This post takes a closer look at the recent state of migration, building upon the global migration trends between 1990 and 2020 presented in one of our previous posts. At SentBe, we strategically monitor migration patterns as they are the root factor driving the need for peer-to-peer cross-border money transfers, specifically migrant remittances. The evolving global migration landscape represents significant market opportunities for SentBe.
In this context, critical insights highlighted in the World Development Report 2023: Migrants, Refugees and Societies by The World Bank and the International Migration Outlook 2023 by the OECD offer valuable perspectives on migrant customers and the remittance market. This post will explore the key takeaways from these two flagship publications, providing a comprehensive overview of current migration trends and their implications for the remittance industry.
According to the World Bank, migrants are defined as individuals who live outside their country of nationality. Migration is often subject to complex regulations from destination countries due to its far-reaching impact on labor markets, productivity, cross-border funds flows, social inclusion, and geopolitical affairs.
The World Development Report 2023 introduces a valuable framework for understanding migration, known as the Match and Motive Matrix (Figure 1). This matrix classifies migration into four categories based on two lenses—labor economics and international law:
Source: World Bank (2023)
Economic migrants with a strong match: These individuals move for better opportunities and align well with the destination country's labor market needs. This benefits all parties involved.
Refugees with a strong match: Although displaced by fear, these refugees possess skills that align with the destination country's needs.
Refugees with a weak match: Many refugees may not match well with the destination country’s labor market but must be accommodated under international law.
Distressed migrants: These individuals neither qualify as refugees nor match well with the destination country’s needs. They often face significant challenges and require specific support.
Understanding these categories can help tailor remittance services to meet the diverse needs of different migrant groups, and support policymakers in making decisions that balance economic benefits with humanitarian obligations.
Amid Korea's unprecedented population decline, the migration trends here represent a notable shift towards a "strong match and opportunity" model. The country’s fertility rate has fallen to the lowest level in the world (Figure 2), leading to a projected increase in the old-age dependency ratio. This demographic change puts immense pressure on the labor market (Figure 3).
Figure 2. Fertility Rates of OECD Member and Major Partner Countries (2021)
Source: OECD (2023)
Figure 3. Population Pyramid of Korea (2000, 2023, and 2050*)
Source: World Bank (2023)
*Data for 2050 is projected.
To address the potential labor shortages, the Korean government has actively promoted foreign employment, exemplified by the introduction of the Employment Permit System (EPS) in 2004. This temporary labor migration program targets low-skilled workers from 17 countries* with which Korea has signed Memorandums of Understanding (MOUs). Under the EPS, the E-9 visa type is issued to foreign workers, primarily for jobs in sectors with labor shortages in small and medium-sized enterprises (SMEs).
*The countries currently involved in South Korea's Employment Permit System (EPS) are: Bangladesh, Cambodia, China, Indonesia, Kyrgyzstan, Laos, Mongolia, Myanmar, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, Timor-Leste, Uzbekistan, Vietnam, and Tajikistan.
The EPS is designed to ensure equal treatment for migrant and domestic workers while protecting domestic employment. The Foreign Workforce Policy Committee (FWPC), an interministerial working group, sets annual quotas for low-skilled foreign workers, determining the total number of workers, sectors of employment, and countries of origin based on domestic labor market conditions.
The introduction of the EPS has led to a significant shift in Korea’s migration trends. Over the past decade, the quota for immigrant employment has more than doubled, primarily driven by the demand for low-skilled labor. Between 2023 and 2024, the annual quota increased by 65%.
Figure 4. Trend of Korean Government’s EPS Annual Quota
Source: Ministry of Justice (2023), Ministry of Employment and Labor (2024) of Republic of Korea
*The 2024 quota was publicly announced as a total in Q4 of 2023, with detailed figures to be released in Q4 of 2024.
Despite Korea's long-standing homogeneity, with approximately only 5% of the population being non-ethnic Korean*, the country has become a significant player in global migration. Korea ranks 39th among the top 40 global migration destinations (Figure 5). However, it holds 24th place among the top 25 remittance-sending countries, with $6.1 billion sent abroad in 2021 (Figure 6). This indicates that migrants in Korea send a significantly higher amount in remittances compared to migrants in other countries.
*Shin, Gi-Wook. 2021. "Racism in South Korea." Stanford Freeman Spogli Institute for International Studies, March 25. https://fsi.stanford.edu/news/gi-wook-shin-racism-south-korea.
Figure 5. Migrants in Global Top 40 Destination Countries (2021)
Source: KNOMAD/World Bank (2023)
Figure 6. Global Top 25 Remittance Sending Countries (2021)
Source: KNOMAD/World Bank (2023)
These dynamics—population trends, migrant inflows, and remittances—illustrate a rapidly evolving migration landscape in Korea, one that will continue to influence both the domestic economy and the global remittance market.
The trends highlighted in the World Development Report 2023 and the OECD’s International Migration Outlook 2023 offer invaluable insights for the remittance industry, particularly in the context of Korea. Understanding migration patterns and how they align with labor needs is crucial for companies like SentBe, which are at the forefront of cross-border money transfers. As migration continues to shape economies and labor markets worldwide, remittance services must adapt to meet the diverse and evolving needs of migrant workers, ensuring they have the tools to manage their financial resources effectively.
Given Korea’s increasing reliance on foreign labor, particularly low-skilled workers through programs like the Employment Permit System (EPS), remittance providers must also anticipate the complexities of managing money flows in and out of the country. With a growing migrant workforce, there is a need for tailored financial products that support these workers not just in sending money back home, but also in managing their financial well-being while in Korea. This includes offering accessible savings and investment options, as well as protection against economic vulnerabilities such as currency fluctuations and financial crises in home countries.
Furthermore, the fact that migrants in Korea are more likely to send higher remittances compared to other countries highlights the potential for further innovation within the remittance market. This could involve providing personalized services, addressing issues of financial literacy, and leveraging technology to make cross-border transfers faster, cheaper, and more secure. As global migration patterns continue to evolve, the remittance industry must remain agile, continuously adjusting its offerings to the unique challenges and opportunities that arise from these shifts.
As the dynamics of migration and remittance flows continue to evolve, several related topics could be explored further to expand on these trends and provide deeper insights into the broader implications for the industry and society. In particular, migrants are often considered one of the most vulnerable groups in finance. In this regard, The Role of Financial Consumer Protection, Education, and Inclusion for Migrants can be explored in future posts, offering valuable perspectives on how the industry can better serve these populations, safeguard their financial interests, and help them navigate the complexities of managing cross-border money transfers.
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