[WHY] Could foreign nannies boost Korea's ultra-low birthrate?

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Published: 17 Jun. 2023, 07:00 Updated: 05 Jul. 2023, 17:45

[WHY] Could foreign nannies boost Korea's ultra-low birthrate?

Debate on allowing foreign nannies from Southeast Asia to come work in Korea continues.[SHUTTERSTOCK]

As early as last September, headlines such as this one have been capturing the public's attention: “Filipino nannies may come to work in Korea for a monthly wage of 1 million won.”

The headlines caught the public's attention due to the extremely cheap price of hiring these domestic workers, or 1 million won ($777.5) monthly — which is around one-third of the salary that most nannies in Korea receive, and way below the minimum wage. A nanny can earn a little over 2 million won in a month for 40 hours of work per week.

The average monthly wage of domestic workers in Korea — including those in housekeeping and child-raising services — is 2.86 million won, according to 2022 data from Statistics Korea.

Conventionally, Korean nannies tend to be more costly than foreign ones, with the monthly wage of a nanny taking care of one child ranging between 3 million and 4 million won.

So how can nannies be hired to work for a monthly wage of 1 million won?

The topic was first advanced by Seoul Mayor Oh Se-hoon, when he proposed at a Cabinet meeting last September that “it takes monthly 2 to 3 million won to hire nannies in Korea, but in Singapore's case, it only costs between 380,000 won and 760,000 won,” and urged the government to hire foreigners for these services.

In March, Rep. Cho Jung-hun of the Transition Korea party proposed a bill that would exclude migrant domestic helpers from the minimum wage law requirement. Cho claims that the minimum wage should be set at a lower bar for such foreigners from Southeast Asia because the wage guidelines proposed by these countries are much lower than Korea’s minimum wage.

President Yoon Suk Yeol speaks at the cabinet meeting at the presidential office in Yongsan District, central Seoul, on May 23. [NEWS1]

On the back of Cho’s proposal, President Yoon Suk Yeol “strongly advised” an examination of the related ministries' policies during a closed-door Cabinet meeting in May, such as the Ministry of Justice of bringing migrant domestic workers to Korea, with countries such as Singapore and Hong Kong implementing such policies since the 1970s.

So why was this bill suddenly drafted? Why do we need nannies from other countries?
The bill was proposed because Korea holds the world’s lowest fertility rate, which was 0.78 in 2022. The figure is also at a historic low since Statistics Korea began compiling the data in 1970.

A jaw-dropping sum of 330 trillion won was injected by the government to raise the fertility rate across 17 years from 2006 to 2022, according to the National Assembly Budget Office — but without concrete results so far. Korea is still a front liner to potentially become the first country in the world to disappear due to a low birthrate, demographer David Coleman warned some 15 years ago.

[KOREA JOONGANG DAILY]

With an urgent need for a breakthrough, the government proposed another policy that would be implemented in a pilot program from the latter half of this year: Bring foreigners from Southeast Asian countries into the country to work as domestic workers for a cheaper price than the prevailing costly market wage. In the case of foreigners in Korea, only ethnic Koreans or spouses of permanent residents can be hired as domestic workers and must specifically hold one of the following visas: F-2 (spouse of permanent resident), F-4 (overseas Korean), F-5 (permanent resident), F-6 (marriage migrant) or H-2 (work and visit).

Another method the ministry is mulling is the expansion of the E-9 non-professional visa criteria to add domestic workers to sectors including construction, manufacturing and agro-fisheries. The E-9 visa applies to 16 countries — Vietnam, the Philippines, Thailand, Mongolia, Indonesia, Sri Lanka, China, Uzbekistan, Pakistan, Cambodia, Nepal, Myanmar, Kyrgyzstan, Bangladesh, East Timor and Laos.

The expansion’s aim? To help young, employed married couples with childcare at a reasonable price.

Another anticipated impact is to increase female workforce participation — with childrearing duties still largely in mothers' domains — amid an increase of dual-income households in hopes that couples will have a more conducive environment for raising children, and ultimately, raise the birthrate.

