Government Catches 58 for Creating Fake Workers to Illegally Obtain State Subsidies

The government has identified a large number of employers and workers who fraudulently received wage guarantee advances by submitting false employment relationships and fake claims of unpaid wages.

The Ministry of Employment and Labor announced on June 19 that it investigated 104 workplaces that had received wage guarantee advances between November last year and May this year, and detected improper receipt or attempted receipt of wage guarantee advances totaling 423 million won at six workplaces. A total of 58 people, including employers and workers, were found to be involved.

The wage guarantee advance system allows the state to pay unpaid wages on behalf of employers to workers who are struggling to make ends meet due to wage arrears, and then collect the amount from the employer. Although this system is designed to ensure workers' livelihood stability, there have been repeated cases of employers and workers conspiring to abuse it. This investigation was part of an annual special inspection on fraudulent wage guarantee advances that has been conducted since 2022. The Ministry of Employment and Labor selected workplaces with a high risk of fraudulent claims by analyzing factors such as the frequency of wage guarantee advance applications, the amount claimed, and the status of repayments.

Among the cases discovered, it was found that representatives of main contractors and subcontractors at construction sites colluded to make it appear as if workers from subcontractors were actually employees of the main contractor, and then submitted wage arrears complaints to receive wage guarantee advances. They misappropriated a total of 122 million won in wage guarantee advances, using it either to settle unpaid subcontract fees or by reclaiming the money from the workers involved. A total of 23 people were implicated in this case.

There was also a case in the manufacturing sector where the company representative conspired with workers to report false unpaid wages. The representative, despite there being no actual wage arrears or severance pay, staged a fake business closure and encouraged workers to file complaints as if their wages and severance pay had not been paid. Through this scheme, three people illicitly received 22.8 million won, and two others attempted to fraudulently claim an additional 20.8 million won.

The Ministry of Employment and Labor plans to conduct another special investigation on fraudulent wage guarantee advances in the second half of this year. If fraudulent claims are detected, the government will respond strictly, including criminal prosecution, full recovery of the advances paid, and imposing additional penalties of up to five times the amount. In addition, for wage arrears cases involving more than 10 people where wage guarantee advance applications are anticipated, the ministry will require employers to submit a list of assets, and will intensify efforts to recover repayments from businesses with assets or those still in operation but delinquent on repayments. For employers who have not made repayments for over a year and whose unpaid amount exceeds 20 million won, credit sanctions will also be pursued.

Furthermore, in accordance with the revised Wage Claim Guarantee Act, which took effect on May 12, the government will introduce the national tax delinquency procedure into the repayment collection process and impose joint liability on direct and higher-level contractors responsible for wage arrears, thereby strengthening employer accountability.

Kim Younghoon, Minister of Employment and Labor, stated, "The wage guarantee advance system is designed to protect workers suffering from wage arrears," adding, "We will respond strictly to criminal acts that abuse the system, strengthen recovery of fraudulently claimed amounts and repayments, and work to enhance the soundness and sustainability of the system."

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