of unskilled foreign workers on an E-9 visa overstayed upon the termination of their term” (OH, 2015: 563); the enforcement, however, has been weak at best, which undermines the policy’s intentions to reduce migrants working illegally and being further exploited by their employers. Impact of EPS Policy One of the intended purposes of the EPS established by Legislation 6967 was to address the high number of unregistered migrants in South Korea. Undocumented foreign workers increased from 100,000 in 1998 to 289,000 in 2002, which equated to 70% of the total foreign labor force in South Korea, and the General Employment Permit Visa Program boosted the registration of foreigners. Unsurprisingly, however, many migrants who did not qualify for the visa still chose to stay in South Korea as undocumented migrants, but the program was still effective in reducing the number of undocumented workers. Before the implementation of the EPS, approximately 70% of the foreign labor force in South Korea were predicted to be undocumented. After the implementation of Legislation 6967 in 2004, however, about 40% of the foreign population in Korea were undocumented. Forty percent is still a very high percentage of migrant workers without any status or protection, but the 30%-point drop from the initial 70% is a great achievement (Park, 2004). Undocumented foreigners, including those who overstayed their E-9 Visas, are prone to human rights violation and exploitation, which undermines social development in South Korea, so the EPS served as a step in the right direction to address human rights violations and support social development in South Korea.

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In addition to the success of lowering the percentage of undocumented migrant workers, the employment permit policy seems to have accomplished a part of the government’s goal in encouraging immigration of laborers to continue South Korea’s economic development. Workers with E-9 Visas numbered over 210,000 and made up about 22% of the registered foreign workers as of late 2010 (KIS, 2009). The program is still in effect today and continues to grow. One of the most telling signs is the fact that the number of countries that have entered into contact with the Korean government for this visa program has increased from six countries in 2004 to 15 countries by 2010. This change can be taken as a sign of not only the growth of the migrant stock, but also of the diversification. The growing intake of migrants through this program and the expansion of employment visas in 2007 directly answers the call for South Korea to relax its immigration policies for the sake of continuing its economic growth (Kalia, 2007). There is a similar case in Japan where the population growth has halted through the drop in fertility rates and out-migration. Japan actually has seen a decrease in economic growth as a result of its strict immigration policy, but according to Kalia (2007), South Korea has heeded the warnings and avoided the negative economic impacts through more welcoming immigration policies for foreign workers. Another key aspect to encouraging migration and encouraging equitable social development is creating a work and social environment that is friendly to foreigners. The regulations and responsibilities of the South Korean employers as established by Legislation 6967 were the first efforts to protect migrant workers and to provide health care benefits for foreigners. Although the exact data has not been collected, the migrant protection policy in Legislation 6967 probably reduced the exploitation of migrant workers through illegal contracts or recruitment by unauthorized brokers. The E-9 Visa Program requires the sending country to

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have a contract with the Korean government and for the employers to meet certain hiring standards as well as provide welfare services that previously were not available to temporary migrants. A possible exploitation, however, could take place on the part of the contracting employer. The E-9 Visa is valid for three years but must be renewed annually by the employer, which gives the employer the authority and power to hold a contract over the head of a migrant worker. Although the E-9 Visa Program cannot guarantee that the employer will not unjustly terminate the employment contact, the Legislation 6967 on the Employment of Foreign Workers explicitly attempts to protect migrants. Chapter 4 of the legislation enforces increased protection measures for migrant workers: the employers are required to provide work insurance and a discharge allowance at the expiration of the work permit provided that the employee returns to his or her country within the legal timeframe (Legislation 6967). Although Legislation 6967 does not promote long-term or family immigration, which also means that it does not seek to establish integration policies, one of the eligibility requirements reflect the intentions to improve the quality of life for the migrant worker. One of the EPS eligibility requirements for migrant workers is some level of language proficiency; before registering through the EPS and becoming eligible to be hired by a South Korean employer through this program, the migrant must pass a Korean language exam. While this might push migrants who cannot afford language classes to illegal immigration, it also means that those who come to Korea through the EPS will be more ready to adjust to the new work and social environment in South Korea.

