The National Assembly Land, Infrastructure and Transport Committee passed a bill that makes an electronic payment system mandatory for private construction sites as well. Until now, this system was mainly applied to construction projects ordered by public institutions. This amendment expands that scope to private projects too. The bill also includes a provision allowing the system to be applied to projects ordered by corporations in which public institutions have invested more than 50% equity. The purpose is to avoid leaving sites on the boundary between public and private outside the system. Construction workers have been asking for this system for more than 10 years. That is because they believed that to change the repeating structure of unpaid wages and delayed payments, it must be possible to track electronically where the money actually goes. The bill now only has the plenary session approval process left.
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If it passed the National Assembly Land Committee, what does that mean will change?
The key point of this news is very simple. It means the way money moves at construction sites should not be left to paper and old practice, but tracked inside an electronic system. Until now, this was mainly used for publicly ordered projects, and now they are trying to expand it to private projects too.
The electronic payment system sounds complicated, but simply put, it is close to an online safe that manages construction costs by purpose. Labor costs worker wages, subcontract payments, material costs, and equipment costs are registered separately, and it leaves a record of who claimed how much and who actually received payment. If you understand this, you can see why labor groups say 'nonpayment is not a personal problem but a structural problem.'
Passing the Land Committee is not the final passage yet, but it is still important. Until now, it was blocked by the view that 'we know it is needed, but making it mandatory for the private sector too is a burden.' Now it can be read as a sign that National Assembly discussion has moved from the stage of agreement to the stage of making it a system.
The issue is not simply whether to use one more system. The key is whether the flow of money itself will change so wages do not leak away in the middle steps.
What is different between the old payment method and the electronic payment system?
| Comparison item | Old method | Electronic payment system |
|---|---|---|
| Movement of money | It moves down from the main contractor to subcontractors and lower-tier subcontractors, so it is easy for it to get mixed together in management | Labor costs, material costs, and equipment costs are registered separately and managed by item |
| Client confirmation | It is hard to see the actual payment status at the final stage in real time | Claim, approval, and payment records stay electronically, so they are easy to check |
| Risk of misuse in the middle | There is a lot of room to use it for operating costs or other site costs | It is designed to make it hard to take out money that is not your share |
| Possibility of direct payment | In principle, it is paid step by step, so it can easily get blocked in the middle | If the agreement or conditions are met, the client can pay subcontractors directly |
| Response to unpaid wages | Many cases are argued after a problem happens | Records are kept from the start, so prevention and proof become easier |
How did unpaid wages at construction sites become a structural problem?
To understand this system, you first need to see how the flow of money in Korea's construction industry became fixed like this.
Step 1: In the high-growth period, a subcontracting structure for fast construction took root
As large-scale land development and housing supply continued in the 1960~1980s, a system became the standard where big construction companies won contracts and actual construction was shared by specialized companies and subcontractors. The division of work itself was efficient, but responsibility and costs also started to move downward.
Step 2: As daily work and indirect employment increased, wage responsibility became unclear
Since the late 1990s, the trend of site-based daily workers and indirect employment became stronger in the construction industry. It became complicated who the direct employer was and who had to pay how much and when, so responsibility for wage payment became hard to see clearly.
Step 3: Unpaid wages started to be seen not as personal misconduct but as a structural problem
Since the mid-2000s, criticism grew that this was not just 'a problem of a few bad business owners,' but a repeated structure where construction payments were delayed and reduced as they passed through many stages. This is the background for labor groups and local councils asking for alternatives like direct payment and ordinances to prevent unpaid wages.
Step 4: Direct payment and electronic payment were introduced first in the public sector
Around 2020, the government improved the system toward making the direct wage payment system mandatory in public construction projects. In other words, policy moved toward preventing problems by changing the payment structure rather than punishing them afterward.
Step 5: But the private sector still remains a big blind spot
The problem was that the great majority of construction projects were private. Safeguards were created at public sites, but old methods continued at private sites, so labor groups saw it as 'half protection.'
Why is the share of construction in total unpaid wages mentioned again and again?
