[Editorial] Foreign caregivers

As the rising cost of caregiving takes a toll on South Korean households, the Bank of Korea proposed two different ways of hiring foreign workers amid a growing imbalance between supply and demand for caregivers for the elderly and children.

According to a report from the central bank released Tuesday, it cost about 3.7 million won ($2,770) per month last year for an individual to hire a caregiver at a long-term care hospital or other facilities for the elderly who are unwell. This amounts to over 60 percent of the median income of households of people in their 40s and 50s, and 1.7 times that of those aged 65 and older. The cost of hiring nannies was 2.64 million won, which is over half of the median income of households of people in their 30s, the report said.

The BOK attributed the rising costs to a limited supply of labor and growing demand for caregivers due to rapid aging in South Korea. By 2042, the supply of caregivers is on pace to cover only about 30 percent of the demand, according to the report.

The result would be a polarization of nursing homes, as the overall quality of service deteriorates and rising costs, with only a very few able to afford high-quality institutions, the BOK said. Abuse of elderly patients at long-term care facilities has been a serious problem for years. This could lead to more people leaving their jobs to provide care for an ailing family member, causing economic losses of up to 77 trillion won in 2042 it said.

The report cited studies that showed how Hong Kong’s employment of foreign domestic workers increased after their wages were lowered, allowing more women with young children in the city to join the workforce, and how increased private hiring of foreign caregivers in Austria eased the negative impact of parental health shocks on their adult children's participation in the labor force.

The BOK suggested two ways to hire foreign workers. One is to have individual households directly hire foreign workers through private contracts, similar to how most domestic helpers are currently hired in Korea. The Labor Standards Act and the Minimum Wage Act apply to domestic workers who have signed contracts with business owners, but those directly hired by households are exempted. Employers who are unable to or do not wish to accommodate helpers in their homes could participate in a program to provide shared housing, the BOK said.

The other method is to add caregiving services to the existing employment permit system, which allows employers who have failed to hire local workers to employ foreign workers from 16 countries, and have agencies hire the helpers, while also applying a lower minimum wage for caregiving services provided by both Korean and foreign nationals.

Under the law, the minimum wage may be determined by type of business by the minister of employment and labor upon deliberation of the Minimum Wage Commission.

If the EPS route is chosen, foreign workers could work both in the home and at nursing facilities, but it may not be easy to build social consensus on the idea of applying different minimum wages for care work.

The city of Seoul is set to begin a pilot project to allow couples who both work, single-parent homes and families with three or more children living in the capital to hire Filipino helpers from as early as June, capped at 100 helpers citywide. The minimum wage will still apply, meaning the helpers will be paid over 2 million won for full-time work. The city government plans to provide them housing, transportation and interpretation.

As Korea’s aging population and dwindling birth rate pose serious threats to the economy, the BOK’s proposal is worth reviewing.

Sufficient efforts must be made, however, to achieve some level of social consensus and educate prospective employers of foreign domestic workers about their rights. The Federation of Korean Trade Unions has criticized the BOK's proposal as "a makeshift policy that causes unnecessary social conflict," contending the government should focus on improving the working conditions of existing workers in the caregiving service.

The unions should also bear in mind that allowing families in dire need of less costly help with caregiving or domestic work to hire foreign helpers who are willing to work in Korea could help many more workers keep their jobs.