All-Out Push to Clear Wage Arrears... Employer Loan Rates Temporarily Cut by up to 1 Percentage Point

The Korea Workers' Compensation & Welfare Service announced on the 11th that it will operate a "Concentrated Wage Arrears Settlement Period" to stabilize the livelihoods of workers with unpaid wages, including temporarily lowering interest rates on financial support and significantly shortening the payment process for substitute payment of unpaid wages.

First, the interest rate on the "Living Expense Loans for Workers with Unpaid Wages," which is provided to workers who have not received wages and other payments from their employers, will be temporarily reduced by 0.5 percentage points from an annual rate of 1.5% to 1.0% from the 2nd of this month until March 6. The loan limit is 10 million won per person, while workers in employment crisis areas and specially supported industries can borrow up to 20 million won, and workers in regions designated for preemptive response to employment crises can borrow up to 15 million won. Applications can be submitted online through the KWCW Net portal or in person by visiting the Welfare Business Department or Management Welfare Department at the nearest branch of the Korea Workers' Compensation & Welfare Service.

Support for employers who are unable to pay wages due to business deterioration and other reasons will also be strengthened. The Service will temporarily reduce the interest rate by 1.0 percentage point for employers who complete their applications for the "Employer Loans for Wage Arrears Settlement Support" by the 27th of this month. Accordingly, the interest rate for secured loans will be lowered from an annual rate of 2.2% to 1.2%, and the rate for credit and joint guarantee loans will be reduced from 3.7% to 2.7%. The loan limit is 150 million won per employer and 15 million won per worker.

Korea Workers' Compensation & Welfare Service headquarters

Employers must first obtain confirmation of the reasons for loan disbursement from the local employment and labor office, then apply for the loan with the Korea Workers' Compensation & Welfare Service. They must also complete their loan applications at IBK Industrial Bank of Korea by the 27th of this month to receive the interest rate reduction benefit.

Payments of substitute payment of unpaid wages to workers with wage arrears will also be expedited. From the 2nd of this month until March 6, the Service will shorten the processing period for simplified substitute payment of unpaid wages from the current 14 days to 7 days to help workers quickly stabilize their livelihoods. Last year, the Service paid out 684.5 billion won in substitute payment of unpaid wages, supporting 115,374 workers with wage arrears.

Park Jonggil, President of the Korea Workers' Compensation & Welfare Service, said, "Last year, the Service helped stabilize livelihoods by providing 85.9 billion won in loans to 11,853 workers with unpaid wages," adding, "By expanding the loan program for wage arrears settlement support, we will both reduce the burden on employers struggling due to the economic downturn and continue our efforts to stabilize workers' livelihoods by minimizing wage arrears."