South Korea Turns to Immigration to Fix Its Skills Gap

Image Source: Getty Images

South Korea has long faced low fertility rates and an ageing population. As a result, several industries across sectors have been facing acute labour shortages, prompting Seoul to adopt an aggressive approach to attract foreign workers. While traditionally, South Korea has focused on unskilled/semi-skilled labour, recent trends indicate a shift toward skilled professionals, suggesting that even the high-tech industries are now experiencing the consequences of these demographic challenges. In this light, this piece examines the evolving trends of labour immigration and the accompanying challenges in South Korea.

An Increasing Emphasis on Labour in South Korea

The saga of South Korea’s economic development is well known, as is its struggle against low fertility rates and an ageing population. Recently, new estimates have suggested that persistence of ultra-low fertility rates could lead to negative economic growth in the 2050s, reinforcing the looming threat of an economic decline in the absence of human capital. This has prompted the administration to sanction 88.5 trillion won to tackle long-persisting demographic issues. However, since similar efforts in the past have yielded marginal results, attracting foreign labour has become a priority for South Korea.

Traditionally, South Korea has focused on attracting lower-skilled labour into the country, especially to Small and Medium Enterprises (SMEs) in sectors such as manufacturing, agriculture, and fisheries. These enterprises, which constitute 99.9 percent of the companies in South Korea, have been facing an acute labour shortage, driven not only by demographic challenges but also by lower wages compared to those provided by larger companies. Against this backdrop, the Employment Permit System (EPS), signed between Seoul and six Asian countries in 2004, has been central to Korea’s economy. Now expanded to 17 countries, the EPS is a government-to-government, temporary employment program that facilitates the immigration of low-skilled workers from poorer Asian countries to South Korea to work in non-professional sectors. With the stabilisation of non-skilled workers in 2024, a first since the COVID-19 pandemic, as illustrated in Table 1, the focus has now shifted to high-skilled professionals.

Table 1: Temporary Foreign Workers in South Korea by Sector (2024-2026) 

Source: Compiled by author. OECD, The Chosun Biz

This transition has been unfolding as the manufacturing and construction sectors are experiencing a decline in job vacancies, amid projections that, between 2025 and 2029, South Korea will lack at least 580,000 science and engineering specialists.

High-Skilled Labour Demand and Policy Misalignment 

South Korea has implemented targeted policies to draw high-skilled talent from abroad. These policies include attracting overseas skilled professionals for specific sectors and employing international students graduating from local universities. Although these policies reflect Seoul’s intent to incorporate skilled workers in the workforce, incoherence across domestic regulations, visa complexity, and limitations in policy execution for foreign workers highlight challenges in policy commitment.

South Korea has implemented targeted policies to draw high-skilled talent from abroad. These policies include attracting overseas skilled professionals for specific sectors and employing international students graduating from local universities.

In South Korea, an increasing number of companies are willing to hire foreigners, primarily through the E-7 visa category. In 2025, South Korea introduced the ‘Top-Tier Visa’ to attract foreign talent in sectors including semiconductors, biotechnology, secondary batteries, and displays, with robotics and defence to be added. This surge in demand for skilled professionals is not exclusive to 2025. It has persisted at least since 2023, when a significant jump was registered in the number of E-7 visa—a category meant for skilled professionals with verified expertise. This visa category is divided into 87 job categories across IT, business management, finance, and other fields, encompassing a wide range of skilled and semi-skilled occupations. The jump from 2,000 to 35,000 in 2023 demonstrated that the labour shortage problem in South Korea was no longer limited to non-professional sectors. Instead, it now spans a whole spectrum of industries, threatening the very foundation of the country’s economy—its technological prowess.

