Construction Industry Reform: Will Direct Payment System Protect Daily Wage Workers?

Critics say the Democratic Party’s Euljiro Committee proposal to institute “direct payment by project owner” under the Construction Industry Basic Act is only a partial solution that fails to reflect how construction day laborers earn and need cash on the same day.

On the 19th, the National Employment Service Association issued a statement saying it agrees with the proposal’s aims but warned that introducing an electronic payment system (such as Chebul e-Zero) could add administrative steps that delay wage disbursements by 15 to 30 days, potentially putting day laborers’ livelihoods at risk.

The association also noted that across the country, roughly 10,000 small construction employment agencies have effectively served as a private safety net by fronting same-day wages from their own capital—so-called advance payment or subrogation—but the current bill contains no protections for these small businesses.

To address that gap, the association proposed amending the Construction Industry Basic Act to guarantee firms’ rights to recover advance-paid wages and revising the Employment Security Act to formalize professional firms’ labor-management roles and the subrogation system. It also called for concrete measures to eliminate any wage-payment lag that could occur during implementation of the direct-payment model.

Under the direct-payment system, project owners pay subcontractors directly rather than routing funds through the prime contractor. Some public agencies already operate similar arrangements via the Chebul e-Zero platform.

The Democratic Party’s Euljiro Committee is pushing to codify the system into law to fundamentally prevent wage nonpayment on construction sites. It has filed amendments to three laws—the Construction Industry Basic Act, the Subcontracting Act, and the Labor Standards Act—with the goal of passing them by April.

The proposed legislation would make direct payment mandatory in the private sector as well, requiring project owners to pay wages directly to subcontractors to break the construction industry’s structural pattern of wage nonpayment.

On the 17th, the association also held a press conference in front of Yeonpungmun at the Blue House in Jongno District, Seoul, to press for additional revisions to the enforcement rules of the Construction Industry Basic Act.

The electronic payment–based direct-wage system is intended to speed up and increase transparency in wage payments by ensuring that public-contract funds and wages are paid directly to actual workers. The Ministry of Land, Infrastructure and Transport announced a draft revision to the enforcement rules containing this measure in December.

The association warned that changing the wage-payment structure through the enforcement-rule revisions could cause confusion on construction sites and undermine employment stability. It urged the relevant ministries to prepare safeguards and issue clear legal interpretations before the system is rolled out.

The association said, “Preventing wage theft is important, but lawmakers must also consider that many day laborers depend on same-day pay to make ends meet. Parliament should hold thorough discussions and refine the system so it protects both workers’ livelihoods and the small-business owners who support them.”

Reporter Park Yoo-jin (pyj@viva100.com)