"Main Contractors Cover Waste Disposal Fees, Payments Within 30 Days"... 'Win-Win Collaboration' Takes Hold at Construction Sites

Exemplary Cases from Kyeryong Construction, POSCO E&C, and Jeil Construction Emerge
Fair Trade Commission and Construction Industry Review Implementation through Public-Private Consultative Body

There has been a series of instances in the construction industry where deeply entrenched unfair practices are being overturned—such as the main contractor covering the entire cost of waste disposal and the payment period for subcontractors being reduced by half. Win-win cooperation models, in which main contractors and subcontractors share risks and costs more equitably, are taking root, particularly among top-tier large construction companies with high construction capacity.

On September 16, the Fair Trade Commission held a ‘Construction Industry Win-Win Cooperation Agreement Public-Private Consultative Committee Meeting’ at the Specialty Contractor Hall in Dongjak-gu, Seoul, bringing together officials from the 19 largest general construction companies based on construction capacity evaluation to share these field improvement outcomes and trends in the enforcement of the Subcontracting Act. This standing committee was newly established to regularly monitor and encourage implementation to ensure that the fair trade agreements signed last May do not remain mere declarations.

The most notable changes are the elimination of unfair special contract clauses and improvement in the practice of passing costs down the supply chain. Kyeryong Construction Industrial recently officially included the statement ‘the main contractor shall bear the full cost of waste disposal’ in its site briefing documents during the subcontract bidding process, thereby moving away from the long-standing practice of quietly shifting various waste disposal costs onto subcontractors.

Measures aimed directly at supporting subcontractors' management stability and improving their liquidity are also materializing. POSCO E&C has decided to directly fund the wages of safety personnel, who must be hired by subcontractors to prevent serious industrial accidents, as a way to alleviate the financial difficulties faced by small and medium-sized partners. Jeil Construction drastically shortened the payment cycle for subcontractors’ fees from the usual 60 days required by law to just 30 days, providing much-needed relief to its partners’ cash flow.

In addition to addressing on-site practices, efforts to reflect increases in raw material costs in construction payments are accelerating. The 19 major construction companies have agreed to raise their procurement prices by a total of 134.3 billion won this year to support subcontractors affected by price spikes due to events such as the Middle East war. Of this, 107.7 billion won—80 percent of the promised amount—has already been adjusted upward. In addition, 15 construction companies have signed payment-linked contracts with 52 partner companies to automatically reflect changes in raw material prices, and 14 companies have operated their own dispute resolution organizations to autonomously mediate 14 cases of on-site conflicts.

The Fair Trade Commission intends to strengthen follow-up management to expand these exemplary cases among large construction firms to the mid-sized construction sector and the industry as a whole. In November, a second public-private consultative committee meeting will be held for 30 mid-sized construction companies that signed agreements in July to review the execution results. The Commission stated, “We will work to ensure that win-win cooperation agreements are effectively implemented through this consultative body, and will continue to communicate to bring about tangible changes that can be felt at construction sites.”

This content was produced with the assistance of AI translation services.