'Boss is Bad' Government Advances 2.5 Trillion Won in Unpaid Wages... Recovery Rate 23.1%

Assemblyman Yoon Jun-byeong "Need to Prepare Measures to Strengthen Subrogation Rights"

[Sejong=Asia Economy Reporter Moon Chaeseok] It has been revealed that the amount of advance payments made by the government to workers on behalf of employers for wages and retirement benefits has approached 2.5 trillion won since 2016, while the recovery rate is only about one-fifth. There are calls to strengthen the right of recourse against employers who delay wage payments to improve the recovery rate.

Status of wage arrears and other payments by year from 2016 to June 2021. (Data provided by the office of Assemblyman Yoon Jun-byeong)

According to data received on the 27th from the Ministry of Employment and Labor by Rep. Yoon Junbyung of the Environment and Labor Committee of the National Assembly from the Democratic Party of Korea, the advance payments made by the government on behalf of employers for wage arrears and other issues from 2016 to the end of June this year amounted to 2.4212 trillion won. By year, it was 368.7 billion won in 2016, 372.4 billion won in 2017, 374 billion won in 2018, and 579.7 billion won last year, showing an increasing trend every year. In the first half of this year, it recorded 266.6 billion won.

The total number of workers who received wage arrears paid by the government on behalf of employers was 542,682. By year, it was 95,982 in 2016, 92,700 in 2017, 92,376 in 2018, 100,085 in 2019, 110,177 last year, and 51,362 by the end of June this year.

By type, the Small Amount Wage Claim Payment System accounted for the largest amount at 1.4368 trillion won (390,878 people), followed by the General Wage Claim Payment System at 984.5 billion won (151,804 people). The Small Amount Wage Claim Payment System is a rule that provides wage arrears when there is a court ruling requiring the employer to pay wages to workers. The General Wage Claim Payment System deals with wage arrears paid when the employer is declared bankrupt, a rehabilitation procedure is initiated, or insolvency is recognized.

Status of wage arrears and other payment arrears by year and workplace size from 2016 to June 2021. (Data provided by Assemblyman Yoon Joon-byung's office)

By workplace size, the '10 to 49 employees' category accounted for the largest amount at 910.6 billion won (182,851 people). This was followed by '4 or fewer employees' with 610.7 billion won (172,499 people), and '5 to 9 employees' with 404.6 billion won (94,558 people). The advance payments made to workplaces with fewer than 50 employees totaled 1.9259 trillion won, accounting for 79.5% of the total.

The problem is that the amount unrecovered has been increasing year by year. Since 2016, the amount recovered from advance payments is 559.8 billion won, which is only 23.1% of the total. The recovery rate has been declining: 35.1% in 2016, 30.9% in 2017, 32.8% in 2018, 28.6% in 2019, 9.9% last year, and 2.1% in the first half of this year. Since last year, it has sharply dropped to single digits.

Looking at the recovery status by workplace size, the recovery rate at workplaces with '500 or more employees' was the lowest at 17.9%. Only 8.3 billion won was recovered out of 46.55 billion won in total. This was followed by '5 to 9 employees' at 19.5% (79 billion won recovered out of 404.6 billion won), and '50 to 99 employees' at 20.1% (51.8 billion won recovered out of 257 billion won).

Rep. Yoon said, "Measures should be prepared to strengthen sanctions against employers who do not properly pay wages to workers, improve the recovery rate of advance payments, and strengthen the right of recourse against employers who delay wage payments." He emphasized, "The government must ensure thorough operation of the system so that the advance payment system, which is supported by taxpayers' money, does not become a system for habitual and intentional wage-delinquent employers."

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