To reduce the issues of multi-tier subcontracting and wage arrears in construction sites, there is a call to activate the 'joint contracting system for main contractors,' allowing specialized construction firms to contract directly with clients. The aim is to extend the temporary provisions set to expire at the end of this year and strengthen the legal basis for stable use in public projects.
The Korea Mechanical Equipment Construction Association announced on October 6 that it held a forum on improving the joint contracting system for main contractors at the National Assembly with the Democratic Party's Euljiro Committee, lawmakers including Min Byung-deok, Kim Nam-keun, Lee Kang-il, Yeom Tae-young, Ahn Tae-jun, and Song Jae-bong, and the Korea Specialized Construction Association.
The joint contracting system allows general contractors and specialized construction firms to form a joint consortium to participate in projects. Specialized firms contract directly with clients as members of the consortium rather than as subcontractors, receiving payment for their work. Proponents argue that this reduces the number of contracting stages, alleviating issues related to low-cost subcontracting and delayed payments.
In a presentation at the forum, Jin Sang-ki, a senior researcher at the Korea Mechanical Equipment Industry Research Institute, stated, "We are not suggesting creating a new system but rather normalizing the existing system where it should be in the law."
Jin pointed out that construction site fatalities, wage arrears, and project cost leaks are linked to the multi-tier contracting structure. He emphasized that the key is for specialized firms to contract directly with clients and receive payment, thereby reducing the financial burdens that arise during the multi-tier subcontracting process.
He described the joint contracting system as an existing framework that implements the government's declared commitment to strengthen client responsibility, block multi-tier structures, and ensure direct wage payments in construction contracts, stressing the need for restoration and permanence of the system.
Specifically, he proposed extending the temporary provisions set to expire at the end of this year or converting them into a permanent system, applying it to both national and local contracts. He also suggested establishing a new provision in the Basic Construction Industry Act to enhance the legal basis for utilizing joint contracting in public projects.
Additionally, he recommended specifying the joint contracting types, such as joint execution and shared execution, in the law to prevent exclusion of specific methods in subordinate regulations, and that reasons and criteria for not applying the system should be disclosed.
To increase the utilization by public contracting agencies, he proposed including relevant information in bid announcements and reflecting cooperation evaluations in joint contracting operational regulations, along with granting evaluation points to participating firms.
Park Kwang-bae, a senior researcher at the Korea Construction Policy Research Institute, also evaluated that reducing contracting stages is advantageous for specialized firms in securing project costs. This could contribute to improvements in safety and quality, minimize wage arrears, and enhance client benefits.
Participants in the discussion included officials from the Ministry of Land, Infrastructure and Transport, as well as representatives from general, specialized, and mechanical construction industries, and legal and research institutions, who discussed directions for system improvement.
Heo Yong-joo, president of the Korea Mechanical Equipment Construction Association, emphasized that activating the joint contracting system for main contractors is an important institutional foundation for promoting fairness and coexistence in the construction industry, highlighting the necessity of extending the sunset provision.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.