"Capturing Wage Arrears More Accurately"... Unpaid Wage Statistics to Expand from 3 to 11 Indicators

Announcement of Wage Arrears Statistics Reform Plan
Monthly Statistics to Be Released on “Labor Portal” Starting with January Data

The Ministry of Employment and Labor has decided to move away from a simple focus on the total amount of unpaid wages in its statistics, instead introducing relative indicators such as the unpaid wage rate and releasing detailed monthly indicators. The aim is to provide a more precise picture of the actual situation regarding wage arrears.

On March 3, the Ministry announced a "Plan to Revise Wage Arrears Statistics," stating that, starting with the data for January this year, detailed statistics will be published every month on the "Labor Portal." The figures for the previous month are scheduled to be posted in early March.

Until now, the government has published data primarily based on three indicators: the "total amount of arrears" and the number of affected workers, drawing on reports received by local offices nationwide. However, there have been criticisms that statistics focused on total amounts have limitations in showing the seriousness or trends of wage arrears in relation to changes in the labor market size.

Accordingly, the government will expand the existing three indicators to eleven. Newly introduced representative indicators include the "unpaid wage rate" and the "arrears victim incidence rate." The unpaid wage rate is the ratio of the total amount of unpaid wages in a given month to the total wages in the labor market for that month, while the arrears victim incidence rate refers to the number of affected workers per 10,000 wage earners. These are relative indicators that allow assessment of the level of arrears in relation to the size of the labor market.

Kim Younghoon, Minister of Employment and Labor, is reporting at the Cabinet meeting held on the 3rd at the Government Complex Seoul in Jongno-gu, Seoul. Photo by Yonhap News.

Details on the outcomes of handling arrears cases (settlement through guidance or judicial process), breakdowns by type of unpaid money (wages, severance pay), as well as by industry, company size, nationality, and region, will also be made public. The amount and rate of resolution for unpaid wage cases will be disclosed as well, enabling the public to see not only the scale of new cases but also the effectiveness of remedies.

The analysis of the causes of arrears will also be further refined. Previously, causes were categorized as "temporary business deterioration," "bankruptcy/closure," or "disputes over facts." Going forward, business-related reasons will be specified as "temporary economic downturn," "non-payment for goods or services," "low-price bidding," and "no business income," among others. The government plans to link arrears data with corporate income information and conduct in-depth analysis through commissioned research, with results to be published annually.

The method for calculating statistics will also be revised. Previously, amounts from unresolved cases were sometimes counted in both the current and following years, leading to duplication. In the future, only amounts confirmed as arrears after the investigation is complete will be included in the statistics. Over the past five years, duplicated amounts have accounted for 30 billion to 100 billion won annually, or about 3 to 5 percent of the total arrears.

The term "settlement amount" will also be changed to "resolved arrears amount" to clarify that this includes not only amounts paid by employers but also government substitute payments, thus emphasizing the remedial aspect. Additionally, wage arrears identified through workplace inspections and comprehensive surveys of all workers affected by wage arrears, beyond just reported cases, will be separately tallied and disclosed semiannually.

Minister of Employment and Labor Kim Young-hoon stated, "We will analyze the causes of wage arrears in detail to deliver precise policies where they are needed. We will take a proactive approach to uncover hidden arrears through comprehensive surveys and push for institutional improvements, such as the segmented wage payment system and raising statutory penalties for employers responsible for arrears, to make every effort to eradicate wage arrears."

This content was produced with the assistance of AI translation services.