A construction site in South Korea. [Newsis]
A construction site in South Korea. [Newsis]

The government plans to build a next-generation electronic payment system to prevent unpaid wages and construction fees in the construction industry. The initiative aims to make the flow of funds transparent — from project owners down to contractors, subcontractors and workers — and will require all construction sites, both public and private, to use the electronic payment system.

The plan was discussed Wednesday at an emergency economic headquarters meeting jointly held with a ministerial meeting on economic and industrial competitiveness, chaired by the Ministry of Economy and Finance. The core of the proposal is to upgrade the electronic payment system currently in use in the public sector and launch a pilot program in January 2028.

The push for a next-generation system comes as wage arrears in the construction industry have shown no sign of abating. According to the Ministry of Land, Infrastructure and Transport, unpaid wages in the sector totaled 426.4 billion won ($288 million) in 2023, 465.7 billion won in 2024 and 402.8 billion won in 2025 — exceeding 400 billion won for three consecutive years. Unpaid wage damages in just the four months through April of this year already reached 117.6 billion won.

"Construction projects are vulnerable to payment arrears because the multi-tiered subcontracting structure makes it difficult to track the flow of funds," a Ministry of Land, Infrastructure and Transport official said. "This easily leads to a chain of damages affecting subcontractors and workers."

In response, the government decided to develop a function allowing project owners to make direct payments for construction fees and wages. The new fund-flow system draws on operating cases such as "Chebulle Zero," an anti-arrears system run by Korea National Railway, and is designed to prevent payment failures caused by account seizures affecting contractors and subcontractors.

The anti-arrears system is specifically designed to protect construction workers and equipment operators — groups relatively vulnerable to delayed payments — by separating the shares owed to contractors, subcontractors and workers from the invoicing stage onward.

The system will also incorporate security features capable of safely handling large-scale financial transactions in preparation for emergencies such as fires and other disasters.

Operational oversight will shift from the Public Procurement Service to the Ministry of Land, Infrastructure and Transport, with the aim of creating synergies with existing data registered with the Construction Industry Information Institute. To that end, the government will form a joint task force led by the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport and the Public Procurement Service to drive development of the next-generation anti-arrears system.

In addition, the government plans to use the Public Procurement Service's ongoing information strategy planning process to determine the development approach and budget, with the goal of deploying the system as early as possible.


hss@heraldcorp.com