To see what complaints can achieve, look at South Korea. Economists have long warned that the country's declining working-age population would create a talent shortage, but few complain more vigorously than the business lobby. Finally, their pressure is paying off: Last year, the quota for E-9 visas, intended for “non-skilled” workers, was 120,000, well above the previous high (see chart). This year, the E-9 quota will rise to 165,000. The total number of migrant workers will rise 9% in 2023.
Chart: The Economist
This is good news for South Korea. Between 2016 and 2022, the number of foreign workers in South Korea stagnated amid a worsening labor shortage. Small visa quotas and strict qualification requirements were just the beginning. Workers who were able to enter South Korea had few avenues to permanent residency and were restricted from bringing their families over.
The barriers are falling, albeit slowly and belatedly. A new system announced in February allows parents of international students studying in South Korea to do seasonal work in labor-shortage rural areas, and encourages more short-term workers to stay. In the 2010s, only 400 workers a year could move from temporary E-9 visas to indefinitely renewable E-7-4 visas, according to Jonathan Chaloff, a migration expert at the OECD, a club of mostly wealthy countries. That limit will rise to 2,000 in 2022, and this year South Korea plans to allow up to 35,000 non-skilled migrant workers to stay.
This is part of a trend. Last year, the stock of migrant workers hit record highs in Japan, Taiwan and Singapore. Japan will have 2 million foreign workers in 2023, up 12% from the previous year and almost three times as many as a decade ago. Singapore and Taiwan have 7% and 11% more foreign workers, respectively, than in 2019. Taiwan's system, which took effect in 2022, allows mid-skilled migrants with significant work experience to become residents. Singapore has relaxed low-skill and mid-skill visa restrictions for jobs that align with the country's “strategic economic priorities.” Singapore shares this goal with Japan, which in 2019 launched a program to accept “specified skilled workers” in industries suffering from labor shortages, such as nursing care.
Big differences remain: immigration is politically contentious in parts of Asia; many in Japan and South Korea still value homogeneity; Singapore, by contrast, is a proudly multi-ethnic society; and in Taiwan, the president has publicly spoken of the need to preserve “multicultural traditions.” These differences are reflected in labor market data: South Korea and Japan each make up 3% of the workforce, much smaller than Taiwan (7%) or Singapore (39%).
Is the recent momentum grounds for hope? The magnitude of the problem is daunting. To stabilize long-term growth, South Korea must raise the share of foreign workers to 15% over the next 40 years, economist Michael Clemens argues in a recent paper. By our rough calculations, foreign workers would need to grow by about 4% per year for 40 years to meet Clemens’ goal. This will be difficult, but there is room for hope: strong growth in the 2010s has led to a 3.3% annual increase over the past decade. A Japanese government think tank estimates that an additional 2.1 million foreign workers are needed by 2030. This would mean an 11% annual increase, matching the rate Japan achieved over the past decade.
But that calculation underestimates how hard it will be to sustain a large influx. As rich Asian countries compete for workers, it may become harder to attract them. Many of the countries from which migrant workers come, such as Indonesia and China, have ageing populations. And it could also lead to increased anti-immigrant backlash; Taiwan recently sparked protests after announcing plans to allow more Indian workers into the country.
