KUALA LUMPUR - South Korea will reduce the intake of low-skilled foreign workers next year by nearly 40 percent to 80,000 under its government-run hiring scheme while abolishing a separate quota for the shipbuilding sector.

The Ministry of Employment and Labour said the decision reflected easing post-pandemic demand for foreign labour and a decline in job vacancies in manufacturing and construction.

The move was approved at a meeting of the Committee for Policy on Foreign Human Resources, according to the ministry.

Under the Employment Permit System, small and midsize firms unable to recruit local workers may hire foreigners with government approval through E-9 non-professional employment visas.

The 2026 quota for E-9 visas will be set at about 62 per cent of this year’s level, marking a significant scale-back from recent years.

A Labour Ministry official said the adjustment followed improvements in labour market conditions after the Covid-19 pandemic.

“Demand for foreign workers, which temporarily surged after the pandemic, has been largely met, while vacancies in manufacturing and construction have shown a clear downward trend,” the official said.

The government had previously expanded the E-9 quota aggressively to address labour shortages across industrial sites nationwide.

Annual inflows, typically between 50,000 and 70,000 workers, jumped to 120,000 in 2023 and 165,000 in 2024 before being lowered to 130,000 this year.

Despite higher caps, actual visa issuances fell well below targets in both 2024 and 2025, with arrivals amounting to less than half of planned intakes.

By sector, 50,000 slots will be allocated to manufacturing and 10,000 to agriculture and livestock farming, with another 10,000 reserved as a flexible buffer.

The quota will function as a ceiling rather than a fixed target, allowing authorities to adjust inflows in response to labour market conditions.

A temporary quota for the shipbuilding industry, introduced in April 2023, will be scrapped at the end of this year and absorbed into the manufacturing allocation.

The Labour Ministry said shipbuilders would continue to access foreign labour through the manufacturing quota without major disruptions.

“We do not expect difficulties in labor supply,” the ministry said.

A joint task force involving multiple ministries will be formed to monitor workforce conditions at shipyards and respond swiftly if shortages arise.

The government will also explore measures to improve working conditions in shipbuilding to attract more local workers.

Separately, the additional hiring cap for manufacturing firms outside the greater Seoul area will be raised to 30 percent from 20 percent.

Manufacturers that have reshored operations to non-capital regions will be allowed to hire foreign workers regardless of company size, with the existing cap of 50 additional hires removed.

The government said it would not expand the number of foreign domestic workers but would apply the same employment-period extension rules used for E-9 workers to those already in the country.

“With foreign workers numbering around 1.1 million, we will further systematize labor supply planning so foreign workers are hired appropriately where they are needed.

“At the same time, we will pursue institutional improvements to enhance skills development and protect the rights of foreign workers,” said Kwon Chang-jun, vice minister of employment and labour.