Last Year's Wage Arrears Reach Record High of 1.7 Trillion Won... Expected to Soar Even Higher This Year

Record Highs for 2 Consecutive Years... Manufacturing and Construction Lead
Possibility of Increased Wage Arrears Cases Due to COVID-19 Impact
Ministry of Employment and Labor: "Wage Arrears Reports Surge After May-June This Year"

Wage Arrears (Photo by Getty Images)

[Asia Economy Reporter Kim Bo-kyung] 1.7217 trillion KRW. This was the amount of unpaid wages last year. It is the highest ever recorded since statistics began. This year, concerns are rising that the amount of unpaid wages will surpass last year's figure due to the worsening business conditions caused by the COVID-19 pandemic. The Ministry of Employment and Labor expects a surge in unpaid wage cases after May to June.

According to the Ministry of Employment and Labor on the 19th, the amount of unpaid wages last year reached a record high of 1.7217 trillion KRW. This marks the second consecutive year of record-breaking figures, following 1.6472 trillion KRW in 2018. By industry, manufacturing accounted for 579.4 billion KRW, construction 316.8 billion KRW, and wholesale, retail, food, and accommodation 248.4 billion KRW. By business size, unpaid wages were 545.6 billion KRW for workplaces with fewer than 5 employees, 712.6 billion KRW for 5-29 employees, 284.3 billion KRW for 30-99 employees, 101.0 billion KRW for 100-299 employees, and 75.9 billion KRW for 300 or more employees. The number of workers affected by unpaid wages reached 345,000.

Concerns over unpaid wages due to the impact of COVID-19 are growing this year. In many industrial sites, companies facing financial difficulties due to COVID-19 are increasingly unable to pay their employees on time. Park (59), who works as a shuttle bus driver at a university in Seoul, said, "The transportation company keeps postponing the payment, saying they will pay at the end of February or the end of March," adding, "The start of the semester was delayed, and I ended up being 'forced to take leave'." Unable to endure the situation, he visited the Seoul Employment Welfare Plus Center the day before with five colleagues who also had not received their wages to report the unpaid wages. Park expressed concern, saying, "Since the COVID-19 outbreak, the anxiety about not receiving wages has increased."

The Ministry of Employment and Labor forecasts that reports of unpaid wages due to the impact of COVID-19 may surge after May to June. Unpaid wages typically occur several months after the economic downturn begins. A representative from the Labor Improvement Guidance Division of the Seoul Regional Employment and Labor Office said, "Most workers with delayed wages believe the employer's request to 'wait a little longer' and only report unpaid wages as a last resort." He added, "During the 2008 financial crisis, the increase in unpaid wage reports appeared 3 to 6 months after the economic downturn," and predicted, "Due to the COVID-19 situation, unpaid wage cases may surge after May to June." It is expected that most unpaid wage cases will occur in small and medium-sized enterprises with fewer than 30 employees that lack sufficient financial resources.

Meanwhile, the amount of wage claims paid by the state on behalf of employers last year increased by about 86 billion KRW from the previous year to 459.9 billion KRW, also a record high. The fund for these payments comes from the Wage Claim Guarantee Fund, which is included in the industrial accident insurance premiums paid monthly by employers. This means that diligent employers bear the burden of unpaid wages arising from financially struggling companies.

This content was produced with the assistance of AI translation services.