The government said on the 16th that it will create internal guidelines to make it difficult for subcontractors in the public institutional sector to hand off second-tier subcontracts. If a subcontractor wants to assign a second-tier subcontract, it would have to undergo prior screening and approval by the prime contractor (the public institution). This follows President Lee Jae-myung's instructions that "exploitative subcontracts in the public institutional sector are a problem" and to "absolutely prevent illegal subcontracts starting in the public sector."
The government held a ministerial meeting on labor safety relations that day and announced "measures to improve public institutional sector contracting operations." In the "guidelines on appropriate contracting operations in the public institutional sector" to be drafted in the second half, the government said second-tier subcontracts in the public institutional sector will be allowed only as exceptions when new technology or expertise must be used, or for temporary or intermittent work. Going forward, if a first-tier subcontractor wants to assign a second-tier subcontract, it must be discussed once by an internal committee and then undergo screening and approval by the public institution.
The government also decided to exclude the expenses for the three types of welfare benefits—meal allowances, welfare points, and holiday bonuses for subcontractor workers—from the calculation of the aggregate total labor cost increase rate. The aim is to encourage the public institutional sector to invest more in improving subcontractor working conditions. Public institutions are subject to a cap on total labor costs according to the increase rate set by the Public Institution Management Committee. If they exceed the set increase rate, they face disadvantages in areas such as budgeting and management evaluation, but the three welfare items will be excluded from the calculation.
In addition, public institutions will be required to set the employment contract period for subcontractor workers to be the same as the project period. The aim is to prevent split contracts. When the government examined contracts in August to September last year in six public institutional sector fields that make heavy use of subcontractors (power generation, energy, airports, railways, roads, and ports), it found that more than half had contract terms of one year or less. However, this occurred because the project period and the employment contract period were aligned. It is therefore uncertain whether the government's new measures can significantly improve the existing situation.