The total number of dual-income households was 5.82 million in 2021, an increase of 4 percent on year and an 11 percent jump compared to 2011’s 5.24 million a decade ago.

The bill will be put on a separate track from this soon-to-be-set-in-motion pilot program. Under the current Act on the Employment Improvement of Domestic Workers, foreigners who work for Korea under an E-9 visa must be paid the minimum wage.

The gist of the pilot program and Cho’s bill overlaps — to increase female work participation by reducing the childcare burden and ultimately, hopes that it would encourage young couples to have more children. But Cho’s bill made better headlines and fueled more debate because of the much cheaper wage that he suggested migrant domestic workers be paid.

Giving foreigners less than the minimum wage — won’t this be problematic?
Cho’s bill was severely criticized by human rights organizations for infringing the rights of foreign workers as well as International Labor Organization (ILO) Convention No. 111, which prohibits “discrimination in respect of employment and occupation.”

What many would be surprised to know is that domestic workers are not “required” by the law to be paid the minimum wage.

“This Act shall not apply to businesses only employing relatives living together with the employer and to persons employed for housekeeping,” according to Article 3 of the Minimum Wage Act.

This exemption of “the persons employed for housekeeping” refers to those hired via private agencies, or personally introduced to their employers through acquaintances.

The Act on the Employment Improvement of Domestic Workers, on the other hand, is still relatively a new law effective from June 2022. The law strives to protect the rights of domestic workers — but there's a catch — it only reaches out to those who work under agencies certified by the Ministry of Employment and Labor (MOEL).

There are a total of 40 agencies certified by MOEL, and about 400 workers under contract, according to the ministry.

In 2022, there were 114,000 people working in the housekeeping and childrearing services sectors, according to the ministry. This means only 0.35 percent of domestic workers are protected under the act.

Rep. Cho Jung-hun of Transition Korea speaks during a hearing at the National Assembly on March 29. [YONHAP]

“The word ‘discrimination’ applies when someone receives more because they are of Korean nationality and someone receives less because they are not,” Rep. Cho told the Korea JoongAng Daily. “This profession is excluded from the minimum wage act regardless of nationality.

“In countries where many of their citizens go abroad to work as domestic workers, they have their own set of minimum wage guidelines and here are some examples: The monthly salary in the Philippines is $420; $400 for Indonesia, $370 in Sri Lanka and $330 in Myanmar. If this is what they ask of us, then why should we give three, four the amount required?”

Any remaining expenses minus the monthly salary required by foreign workers will be given to the agencies, who will cover expenses for food, dormitories and insurance, according to Cho.

Cho also refuted protests from labor unions that it will depreciate their labor value as the overall market price falls with the influx of foreigners.

“Foreign domestic workers are on a separate track from Korean workers,” Cho said. “Korean nannies are in the premium market, and those who are affluent enough to hire them will continue to do so. Choosing whether to hire a foreign or Korean domestic worker can be compared to airplane seats. We cannot blame someone for choosing to pay less for an economy class seat, nor to pay more for a business class one.”

Singapore, which does not have a minimum wage, separately negotiates with each country to set the minimum monthly salary for domestic workers. There were 268,500 foreign domestic workers in Singapore as of December 2022, according to Singapore’s Ministry of Manpower. Out of Singapore's 1.4 million households, nearly one out of five hire a domestic worker.

According to Singapore’s foreign domestic worker matching portal HelperChoice, the average salary of workers is $597.

In Hong Kong, there are over 390,000 foreign domestic helpers and the city sets a separate minimum allowable wage of 4730 Hong Kong dollars per month, or $604.

Bringing a cheaper workforce from abroad — great. But is this policy really in demand?
The answer to this question lies in the gray zone because there is no specific data or survey on the demand for hiring cheaper nannies, and the exact number of nannies working in Korea is not compiled by any government agency.

