Kwon Chang-jun, vice minister of Employment and Labor, demonstrates an electronic card system for construction workers — introduced to prevent wage theft in the construction sector — during a visit to a Korea Land and Housing Corporation public housing construction site in Sejong on July 19. [Yonhap]
Kwon Chang-jun, vice minister of Employment and Labor, demonstrates an electronic card system for construction workers — introduced to prevent wage theft in the construction sector — during a visit to a Korea Land and Housing Corporation public housing construction site in Sejong on July 19. [Yonhap]

Unpaid wages in the first half of this year exceeded 920 billion won ($648 million), with more than 70 percent of the total stemming from workplaces with fewer than 30 employees, data showed.

The share attributable to workplaces with 5 to 29 employees had been declining for years but rebounded above 40 percent in the first half of this year. The trend points to an increasingly concentrated pattern of wage theft at small and micro-sized businesses, even as the share at larger firms has fallen sharply.

According to data submitted to People Power Party lawmaker Kim So-hee of the National Assembly's Climate, Energy, Environment and Labor Committee by the Ministry of Employment and Labor, total unpaid wages in the first half of this year came to 924.78 billion won.

Annual wage arrears rose from 1.31 trillion won in 2022 to 1.73 trillion won in 2023 and 1.94 trillion won in 2024, before crossing the 2 trillion won mark for the first time last year. The pace of increase has eased on a first-half basis this year.

By workplace size, firms with 5 to 29 employees recorded the highest arrears at 372.51 billion won, accounting for 40.3 percent of the total. Workplaces with fewer than five employees followed at 313.24 billion won, or 33.9 percent. Combined, the two categories totaled 685.75 billion won — 74.2 percent of all unpaid wages, meaning roughly three in every four won in wage arrears originated at workplaces with fewer than 30 employees.

Workplaces with 30 to 99 employees recorded 147.51 billion won in arrears, or 16.0 percent of the total, while those with 100 to 299 employees accounted for 73.45 billion won, or 7.9 percent. Firms with 300 or more employees accounted for just 17.57 billion won, or 1.9 percent, and arrears at workplaces of unconfirmed size totaled 493 million won, or 0.1 percent.

The share of wage theft at workplaces with 5 to 29 employees has reversed course and is rising again. After declining from 40.5 percent in 2022 to 40.0 percent in 2023, 39.9 percent in 2024 and 38.3 percent last year, the figure climbed back to 40.3 percent in the first half of this year.

A similar pattern emerged at workplaces with fewer than five employees. Their share fell from 34.0 percent in 2022 to 34.8 percent in 2023, then to 33.6 percent in 2024 and 30.0 percent last year, before rising again to 33.9 percent in the first half of this year.

By contrast, the share at larger firms declined. Workplaces with 300 or more employees saw their share drop sharply from 5.6 percent last year to 1.9 percent in the first half of this year. The shares for the 30–99 and 100–299 employee categories also fell by 1.4 percentage points and 0.8 percentage points, respectively, compared with last year.

By industry, manufacturing recorded the highest arrears at 286.42 billion won, followed by construction at 169.16 billion won. Retail, food and accommodation came in at 142.45 billion won; finance, insurance, real estate and business services at 107.9 billion won; other industries at 107.57 billion won; and transportation, warehousing and communications at 94.81 billion won.

The number of workers affected by wage theft in the first half of this year stood at 109,830. Annual figures had risen from 233,458 in 2022 to 270,074 in 2023 and 275,947 in 2024, before falling to 256,481 last year.

Among affected workers in the first half of this year, construction accounted for the most at 27,577, followed by retail, food and accommodation at 23,312 and manufacturing at 22,894. By workplace size, firms with fewer than five employees accounted for 51,784 affected workers and those with 5 to 29 employees for 38,290, together making up the vast majority. Workplaces with 300 or more employees had 3,673 affected workers.

The government plans to tighten oversight of wage theft, with a focus on small businesses. In a presidential briefing Tuesday, the Ministry of Employment and Labor said it would gradually extend the wage-segregated payment system — currently applied to public construction projects — to private construction and shipbuilding starting in January, to prevent wage arrears from arising through subcontracting chains.

Sanctions against repeat offenders will also be strengthened. The ministry plans to raise the maximum prison term for wage theft from the current three years to five years, and to pursue legislation that would calibrate punishment based on the scale of arrears and the number of workers affected.


fact0514@heraldcorp.com