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Theoretical Frameworks It will be helpful at this point to look at theoretical frameworks of migration in order to understand South Korea’s immigration policy and the increasing migrant flow, especially that of temporary laborers from poorer Asian countries. Why are so many migrant workers coming to South Korea? How can we understand South Korea’s policy toward migrant workers becoming more open and welcoming? Why is the EPS continuing to be a successful policy and expanding to more government-to-government partnerships? In the chapter “Demographic Analyses of Immigration” in Brettell and Hollifield’s book (2015: 67-89), Frank Bean and Susan Brown lay out the theories of international migration. Among them, the Neoclassical Economic Theory and the Labor Market Segmentation Theory are particularly relevant in contextualizing the recent migration phenomenon and patterns in South Korea. First of all, the Neoclassical Economic Theory explains that the imbalance in labor across countries leads to wage differences. Since individual migrants weigh the cost and benefits of the labor market at home and the labor market abroad, the wage differences will encourage migration (Brettell and Hollifield, 2015: 70-71). As South Korea’s economy grew, its wage also increased. The minimum wage in South Korea as set by the Minimum Wage Council is currently 5,580 KRW (Minimum Wage Council, 2016), which is approximately 4.85 USD, and the minimum wage applies to foreign workers who come through the E-9 Visas (Legislation 6967). Under the EPS, the South Korean employers cannot pay less the migrant workers than the minimum wage set for Korean nationals. Although the minimum wage converted into US dollars seems low in comparison to the minimum wage in the United States or Canada, but compared to the minimum wage or even an average hourly pay in the sending countries of immigrant workers to South Korea, the wage difference is enough to spur migration.

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Table 2 is a table of the 15 countries that have signed an MOU with the South Koreas government for the EPS in the ascending order of minimum monthly wage in USD as reported for 2013. The table was created using the data compiled by a database called Quandl; Quandl’s data is based on the individual country information provided by the World Bank. South Korea is highlighted in blue, and its minimum monthly wage in 2013 was more than twice that of Bangladesh, the next country on the list with the highest wage. Based on this data and according to the predictions of the Neoclassical Economic Theory, we would expect a large migration from all of the listed countries to South Korea, which is, indeed, what we observe with the large number of foreign workers and the popularity of the E-9 Visas. Secondly, the Labor Market Segmentation Theory points to the stratification in the labor market, which minimizes competition with South Korean workers (Brettell and Hollifield, 2015: 71-72). The E-9 Visas are specifically intended for unskilled labor force to take up temporary employment, and only the employers of the following industries are allowed to hire through the EPS: manufacturing, construction, service, agriculture and livestock, and fishing. Furthermore, the employers also must show the South Korean government that they have actively tried to fill the positions with nationals through public employment centers or other ways that can be presented as proofs (Legislation 6967). The labor force overall is shrinking in South Korea, but the sectors specified in the legislation are particularly undersupplied as most Korean nationals are not willing to take up labor-intensive and/or low-skilled positions within

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these industries. The labor market segmentation not only benefits the South Korean workers as the foreign workers do not pose a competition, but it will also strengthen the policy and grassroots efforts to minimize the tensions between nationals and immigrants. Social Development Although Legislation 6967 does not promote permanent or even long-term migration to South Korea, it is one of the first policies that addresses the rights of migrant workers and seeks to establish their position officially within the South Korean work force and even in society. The responsibility of the employees to provide basic welfare services, however, is not enough to ensure that the migrant workers can become an integral part of their community. With the percentage of foreigners in the total population quickly approaching 4%, South Korea must begin to build on Legislation 6967 and the EPS to promote the development of a multicultural and accepting society. Social cohesion between the immigrant community and a historically homogenous South Korea will require strong political will and education of the Korean public, but South Korea has the potential to be a leader in the region to model successful integration and harnessing of the advantages of growing migration into the country in the face of decreasing national population. Conclusion The historically low fertility rates and out-migration of native South Koreans have threatened the economic growth of this OECD country. Legislation 6967 of Foreign Workers implemented in 2004 established the Employment Permit System, and the EPS seems to have successfully mitigated the effects of a diminishing native labor force and also decreased the number of undocumented migrants in South Korea. As of June 2012, foreign workers accounted for 3.2% of the Korean workforce (Korea Support Center for Foreign Workers, 2012), following

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the growth trend of the number of foreigners and the number of E-9 Visas since 2012. The program still continues to bring in migrant workers in the manufacturing, construction, and service sectors. It also marks the beginning of more welcoming policies for foreigners. Since its implementation in 2004, there have been efforts for the Ministry of Justice and the Ministry of Labor to collaborate on improving work conditions, further increasing the quota for unskilled labor, and supporting foreign workers’ life in Korea. But these labor protection measures do not seem to be enough in creating a more welcoming and safe environment for migrant workers (Snyder, 2015). As the foreign population in Korea has exceeded 3% in the early 2010s and is quickly approaching 4% today, there is a growing need for integration strategies. As the foreign population and naturalized foreigners grow in number, especially with high numbers of foreign brides from Vietnam, China, and the Philippines, the government will have to work to fight discrimination against multiethnic families as well as migrant workers. South Korea poses new opportunities as a unique case distinct from traditional destination countries; as a NID and being a historically homogenous country, there are unique challenges to channel the increasing migration to South Korea as a positive force to continue development in South Korea as well as contribute to development to the sending countries. There are further studies to be done, especially regarding the remittances sent by immigrants in South Korea as well as the impact of integration policies. As the native South Korean population is projected to decrease precipitously in the next century, it remains to be seen how the government will educate and prepare the society for the rise of multiculturalism in the face of South Korea’s pull of economic migrants.

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