There are no datasets available from Statistics Korea, which survey the number of workers providing childrearing services. The data that are available are workers that are categorized under the “domestic chores and infant rearing helpers," which fell some 30.5 percent to 114,000 in 2022 compared to 2017’s 164,000, according to MOEL.

Children thank their teachers with paper carnations for Teacher's Day on May 15 at a daycare center in Gwangju. [YONHAP]

The sector is also heavily populated by older people in their 50s — 92.2 percent of the workforce is over 50 years old, and of that subsector, 59 percent were over 60 years old.

According to 2020 data, the number of households that responded that they needed childcare services was 239,160, according to Statistics Korea. In 2020, there were 144,000 workers in the housekeeping and childcare services sector.

A 34-year-old working mom surnamed Kim with two daughters told the Korea JoongAng Daily that she would definitely consider hiring a foreign nanny for a cheaper price.

“I did not have a career hiatus for childcare, but I nearly had to, or seriously considered quitting my job, because both of my children were so young,” she said. “All of my wages went straight into hiring a nanny.

“My opinion is that the current market price for domestic housekeeping and child caring services are too high,” she said. “Every year the price is set at a higher bar but the quality of the services is not guaranteed, and there are even times when we, as an employer, have to adjust to the nanny's schedule because the overall supply is low.”

Based on April 2022 data from Statistics Korea, there are 1.39 million married women who quit their jobs, which is 17.2 percent of a total of 8.1 million married women. And 597,000, or 42.8 percent, of the women who left their jobs, elaborated that it was due to childcare, followed by marriage at 26.3 percent, with pregnancy and childbirth at 22.7 percent.

Another 35-year-old father raising a newborn daughter said he is interested in hiring a foreign nanny.

“My wife is currently on her maternity leave so we do not need a nanny immediately, but she is still weighing her options on whether she will return to her job because of the baby,” he said. “The daycare centers near us are already fully booked, so we would consider getting a nanny. Since we are still newlyweds, hiring one at a cheaper cost is our priority. We don’t really care about the nanny’s ethnicity, but hope they’ll be fluent in English since we need to communicate.”

However, when asked if he would hire foreign nannies who are paid the minimum wage, he answered no.

“What’s the point if they receive the minimum wage? Then there is no point in hiring one. Then I would hire a domestic worker whose background I could ascertain.”

What are the other hurdles that need to be resolved?
Thirty-two-year-old mother Ju Young-min has plans to hire a foreign nanny but forecasts some problems ahead.

“I’m worried about their communication skills,” she said. “I would prefer to hire foreigners who can at least speak a little Korean, or are accustomed to our ways. If not, I think it would be difficult for them to provide proper childcare services. For example, since they cannot cook any Korean food, I cannot ask them to cook for my son.”

Experts are adopting a more conservative attitude towards the policy, saying that it is too soon to implement the pilot program.

“Foreigners need at least three to six months to adjust to the country,” said Prof. Hur Jun-soo, who teaches social welfare at Soongsil University. “We need institutions that teach them the language and Korean ways of childrearing services. Before the pilot program kicks off, the Seoul Metropolitan Government needs to assess parents' specific demands — to monitor what type of households want to hire foreign domestic workers.”

Professor Jeong Jae-youn of Myongji University’s Graduate School of International Exchange & Management criticizes the government for failing to draw up regulations to deal with illegal immigration.

The number of immigrants staying in Korea illegally continues on an upward trend. Over 410,000 foreigners out of 2.14 million are staying illegally, according to data from the Ministry of Justice — approximately up 125.5 percent compared to a decade ago, when the number was 183,000. Under the E-9 visa, the applicant can work only in designated workplaces over a three-year period.

“What the government has to ensure is that these foreigners have to go back to their home country after working for the designated period,” Jeong said. “The issue of illegal immigrants is a serious problem in Korea, but the government has yet to come up with enforcements, or stronger measures to regulate the immigration system.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]

korea joongAng daily

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[WHY] Could foreign nannies boost Korea's ultra-low birthrate?

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