Officials' negligence mass-produces minimum wage violations

By Choi Sung-jin

More than 700 business owners have been caught violating the minimum wage law this year but only 1.7 percent were fined or suffered other penalties, a lawmaker said Tuesday.

While the number of violators ferreted out by government inspectors has decreased, workers’ reports of employers failing to pay the legal minimum wage have increased every year, said Rep. Hwang Hee of the opposition Minjoo Party of Korea, based on data from the Ministry of Employment and Labor.

“All this shows that the government’s loose supervision and soft punishments have weakened enforcement of the minimum wage law,” Rep. Hwang said.

According to the ministry’s data, 757 businesses have violated the Minimum Wage Act’s Article 6 by paying wages below the legal minimum, or Article 11 by failing to remind workers of the minimum wage through posting and notifying it. The minimum wage for this year is 6,030 won ($5.40) an hour and that for next year has been set at 6,470 won, up 7.3 percent.

The number of Article 6 violators in the first seven months of this year totaled 552 and that of Article 11 205. The former are subject to jail terms up to three years or maximum fines of 20 million won while the latter is slapped with less than 1 million won in fines.

However, only 13 violators, or 1.7 percent of the total, have been punished by facing judicial action (10 cases) or fines (three). The ministry’s slapping of wrists is not necessarily peculiar to this year. Last year, it punished 22 violators, 1.5 percent of the total 1,502 offenders. Likewise, the annual punishment rate has not exceeded 2 percent over the past decade or so.

The low prosecution rate is due to labor supervisors’ time-honored practice of ordering “corrective actions” -- belated payment of the wages shortfall. Business owners have only to implement these corrective actions to get away with their violations.

This is a far cry from what happens in advanced countries. A court in Australia, for example, recently slapped a penalty of $A408,000 (360 million won) on a convenience store owner who failed to pay minimum wages to 12 employees, including foreign students, five times higher than the amount he bilked.

In introducing a minimum wage, the German government stipulated a maximum fine of 500,000 euros (about 600 million won) for violators. The British government makes public violators’ names in press releases and deprives them of the right to hire workers for 15 years.

“Who will abide by the law when violators suffer little disadvantages if only they pay wage shortfalls later?” Rep. Hwang said. “The government should toughen its punishment by introducing aggravated punishment for businesses that violate the law twice or more.”

It is small surprise then that about 2.8 million workers, 14.6 percent of the total workforce, did not receive minimum wages this year, as the Bank of Korea pointed out in a recent report. The number is expected to grow to 3.13 million, or 16.3 percent of workers, next year.

The number of workers failing to get the minimum wage has risen since the Park Geun-hye administration took office -- from 2.12 million (11.9 percent) in 2013 to 2.43 million (13.2 percent) in 2014, 2.5 million (13.3 percent) in 2015, an estimated 2.8 million (14.6 percent) in 2016 and 3.13 million (16.3 percent) in 2017.

This is in stark contrast to the fall under the previous administration -- from 2.06 million workers (12.4 percent) in 2010 to 1.86 million (10.7 percent) in 2012.

In short, regulating authorities have all but given up their jobs, Rep. Hwang said. The ministry data shows that between 2013 and 2016 the number of visits by labor supervisors to check the implementation of the minimum wage law has not exceeded 20,000 a year. In contrast, the number did not fail to surpass 20,000 between 2007 and 2012.

The number of violators ferreted out has also declined sharply, from a peak of 55.4 percent of the detection ratio in 2011 to 9.3 percent in 2014, 7.2 percent in 2015 and 8.2 percent in the first seven months of this year.

On the other hand, workers’ reports of violations have steeply increased every year, from 261,591 in 2007 to 329,261 in 2013, 331,370 in 2014 and 341,704 last year.

The number of labor inspectors has risen a little, from 1,043 in 2012 to 1,185 this year, indicating workers have had to take their rights amid the government’s dereliction of duty.

The central bank, which largely maintains a neutral stance on social issues, says the government’s light punishments are behind the rampant violations, calling for the strengthening of supervision to increase the law-abiding ratio.

“Minimum wages are literally the minimal conditions for workers to maintain their subsistence,” Rep. Hwang said. “The government must try to protect the lives of the underprivileged people by meting out exemplary punishment to violators.”