South Korea has recorded its highest ever wage arrears. (Image courtesy of Yonhap)
SEOUL, Jan. 26 (Korea Bizwire) — South Korea has recorded its highest ever wage arrears, surpassing 1.7 trillion won last year, marking a significant increase from the previous year.
According to a statement from the Ministry of Employment and Labor, the total amount of unpaid wages in the past year amounted to 1.78 trillion won. This figure represents a sharp 32.5% increase from the 1.35 trillion won reported in the previous year and exceeds the previous record of 1.72 trillion won set in 2019.
After reaching a peak in 2019, wage arrears had been on a declining trend during the COVID-19 period, dropping to 1.58 trillion won in 2020 and further to 1.35 trillion won in 2021.
The resurgence in unpaid wages last year is attributed to the normalization of economic activities post-COVID-19, coupled with an increase in defaults in the construction industry.
Factors such as the slump in the real estate market and the rise in raw material prices, leading to increased construction costs, have significantly impacted this sector. The construction industry alone saw its unpaid wages soar by 49.2% from 292.5 billion won in 2022 to 436.3 billion won last year.
Concerns are also growing over wage defaults among subcontracted workers at construction sites managed by Taeyoung Construction, which recently entered a workout program for financial restructuring.
The Ministry of Employment and Labor has initiated comprehensive inspections since December 15, targeting all 105 construction sites managed by Taeyoung Construction nationwide and 500 private construction sites, to prevent and resolve wage arrears.
The government, in response to the increasing issue of habitual defaults, has been working on strengthening economic sanctions against business owners who repeatedly fail to pay wages. It is also currently pushing for amendments to the Labor Standards Act.
In a statement released today, the Federation of Korean Trade Unions criticized the government’s approach, saying, “The government’s ‘rule of law in labor relations’ is powerless in the face of workers’ wages.” They urged the government to present practical solutions and legal and institutional improvements to address the wage arrears issue.
M. H. Lee (mhlee@koreabizwire.com)
