Talent acquisition and retention in South Korea

By Jacco Zwetsloot, Seoul moderator

On 16 February we held our monthly EICN Seoul event, this time as a luncheon roundtable at the Four Seasons Hotel Seoul. During the event, we discussed the challenges of talent acquisition and retention in South Korea. Special thanks to our discussion leaders: Gordon Dudley CEO of RDI Worldwide and Rob Flemer Foreign Attorney at Kim & Chang who advised our members and guests on the main challenges and opportunities for executives who wish to secure and retain high-quality talent in 2023. For those that missed the event, here are some key takeaways that were discussed:

  • A dramatic shift in space time conditions occurred after Covid, when remote work meant that the hiring scope started to move beyond Seoul. This opened the door to a larger talent pool, not restricted by commute times or residence.
  • The more specific the job description, the more likely to hire a person that is right for that job. This could save bosses a lot of trouble in markets with rigid labour laws such as Korea, where it is extremely difficult to move staff on who are no longer deemed fit for a given role.
  • Labour laws mean that a company must be meticulous in documenting poor performance or disciplinary proceedings before trying to dismiss an employee. Fixed term employment contracts, which are still less desirable among Koreans in general but more acceptable to younger jobseekers, could spare some of the difficulty.
  • Chaebol are still attractive places to work. Foreign firms and SMEs that can offer better pay but fewer benefits have a hard time competing in the talent market, as people look beyond salary packages to what else is on offer.

This post is intended as a further reflection on the new developments and shifts taking place in the field of human resources in this country. 

In offering jobs, there is very often a mismatch between employers, who want to hire somebody quickly but fire them at will, and employees, who want a job with some sense of security, including at least the payment of the so-called “Four Major Insurances” (employment, industrial accident compensation, national pension, and national health insurance). In 2021, about 42% of employees were deemed “irregular”, meaning they were temporary, part-time or atypical workers, according to the Korea Economist Institute of America, at least some of whom are not covered by the Four Major Insurances. The Korea Economic Institute of America (KEIA) sees this labour-market dualism as linked to the gulf that exists between large firms on the one hand and SMEs on the other.

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Meanwhile, most high school graduates go on to university to gain a four-year degree, which has led to chronic problems like “education inflation”, credentialism, and a mismatch between what employers want and what young people have to offer. Consequently, the level of youth employment in South Korea is lower than the OECD average, and starting wages are only a little above that of high school finishers and much less than the OECD average. It seems everyone in South Korea knows the education system is broken, but nobody knows how to – or is able to – fix it. 

Amidst the difficulties experienced in finding the right type of young South Korean talent, some industries will soon have an easier time hiring foreign workers to fill positions deemed unattractive to locals. Manual labour will be imported to the tune of 110,000 foreign workers starting from 2024, and the Ministry of Employment and Labor has already announced that foreign workers will be dispatched to work at shipyards, factories, farms, and public transport firms, as well as small restaurants and stores. Meanwhile, the government of President Yoon Suk-yeol and the People’s Power Party (PPP) with which he is aligned have agreed to lift restrictions on labourers from overseas being hired on South Korean construction sites, but the latter may have to wait until after the next National Assembly elections, since the PPP is currently the minority party.

Of course everybody’s problem is somebody else’s opportunity. The recent shift away from group recruitment once or twice a year to continuous, rolling hiring means that HR departments are busier than before with interviewing applicants. South Korean online recruitment company Saramin recently surveyed domestic firms and found that two thirds of respondents already use AI-assisted recruiting companies to reduce time and energy. Originally this meant only pre-interview screening of documents, but now AI is also being used for interviews, a trend that began during the COVID-19 pandemic, when group in-person screenings were risky. The latest AI programs are already able to conduct simple interviews of hopeful applicants, grading them on the content and presentation of their answers. 

As if it isn’t enough trouble just hiring the best people for the job, after 2+ years of social isolation, many Korean employers are finding their new hires to be uncompetitive compared to pre-pandemic graduates, and are having a hard time fitting into the workplace, lacking the social skills necessary to build relationships with their colleagues and bosses. While causing immediately headaches for HR executives, it could also lead to lasting workplace cohesion problems. Surely there is an opportunity for training and other upskilling firms to seize the moment. 

These developments caused by demographic shifts, an over-educated workforce, pandemic-related social distancing and other factors make working in South Korean HR today a very different set of challenges to those of even just decade ago. We will therefore continue to revisit this topic in future EICN sessions in Seoul.