However, stringent visa requirements and a complex application process—requiring a business license, registration certificate, and proof of the necessity for hiring foreigners— make the process arduous. In addition, factors such as work experience, language proficiency and minimum income levels of the candidates add to the difficulty of hiring foreign workers. Combined with the wage requirements, these procedures disincentivise domestic enterprises from hiring foreign workers, especially SMEs and start-ups with limited turnovers and stipulated wages. To address this issue and to attract talent in the start-up ecosystem, the government launched the K-Startup Grand Challenge in 2016, offering added incentives such as settlement support, visa and corporate registration assistance. Building on its success, the government is also planning to launch the K-startup grand challenge student track next year to further encourage entrepreneurship among foreign students. Replication of these initiatives underlines the robustness of the policies and the coordinated efforts of multiple ministries working towards a single goal.

Due to policy fragmentation, many students struggle to find employment and return home after graduation. Navigating the D-10 job-seeking visa, the E-7 work visa, and the F-2-7 long-term residency visa is a challenging process.

Besides overseas recruitment, South Korea’s higher education sector plays a critical role in attracting and retaining skilled talent, having contributed substantial numbers of workers to the country. Some positives have emerged lately. For instance, for the first time, employment among foreign graduates reached 30 percent, representing an 11.7 percent increase compared to the previous year. Furthermore, Korea achieved its target of 300,000 international students two years ahead of schedule, underscoring the success of its higher education policy and its potential to reduce the workforce gap further. Nonetheless, bureaucratic and systemic challenges persist. The number of STEM majors is low at just 19 percent, compared to the US, where STEM majors account for 55 percent among international students. Moreover, the country faces difficulties in retaining foreign students due to the incoherence between the higher-education and employment policies. Due to policy fragmentation, many students struggle to find employment and return home after graduation. Navigating the D-10 job-seeking visa, the E-7 work visa, and the F-2-7 long-term residency visa is a challenging process. In addition, the constraints—such as income levels, academic credentials, and language proficiency—associated with these visa categories further disincentivise students from moving forward.

As South Korea recalibrates its approach to attract more skilled talent, it must identify existing gaps between policy intent and execution. Although a plethora of labour immigration policies, such as targeted visas, scholarships for international students, and recommendation systems for skilled professionals, exist, they have their own limitations that inhibit the candidates’ long-term retention.

Aligning Education, Industry, and Migration Frameworks

Foreign workers in South Korea also face significant uncertainties regarding workplace rights and benefits. Governed by a complex web of visa rules and legal frameworks—comprising the Immigration Act, Labour Standards Act, and the Act on the Employment of Foreign Workers—international employees often have an opaque understanding of their workers’ rights in Korea. For example, while the Act on the Employment of Foreign Workers does not stipulate benefits for the family of foreign labourers, the ‘Top-Tier Visa’ attracts foreign professionals by providing immigration and residency benefits not only to the individuals but also to their family members. This mismatch reveals non-uniformity across government agencies, contributing to a lack of awareness and anxiety among foreign workers about the prospect of their long-term stay in the country. Similarly, although existing labour laws protect workers from discrimination, enforcement on the ground remains inconsistent. In practice, the experiences of foreign workers report lower wages than their Korean counterparts, substandard living conditions, and delayed—and in some cases unpaid—wages.      In light of its demographic challenges, labour immigration has emerged as one of South Korea’s key options for sustaining economic growth. As South Korea recalibrates its approach to attract more skilled talent, it must identify existing gaps between policy intent and execution. Although a plethora of labour immigration policies, such as targeted visas, scholarships for international students, and recommendation systems for skilled professionals, exist, they have their own limitations that inhibit the candidates’ long-term retention. The absence of effective labour laws and policies that protect workers’rights and provide security compounds these challenges. Accordingly, Seoul must introduce targeted reforms—linking education and hiring policies for international students, exploring integrated study and work visa pathways, and reforming labour laws for foreigners—measures that could improve long-term labour retention.

Abhishek Sharma is a Junior Fellow with the Strategic Studies Programme at the Observer Research Foundation.

Shreya Mishra is a Research Intern at the Observer Research Foundation.

• International Affairs
• East Asia
• employment permit system
• foreign workers in South Korea
• high skilled workforce south korea
• south korea economy
• south korea economy landscape
• south korea labour crunch
• South Korea labour shortage

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

PREV NEXT