Suspected fraudulent employment subsidy payments went unchecked; fines miscalculated; attendance records mismanaged

The Ministry of Employment and Labor [Photo by Kim Yong-hun]
The Ministry of Employment and Labor [Photo by Kim Yong-hun]

Regional offices of South Korea's Ministry of Employment and Labor left worker complaints unresolved for more than 586 days and failed to properly verify eligibility for employment subsidies, according to internal audits. The audits also uncovered problems in workplace inspections, fine calculations and staff attendance management.

The findings come from a "2025–2026 internal audit report on affiliated agencies" obtained by Park Hae-cheol, a lawmaker of the Democratic Party of Korea on the National Assembly's Climate, Energy, Environment and Labor Committee, from the ministry Friday. The report confirmed cases of mismanaged subsidy payments, delayed handling of worker complaints and improper leave practices at regional employment labor offices and branch offices.

Processing of worker complaints — matters directly tied to workers' livelihoods — was delayed for extended periods.

Auditors found cases in which no action was taken on complaints for anywhere from several dozen days to more than 586 days. In some instances, applications for "de facto insolvency recognition" — a determination that links workers to back-wage relief payments — sat unprocessed for hundreds of days.

Problems also emerged in the handling of permits and approvals. Auditors confirmed cases in which officials granted retroactive approval for applications that were not eligible for backdating.

In the disbursement of employment incentive grants, officials failed to adequately verify whether applicants met eligibility requirements. Auditors flagged suspected cases in which employers falsely reported fixed-term workers as full-time employees, or concealed the rehiring of workers within six months of their departure, in order to receive subsidies.

Lapses in verifying payment eligibility were found at the Jinju, Busan North and Gumi branch offices in the 2025 audit, and at the Boryeong, Seosan, Daejeon, Seoul North, Seoul South and Seoul Gwanak branch offices in the 2026 audit. The subsidies involved include the Youth Employment Jump Incentive and the Employment Promotion Incentive, both employer-side support programs.

Auditors also uncovered cases in which job seekers received job-search allowances under the National Employment Support Program and unemployment benefits without reporting — or by falsely reporting — income they had earned. The lawmaker's office said improper payments ranging from several million to tens of millions of won were confirmed.

Follow-up actions after workplace inspections were also found to be inadequate. In some cases, officials delayed issuing corrective orders citing the need for further review, or closed cases without pursuing criminal referrals after deadlines had passed, on the grounds that workers' rights had been remedied. Auditors also found cases in which fines imposed on businesses that violated the law were miscalculated — either too low or too high by tens of millions of won — due to the misapplication of assessment standards or reduction provisions.

Staff attendance management was found to have gaps as well. Some employees on flexible work schedules failed to log their hours in the system, while others who arrived late or left early had their tardiness and early departures recorded as annual leave rather than as lateness or early departure.

Auditors also found cases in which official leave was used for voluntary personal health checkups, or granted in connection with transfers that did not meet the requirements for such leave.

Park criticized the findings as reflecting systemic problems. "The 2025 and 2026 audit results are not the isolated misconduct of a few employees — they lay bare the administrative convenience-seeking, complacent work attitudes and moral hazard that have taken root across the Ministry of Employment and Labor's regional offices," he said. He urged the ministry's headquarters to "draw up a sweeping reform plan to root out the lax administration at regional offices that has been dressed up as standard practice, and prevent a recurrence."


fact0514@heraldcorp.com