South Korea’s government has proposed compensating Koreans who were forced to work for Japanese firms during World War II

using funding from a domestic foundation rather than funds from the companies involved in the forced labour.

The plan, unveiled at a public hearing on Thursday, comes as Seoul seeks closer ties with Tokyo to counter threats from North Korea and its growing nuclear and ballistic missile capabilities.

The proposal immediately prompted a backlash from some Korean victims and their families who called the plan “humiliating”.

The plan, proposed by the South Korean foreign ministry on Thursday, would compensate the former forced labourers using a foundation

funded by businesses in the country that benefitted from a 1965 treaty in which Seoul received a package of $300m in economic aid and $500m in loans from Japan.

The unresolved legacy of Japan’s colonisation of the Korean Peninsula from 1910 to 1945, including restitution for Koreans

forced to work at Japanese firms and in military brothels, has long been a source of contention between the two countries.