The Shortage of 200,000 Laborers for Small & Medium Manufacturers

The average shortage rate of labor force for domestic small and medium manufacturing is 9.36%. It is 204,900 places numerically and the companies can’t recruit one of ten persons they need.

More than 50% of small and medium companies want to recruit foreign labor force, but only 20% recruit foreign labor force. As the demand for foreign labor force increases, the payment gap between Korean labor force and foreign force becomes very small.

This fact obtained exclusively by Dong-A Ilbo is known from the report of The Survey for the Employment of Small and Medium Manufacturers’ performed by KIET for Small and Medium Business Administration. This survey is performed by KIET for 96,830 small and medium companies employ more than 5 persons and less than 300 persons.

▽the smaller, the less labor force=according to the survey, the shortage rate is the highest in manufacturing occupation with 10.86%, particularly, skilled and unskilled occupation show the highest rate because of the ‘Avoidance of 3D Occupations”. The shortage rate means that the number of shortage labor force is divided by optimum labor force (present number + shortage number).

It is also has the same reasons why companies can’t recruit labor force. ‘The avoidance tendency from small business’ records the highest rate of 39.7% and the second reason is ‘inappropriate payment condition’ is 33.3%. According to the size, the companies with more than 5 and less than 19 employees shows the highest shortage rate of 14.10%. So the smaller size, the higher shortage rate.

The tendency of temporary employment by small and medium companies, particularly daily base, is one of the factors of the worse employment condition. About 54% of small and medium companies employ labor force temporarily and 69.3% of the temporary labor force is employed daily base.

▽the increasing of foreigner’s payment= as the recruitment becomes worse, the demand for foreigner increases with their payment. Only 21.25 of small and medium companies employ foreigners, but 35.1% of them responded to maintain the level of their employment and 54.4% responded to increase the employment.

The payment level for the foreigners is 81.5%, but their productivity is 86.3% of Korean. So the there is no difference in the payment considering the productivity. The reason for the employment of foreigners is the difficulty employing Koreans (43.6%) rather than lower level of their payment (19.7%).

Yang Hyun-bong, Manager for Small and Medium Venture Business of KIET commented “ the number of foreign industrial trainees will increase from 80,000 this year to 130,000” and added “the shortage rate will decrease to 7.8%, but there is a worse possibility as illegal staying foreigners go back by March of 2002, many foreigners will move to service industry, then the shortage rate of small and medium manufacturers become worse”

Ja-Ryong Koo bonhong@donga.com