It has been confirmed that a slew of mid-sized construction companies have been banned by the government from participating in subcontracted public works. Under the relevant law, corporations found to have problems such as a higher-than-industry-average number of worker deaths on site, the occurrence of serious accidents, illegal subcontracting, or labor-related violations are regulated so that, for a certain period, they cannot take on subcontracts for projects ordered by the government, local governments, or public institutions.
Usually, those restricted from participating in subcontracted works under such regulations are mostly small construction companies. But as of the first half of this year, five mid-sized construction companies ranked within the top 30 in construction capability evaluation were included.
According to the Ministry of Land, Infrastructure and Transport on the 30th, Hoban Construction (No. 12 in construction capability evaluation), DL Construction (No. 13), KyeRyong Construction Industrial (No. 15), KCC E&C (No. 20), and Kumho Engineering & Construction (No. 24) have been included this month among corporations restricted from participating in government subcontracts.
So far this year, 201 construction companies and general corporations have been subject to this sanction, and five large construction companies within the top 30 in the construction capability evaluation rankings were targeted. The restriction on subcontract participation is a sanction imposed under the Construction Industry Framework Act on construction companies penalized for illegal subcontracting and labor-related violations. Participation in subcontracts for public construction projects ordered by the state, local governments, and public institutions is restricted within two years. If a construction company that has obtained the right to carry out a public construction project issues subcontracts related to that project, those restricted cannot take them on.
An official at the Ministry of Land, Infrastructure and Transport said, "It is designed to exclude corporations caught for illegal subcontracting or insufficient safety standards when the contractors for projects ordered by the government, local governments, and public institutions select subcontractors," and added, "We identify the status of sanctions by local governments and then the ministry designates the target corporations."
By company, Hoban and KyeRyong Construction are banned from bidding for two months from Sept. 20 to Nov. 19. DL, Kumho, and KCC E&C cannot bid for one month from Sept. 20 to Oct. 19.
KyeRyong, DL, Kumho, and KCC E&C were sanctioned because their fatal accident incidence per ten thousand workers was higher than the construction industry average. The fatal accident incidence per ten thousand workers refers to the number of fatal accident victims per 10,000 workers and is a key indicator measuring safety management.
The Ministry of Employment and Labor commissions the Korea Occupational Safety & Health Agency (KOSHA) to tally fatal accident victims that occurred in the previous year (Jan. 1–Dec. 31) and finalizes the fatal accident incidence per ten thousand workers on Jul. 1 each year. 4th, the fatal accident incidence per ten thousand workers among domestic corporations was 0.39, higher than Japan (0.12), Germany (0.11), and the United Kingdom (0.03). The government notifies local governments and public institutions of corporations whose indicator is higher than the average. However, it does not disclose each corporation's incidence to the outside.
Hoban Construction was put on the sanctions list for having a high industrial accident rate. On the reason for the sanction, the ministry said, "As a business site where a serious accident occurred under the Occupational Safety and Health Act, it is a business site whose annual industrial accident rate in the year a serious accident occurred is at or above the average accident rate for the same industry by size." Hoban Construction is participating as the contractor in the Gohyeon Port harbor redevelopment project in Geoje, South Gyeongsang Province, and in 2020 two people were seriously injured during a crane dismantling process. As this accident was recently finalized as a serious accident, the company received a sanction banning subcontract participation. Unlike the fatal accident incidence per ten thousand workers, which is calculated based on the date of occurrence, the industrial accident rate is determined monthly based on the date the industrial accident is finally approved.
Choi Su-young, a research fellow at the Korea Research Institute for Construction Policy, said, "Corporations often face various disadvantages such as restrictions on subcontract participation, higher industrial accident insurance premiums, and lower construction capability rankings when accidents increase, including fatal accidents," and added, "They should recognize that the expense of investing in prevention is lower than the cost of handling accidents after they occur and make active efforts to prevent safety accidents."