BOK report on paying foreign helpers below minimum wage sparks outcry

Foreign caregivers were suggested as an option to solve the lack of care service workers by the Bank of Korea during a seminar on Tuesday. [JOONGANG PHOTO]

The central bank's call to bring in foreign nationals for caregiving services at a lower minimum wage has sparked controversy in the political and labor realms.

In a report released by the Bank of Korea (BOK) Tuesday, the bank noted that Koreans spend more than fourfold in hiring caregivers for the elderly and children compared to the neighboring regions of Hong Kong, Taiwan and Singapore. The cost is set to increase further given the rapid expansion of the aging population and contraction of the younger generation.

To resolve the shortage, the bank suggested that Korea introduce separate minimum wage rates for foreign workers in the domestic labor sector — in other words, paying foreign caregivers wages below the legal minimum, which is currently 2.06 million won ($1,541) per month.

Koreans pay a monthly average of about 3.7 million won for caregivers for the sick and 2.64 million won for child caregivers, according to the BOK.

It expects that the wage policy would reduce the financial burden of caregiving and encourage more Koreans to enter the domestic labor market.

The BOK also said that such services should progress under a private contracting system, allowing them to be paid below the regulated minimum wage.

Amid the controversy, Seoul Mayor Oh Se-hoon welcomed the bank's suggestion in a post on Facebook Wednesday.

“If the foreign worker plan is applied with the standard minimum wage, it will cost over 2 million won per month, which will be a ‘pie in the sky’ for mid- and low-income households.”

Oh also agreed with the BOK’s claim regarding the economic side effect of the confluence of the financial burden and shortage of caregivers, career interruption for women and the low fertility rate.

“Such a situation is not simply a problem of a caregiver shortage, but an ordeal that can trap the entire family in unhappiness as they become unable to work due to raising children, looking after the sick, or overpaying for care services,” Oh added. “The more such cases occur, the more economic loss the nation will suffer.”

“The foreign caregiver program is set to start this year under a joint partnership between the Seoul Metropolitan Government and the national government,” the Seoul Mayor said. “However, the program's high cost remains a significant barrier.”

The BOK’s report, however, ignited outcry over whether paying foreign caregivers less than the minimum wage will solve the actual problem, along with criticism that caregivers are already working in poor environments.

“Korean caregivers are already working in a poor environment,” the Federation of Korean Trade Unions said. “Ignoring such conditions and implementing temporary measures, such as introducing separate minimum wage rates, will cause unnecessary conflicts.”

BY KIM JI-YE [kim.jiye@joongang.co.kr]