With annual unpaid wages setting records for three consecutive years, calls are growing for a thicker social safety net covering vulnerable workers, both Korean and foreign. Migrant workers are covered by preventive protections that account for their residency status and employment conditions, but critics say those measures need to work better in practice. Korean workers, by contrast, must pursue individual redress only after the damage has already occurred — and even that path is difficult. Some argue that the blind spots in the safety net, exposed as the country reviews its broader social insurance system, deserve equal attention.
Unpaid Wages Reached 2.07 Trillion Won Last Year, a Record
According to the Ministry of Employment and Labor on the 7th, unpaid wages in South Korea totaled 2.0679 trillion won last year, the highest on record. That was up 1.1% from 2.0448 trillion won a year earlier. Unpaid wages hit a then-record 1.7845 trillion won in 2023 before crossing the 2 trillion won mark in 2024. A total of 262,304 workers were affected last year.
Wage Guarantee Insurance Exists, but Its Effect Is Questioned
Korean and foreign workers follow different paths to redress when wages go unpaid. Foreign workers can file a claim under wage guarantee insurance, which covers up to 4 million won. Employers hiring foreign workers under the Employment Permit System (E-9 and H-2 visas) must take out the insurance as a hedge against failing to pay wages. The separate safeguard exists because foreign workers who leave the country with wages outstanding have little practical chance of recovering them.
Yet people on the ground say the system often fails to function as intended. "Even though employers are required to buy the insurance, some simply do not," one official said. "And even when they have coverage, payment to the worker can be suspended if the policyholder raises an objection." The official added that the 4 million won ceiling is "far too low."
Government Substitute Payments Take a Long Time
Korean workers who go unpaid must start the process after the fact. They file a complaint with a labor office and have the nonpayment officially confirmed. If the employer is unable to pay, workers may qualify for the government's substitute payment program under certain conditions. But it takes considerable time before the money actually arrives. For those at small businesses or on short-term and daily contracts in particular, even one month of missed wages can immediately threaten their livelihood.
Unclaimed Departure Insurance Topped 30 Billion Won Last Year
A similar gap appears with severance pay. Employers hiring foreign workers who entered under the Employment Permit System must take out departure guarantee insurance, designed to prevent workers from leaving the country without their severance pay. Even with the program in place, a significant number of workers never collect. Data submitted by the Ministry of Employment and Labor to Rep. Park Hae-chul of the Democratic Party of Korea, a member of the National Assembly's Climate, Energy, Environment and Labor Committee, showed that dormant insurance benefits left unclaimed by foreign workers exceeded 32.3 billion won last year, the highest on record.
Living Hand to Mouth Makes the Programs Hard to Use
Korean workers can file a complaint with a labor office or apply for substitute payments. But confirming that wages or severance went unpaid and assembling the necessary documents is no easy task, critics say. When employers deny the nonpayment, shut down or disappear, recovering the money can take a long time. For low-income workers at small businesses or on short-term and daily contracts, that burden is heavy.
Strengthen the Safety Net Regardless of Nationality
Experts stress the need to examine the blind spots in the safety net. "If foreign workers need preventive protections because of insecure residency and poor access to information, one can ask whether vulnerable Korean workers need similar safeguards as well," one official said. "The safety net should be redesigned around actual risk and vulnerability, not around whether someone is a Korean national or a foreigner."
