The Korea Specialty Contractors Association has raised concerns about the survival threats and declining quality in construction due to the allowance of mutual contracting between general and specialty construction companies, stating that a reform is necessary.
At a press conference marking the 40th anniversary of the association held on the 3rd at the Korea Specialty Contractors Hall in Dongjak-gu, Seoul, Chairman Yoon Hak-soo noted, "As the government has opened the 'construction industry production system' allowing general contractors to carry out specialty work, general construction companies have encroached upon specialty construction projects."
Chairman Yoon emphasized, "General contractors are winning contracts for all types of retaining wall projects in the provinces and subcontracting them to specialty contractors. Specialty contractors must compete for comprehensive projects that consist of 12 types of work, but in reality, this is difficult and leads to results that compromise quality."
In 2021, the government abolished industry boundaries to allow mutual market entry and subcontracting between general and specialty construction companies as part of its reform of the construction industry production system.
Currently, projects up to 430 million won are considered within the protected zone for mutual entry. General construction companies typically refer to firms that undertake large-scale projects such as civil works, architecture, landscaping, and environmental facilities. Specialty construction companies perform specific processes such as rebar and concrete work, interior construction, painting, waterproofing, and water and sewage.
The specialty construction industry pointed out that following the abolition of industry boundaries, specialty contractors have lost bidding opportunities and are facing survival threats. While competition in specialty work has intensified, it is becoming challenging to meet the registration requirements for general contractors, leading to a new type of illegal subcontracting.
Chairman Yoon stated, "When a general contractor wins a project for 100 won and subcontracts it for 80 won, the prices don't match, and safety and construction quality deteriorate."
While there is a trend to subdivide work types overseas, there have been criticisms that Korea is producing illegal and unorthodox subcontracting while promoting a broad classification of work types domestically.
Chairman Yoon commented, "Japan has subdivided work into 27 categories, while Tennessee in the U.S. has 170. However, in Korea, different types of industries are categorized as one, making it challenging to develop expertise and technological advancement." He added, "Although subcontracting among general contractors is allowed, in practice, specialty work cannot be performed, leading to further subcontracting. This raises construction costs, increasing prices for consumers, which ultimately harms the public."
Regarding safety accidents at construction sites, Chairman Yoon stated that punishing only management is unreasonable. He believes all members should be held responsible for preventing accidents and that there should be a clear recognition that they can also be held accountable. Additionally, he assessed that domestic construction costs are at the lowest level, yet asking them to meet safety and quality requirements is excessive.
Chairman Yoon argued, "Due to laws such as the Serious Accident Punishment Act, safety management expenses are bound to increase by 25 to 30 percent," and insisted, "We need to raise safety management expenses and adjust appropriate construction costs."