This is the share of the construction industry in total unpaid wages at the end of 2024. In absolute amount, it was about 478.0 hundred million KRW, and the total unpaid wage amount was 2 trillion 448 hundred million KRW.
Why is the line between public and private so complicated in Korea?
| Ordering body | Legal form | Why a separate rule is needed |
|---|---|---|
| State and local governments | Typical public client | Public regulations apply relatively directly |
| Government-invested and government-funded corporations | They have a public role but have separate corporate status | Because they are different from the main public institution itself, the target of application often has to be written in each law separately |
| Re-invested corporations with 50% or more | Subsidiaries and related companies in which public institutions hold large shares | Their real public nature is strong, but not all regulations apply automatically |
| Pure private client | Mainly based on private contract relationships | In the past, mandatory application was delayed because of the logic of regulatory burden |
People have said it was needed for a long time, so why was expansion to the private sector delayed for more than 10 years?
This point is important. It was not because there was little need, but because interests had been clashing for a long time over how far to expand the scope of application.
2017: A solution came out, but it started with the public sector
The government had already presented a direction around 2017 to strengthen electronic payment and direct payment in public construction work. But it thought there would be strong opposition if it applied it right away to all private projects from the beginning, so it chose a public-centered step-by-step approach.
2017~2023: Operating in public, gap in private
At public sites, systems like the subcontract protection system started to take root, but the private sector was not a mandatory target. So the gap remained between sites with wage arrears prevention devices and sites without them.
2024: There was much discussion in the National Assembly, but industry opposition also became more specific
Several bills to expand to the private sector were proposed, but they stayed pending for a long time. According to reports at the time, in 2024 the National Assembly had 7 related amendment bills proposed, and the industry gave these reasons for opposition: system fees, administrative costs, burden on small-scale clients, and concern that payment details could be misused as material for unit price pressure.
2025: The need to expand to the private sector was raised again with numbers
The proposed bills explained that the amount of unpaid wages in the construction industry takes up a large share of all wage arrears, and that protecting only the public sector does not reduce blind spots. In other words, the logic that it should go beyond the public-centered step-by-step approach and expand to the private sector started to gain strength again.
2026: Passing the Land Committee meant the discussion began to cross the real threshold into the system
This passage by the Land Committee is a symbolic moment. It means that demands repeated for more than 10 years are no longer just a campaign, but have entered the stage of being made concrete in legal wording.
If the bill passes, who will change the most?
| Group | What they gain | What they will newly have to take on |
|---|---|---|
| Construction workers | Lower risk of unpaid wages, can check payment records, secure proof to claim their rights | Just because there is a system does not mean unpaid wages become 0, so real operation monitoring is still needed |
| Subcontractors | More stability in collecting payments, less impact from delays by main contractors | More administrative work like claims, proof documents, and data entry |
| Main contractors | Fewer chain disputes over unpaid wages, better predictability in the payment structure | Some reduction in control over funds, burden of exposing detailed payment records |
| Clients | Can understand on-site money flow more accurately, stronger responsibility to prevent unpaid wages | Burden of introducing and operating the system, expanded responsibility for checking |
So how should we read this news?
If you read this news like 'the construction industry is getting one more system,' you may miss the main point. What matters more is that Korea's construction industry is trying to redesign by law the multi-step payment structure that it has treated as normal for a long time. In other words, it is moving from a way of helping after unpaid wages happen to a way that makes unpaid wages harder to happen from the start.
If you understand this much, you will not only watch whether it passes the plenary session later, but also look together at how far the target of application expands, whether small private worksites can really follow it too, and who will pay the fees and administrative burden. These issues need to be solved for the system to become not just words on paper, but real rules at worksites.
In the end, this bill also shows how labor protection laws move in Korea. First they are tested in the public sector, and when blind spots are found, they are expanded to the private sector. So this news is not simply about a bill passing, but is most accurately read as one scene in a long process of making money flow at construction sites more transparent.
Whether it passes the plenary session
Up to what size of private worksites it becomes mandatory
Who will pay the system fees and administrative costs
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