Even if Construction Companies Participating in Public Projects Have Accounts Seized, Workers' Wages Are Guaranteed

[Asia Economy Reporter Moon Jiwon] Starting next year, the system will be improved so that workers' wages can be properly paid even if a construction company participating in public construction projects goes bankrupt and its accounts are seized.

The Ministry of Land, Infrastructure and Transport announced on the 15th through a meeting of the Job Committee that it has prepared improvement measures for the wage direct payment system reflecting this content.

Earlier, to prevent frequent wage and payment delays at public construction sites, the government mandated the 'Public Client Wage Direct Payment System' in June last year.

Wage arrears at construction sites are known to be a chronic problem. The amount of arrears has been increasing: 248.8 billion KRW in 2015, 236.6 billion KRW in 2016, 231.1 billion KRW in 2017, 292.6 billion KRW in 2018, and 316.8 billion KRW last year.

Looking at the government's improvement plan for the wage direct payment system, even if a construction company goes bankrupt and its bank accounts are seized, workers' wages will be protected from seizure.

According to the current Construction Industry Promotion Act, labor costs are excluded from seizure, but many cases occurred where construction companies managed labor costs together with other items in one account, resulting in joint seizure.

Accordingly, the government plans to separate labor cost accounts in the Public Procurement Service's electronic payment system for public construction projects, called 'Hadogup Jikimi,' and apply this to all public construction projects starting next year.

From January next year, clients will also be able to directly pay for materials and equipment costs. Until now, there were shortcomings in tracking some payment flows such as advance payments, but from July, monitoring functions will be enhanced so that clients can check the entire flow of advance and prepayments in real time.

The Ministry of SMEs and Startups' electronic payment system, the 'Win-Win Payment System,' will also be improved. This system allows clients to directly pay material and equipment workers through a win-win payment escrow account. Until now, advance payments were kept in the subcontractor's account, making monitoring and misuse prevention difficult, but this will be improved by processing through the escrow account.

The Ministry of Land, Infrastructure and Transport plans to reflect the efforts and achievements of public ordering institutions to eradicate wage arrears in public institution management evaluations and public institution win-win growth evaluations.

Regular wage arrears inspections will be conducted by ministries centered on the Job Committee, and autonomous wage arrears eradication measures for major public institutions will be prepared through the Fair Economy Inter-Ministerial Meeting.

In particular, the Ministry of Land, Infrastructure and Transport will expand benefits to encourage the wage direct payment system to spread to private construction sites as well. If the payment system is voluntarily used in private construction projects, incentives such as reduced fees for payment guarantees on construction payments and subcontract payments will be provided.

Minister Kim Hyunmi of the Ministry of Land, Infrastructure and Transport said, "This measure is a comprehensive plan to eradicate wage arrears at construction sites led by the public by overhauling the payment system overall, establishing usage principles, and strengthening the role of public clients," adding, "We expect this to be an opportunity for the culture of safe workplaces without wage arrears to take root on site and for the competitiveness of the construction industry to improve."

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