Remittances by migrant workers in South Korea to the world

Remittance is by definition the sum of cross-border personal transfers and compensation of employees according to the World Bank. Global remittance flows by country has been annually estimated and released by the World Bank. Top remittance sources are mostly high income countries. During the recent 5 years, high income countries from North America, Middle East and Europe have appeared to top 5 remittance sources. Looking into the list of the world's top 10 remittance sources from 2015 to 2020, only 2 countries from East Asia & Pacific - China and South Korea - are included. This context strengthens the importance of South Korea's outward remittance at global level.

Global top 20 remittance resources from 2015 to 2020 (USD million)

Source: World Bank (2021)

According to the World Bank's latest data, Korea was ranked at the 14th in the world’s largest outward remittances in 2020. While 9.219 million USD was sent out of South Korea in 2020, higher amount used to be sent out before the global pandemic started. South Korea's outward remittance peaked at 12.888 million USD in 2017.

Major remittance senders of this South Korea's outward remittances are migrant workers coming from Southeast and South Asian countries. South Korea’s population is about 51 million. Majority of them are considered to be highly skilled domestic workforce unwilling to work in manufacturing, construction, agriculture sectors. This, in combination with an aging workforce has given rise to an unmet labor demand in certain sectors of South Korea’s economy, a demand ripe for foreign labor.

Annual quota of South Korea’s EPS (2012-2021)

Source: World Bank (2021)

In response to this, the South Korean government enacted Act on the Employment, etc. of Foreign Workers in 2003, and introduced Employment Permission System (EPS) in 2004. The Act was developed to resolve corruption in the process of sending and receiving workers, and illegal work, illegal stay, and human rights issues of the trainees after introduction, which occurred during the process of operating foreigner industrial trainee system that was implemented as a part of the economic cooperation with Asian countries. 16 countries - Nepal, Indonesia, Cambodia, Myanmar, Thailand, Philippines, Vietnam, Sri Lanka, Bangladesh, Uzbekistan, Mongolia, Pakistan, Kyrgyzstan, East Timor, China, and Laos - have signed bilateral agreements with the Korean government so far. The quota for each country is annually reviewed and announced by the Korean government. Korea is to accept 69,000, higher than the pre-pandemic quota of 2018, foreign workers from the 16 EPS countries in 2022.

Migrant worker population distribution by region in Korea (2022)

Source: Ministry of Labor of Republic of Korea (2022)

Migrant worker population in Korea is densely found in suburbs of its capital city Seoul. According to the Korean Ministry of Labor, as of the 2nd quarter of 2022, formerly registered163,886 migrant workers are residing in Korea. 42.4% of them, 69,495 migrant workers live and work in Gyoungggi. The second largest group, 15.2% of the total, 24,949 migrant workers, appears in the mid-western region of Korea in which manufacturing facilities are mostly concentrated. In addition, the third largest migrant worker population, 10.5% of the total, of 17,135 is shown in the Southern coastal regions.

Industry distribution of migrant workers in Korea (2022)

Migrant workers in Korea are mostly working in the manufacturing industry. As of 2022, 133,027 migrant workers, 81.1% of the total migrant worker population, appear to be factory workers. Relatively small number of migrant workers is engaged in agriculture and stockbreeding (11.4%), fishery (3.9%), and construction (3.4%). Only 0.2% of the total migrant workers is found in service sector. The Korea's EPS policy was originally designed to address the domestic labor shortage in low-skilled occupations. The industry distribution of migrant workers in Korea shows the policy fills the gap of shortages in tis labor market.