As one of the original Asian Tiger economies, South Korea is a high income country and a member of the G-20 group of major world economies but the strong desire of Koreans to pursue higher education opportunities is both a plus and a minus for the Korean recruitment market as the country faces both a brain gain along with a brain drain.
The South Korea Diaspora and Korean Returnees
The entire worldwide Korean Diaspora consists of around seven million people with four-fifths of this Diaspora living in China, the USA and Japan. Specifically, the Korean Diaspora in China is estimated to number more than 2.3 million followed by another 2.1 million in the United States and 900,000 in Japan. Large Korean populations can also be found in Canada, Russia and the former Soviet Union, Australia, the Philippines and in other Asian countries.
In recent years, South Korea has suffered a brain drain of highly skilled or highly educated Koreans who opt to stay abroad in the United States or elsewhere after completing higher education. Koreans, especially Korean entrepreneurs, have also been relocating to other Asian countries – most notably to China and The Philippines.
On the other hand, a December 2011 article in Inc. Magazine noted that Seoul has become the home of a growing number of Korean entrepreneurs – many of whom were either born or educated in the United States and have decided to return to South Korea to start businesses. Moreover, many Koreans who move overseas for education or work purposes feel obligated to return home for family reasons – especially if they are the only son or the eldest child.
The South Korea Recruitment Market
South Koreans are highly educated and tend to be driven to obtain higher education, especially graduate and post graduate degrees, as well as career advancement. Moreover and while heavy industry remains the backbone of the Korean economy, technology and high tech industries have also increased in importance as Korea becomes a knowledge based economy. This means that the Korean recruitment market is in need of highly skilled engineers and IT professionals.
In addition, many Korean companies are increasingly expanding overseas and becoming global enterprises. Hence, there is a strong need for Korean returnees who are both bilingual and themselves globalized to either return to Korea for jobs or to take up positions in Korean MNCs abroad.
Working in South Korea
Foreign expatriates intending to work in South Korea must obtain a work visa that will usually be valid for up to three years from a South Korean embassy or consulate outside of the country. The South Korean work visa application process will usually take one or two weeks plus any foreign expatriate living and working in South Korea must obtain a residence permit from the Immigration Office. For further information about South Korean work permits and visas, visit the Ministry of Foreign Affairs and Trade or the Korea Immigration Service.
On the tax front, foreign expatriate residents who have stayed in South Korea for longer than five years during the last ten year period are subject to taxes on their world-wide income while foreign expatriate residents who have stayed in South Korea for five years or less during the last ten year period are taxed on South Korea-source income and foreign source income only if the later is paid by a South Korean entity or transferred to South Korea. Non-residents in South Korea are subject to income taxes only on the income derived from sources within South Korea with limited deductions.
As for income tax rates in South Korea, they range from 6% to 35% with the top marginal tax rate including a residence surcharge of 38.5% on taxable income in excess of W88 million. However, foreign expatriates and employees in South Korea also have the option of applying for a flat income tax rate of 16.5% (including resident surtax) on their salary income. For further and more updated information about South Korea tax rates or South Korean taxes in general, visit taxrates.cc, KPMG’s Taxation of International Executives page for South Korea or the website of the South Korea National Tax Service.
Otherwise, it should be noted by foreign expatriates and Korean returnees alike that Korean culture and especially workplace culture tends to be on the conservative side and male dominated with an emphasis on relationships and seniority. Hence, being an entrepreneur in South Korea can be seen as being rebellious, especially since it was the Chaebol system that had made the country prosperous, as Koreans themselves tend to not be risk takers when they are living in their own country. It’s also worth mentioning that Korean companies operating elsewhere in Asia have not always earned a reputation for being overly generous when it comes to paying local employees.
On the other hand, Korean attitudes are changing and there are a growing number of job opportunities for women as well as for younger workers and recent graduates (especially for bilingual Korean returnees) either in the Korean workforce or with Korean companies abroad.