Reform of the paid employment system frequently used by foreign residents is not far off

A significant number of foreign residents working in Korea use paid employment agencies and outsourcing companies to find employment. In addition, many foreigners are receiving illegal employment services through acquaintances. It is legal to use employment agencies, but any act of providing employment services without permission from the Korean government is illegal.

In either case, they take too much of the workers' wages and violate the Labor Standards Act.

Therefore, there are many voices calling for reform of the paid employment agency system in Korea. We have summarized the problems of employment agencies that were recently pointed out by the ‘Hankook Ilbo’, a daily newspaper in Korea.

① Excessive fees

The fee that employment agencies can receive from job seekers is 1% of their monthly salary for up to three months, and from job offerors (company) they can receive the fee for 10% for daily construction workers and 30% or less for others.

However, at the job search site, more than 10 percent of the wage is being deducted from job seekers without receiving a fee from job offerors (company). This is all illegal. 

This is an act of passing on the fee that the job offerors (company) has to pay to the job seeker. It's like exploitation of labor.

If these illegal acts are found in the local government crackdown, they will be subject to a fine for negligence. The only punishment is the local government's crackdown, but even this is not implemented properly.

② Wage ‘proxy payment’

If you work through a paid employment agency, the employment agency will give you a daily wage. After a day's work, the fee is deducted and cash is placed in an envelope or deposited into an account.

However, in Korea’s Labor Standards Act, there is a so-called direct wage payment principle that ‘wages must be paid directly to workers in full in currency’.

However, an official from the Korean Ministry of Labor said, “The principle of wage payment in the Labor Standards Act is primarily aimed at preventing unpaid wages. If there is no unpaid wages, it is not appropriate to think that the principle of direct payment of wages has been violated.”

③ The practice of not signing a written contract

If it is difficult to ban the wage proxy payment system immediately, it should be forced to comply with the Ministry of Employment and Labor's notice. The Ministry of Employment and Labor stated in a notice that “the referral fee must be based on a written contract signed with the job seeker in advance, and when the referral fee to be borne by the job offeror is deducted from the worker’s wages, a ‘consent to receive the referral fee by proxy’ must be obtained.” However, if it is not followed, there is no provision to punish it, so usually it is not kept well.

④ Unlicensed businesses abound

Employment agencies can only be operated with permission, but the fact that there are a lot of 'unlicensed' employment agencies is also a cause of deviance. In a related survey in the Chungnam region in 2019, 84.7% of the employment agencies that posted job advertisements were found to be employment job agencies without a permit. Since there is a high probability that such unauthorized employment agencies will commit illegal acts such as excessive collection of referral fees, crackdown on them is also necessary.

⑤ System to recover the amount of damage

Even if local governments crack down on illegal employment agencies or individuals, the amount of intermediate exploitation stolen from the workers does not come back. The only way to get this is to file a civil suit. There is no fool to file a civil suit to get a fee of 50,000 to 200,000 won back.

The reason why many foreign residents in Korea find illegal employment through employment agencies or acquaintances is that, first, it is difficult to communicate with job opening companies in Korean, and second, it is convenient that the applicable companies take foreigners to work places by car.

Using these services and paying 10% of their wages is actually exploitation of the labor force, but many foreigners are not aware of this.

As the media, labor-related organizations, and job seekers are constantly raising concerns, it is expected that wrong practices and systems will be improved in the near future.

Foreign residents also need to prepare for the possibility of major changes in related systems, such as using Papaya Story's employment information.

Reporter Jieun Lee