Replace Hazardous Equipment, Expand the Factory... KRW 100 Billion Cut [Labor Budget Deep Dive (2)]

KRW 101 billion cut from budget to improve outdated hazardous processes
Post-support monitoring previously criticized for allowing continued use of old equipment
"Concern that support for small businesses with high-risk operations will decline"

Company A, a small manufacturer, received government subsidies to replace three aging milling machines that posed a high risk of entrapment and cutting accidents with new CNC (computer numerical control) milling machines. But even after the new machines arrived at the factory, the old ones remained. Company A kept the outdated equipment in place and operated it alongside the new machines, continuing to use the old machines on the grounds that it had conducted its own safety training. In effect, a government program intended to remove hazardous equipment and protect workers was used to fund an expansion of the factory's equipment.

KRW 101 billion cut from 'Safety Partnership' program

According to the National Assembly Budget Office's "Analysis of the 2027 Budget Bill by Committee," released on November 10, the proposed budget for next year for the Ministry of Employment and Labor's industrial accident prevention program, "Support for Creating Clean Workplaces," is KRW 501.227 billion, down KRW 35.866 billion (6.7%) from the 2026 planned amount of KRW 537.093 billion. In particular, the "Safety Partnership Support Program" was cut by KRW 101 billion (30.4%), from KRW 332 billion in 2026 to KRW 231 billion in 2027. This contrasts with increases in the budgets for "Support for Creating Safe Workplaces" (up 10.1%) and "Support for Creating Healthy Workplaces" (up 22.0%). The Safety Partnership Support Program covers the cost of improving outdated equipment and hazardous processes at high-risk manufacturing workplaces with fewer than 50 employees that lack the technical and financial capacity to make improvements. It provides up to KRW 100 million per workplace for replacing machinery and equipment. In 2025, 3,383 workplaces received between KRW 50 million and less than KRW 100 million, accounting for 73.7% of all recipients and highlighting the program's focus on smaller workplaces.

Large cuts follow discovery of hidden old machines and excess subsidy payments

The budget was sharply reduced after the Government Joint Anti-Corruption and Prevention Task Force under the Office for Government Policy Coordination uncovered cases in which the subsidies had not actually eliminated hazards, according to its "Inspection Results on the Implementation of Industrial Accident Prevention Programs," announced in April this year. In addition to cases in which milling machines were not scrapped, a total of 70 more CNC lathes and milling machines were subsidized than the number of existing machines at 56 recipient workplaces. In effect, subsidies meant to replace hazardous equipment were used to purchase additional machinery and increase production capacity. The National Assembly Budget Office noted, "Introducing equipment unrelated to hazard reduction or purchasing more equipment than necessary could deprive other workplaces, where the need for safety equipment is urgent, of the opportunity to receive subsidies." The Ministry of Employment and Labor, however, maintains that it is difficult to regard past spending as a violation of the rules, since scrapping existing equipment was not mandatory through 2025. A ministry official explained, "When new machines are introduced, production can be disrupted while workers adapt to them, so scrapping was left to the discretion of each workplace. However, inspection results led us to conclude that outdated equipment must be scrapped to ensure safety at its source, so starting this year we made one-for-one scrapping mandatory." The ministry will pursue recovery procedures for workplaces that improperly received subsidies.

Inspection budget also cut, raising questions about effectiveness

With the scale of support sharply reduced, opportunities for small businesses that urgently need to improve outdated equipment and hazardous processes may also decline. The effectiveness of post-support monitoring is also under scrutiny. The government introduced a one-for-one scrapping requirement and granted a grace period of up to one year to allow workers to adapt. Thorough on-site inspections are essential to determine whether recipient workplaces are secretly operating old machines or selling them on the black market. However, the budget for "Post-Support Management of Clean Workplaces and Program Implementation Costs," which funds this work, was cut by 4.5%, from KRW 3.661 billion in 2026 to KRW 3.495 billion in 2027. A ministry official said, "We judged that the improvements to hazardous processes we have pursued since 2021 had reached a certain level of maturity, and expanded funding for specialized support targeting fires and explosions, which have caused frequent accidents recently. It is true that the post-support management budget has decreased, but we will operate it efficiently and continue providing on-site technical guidance without disruption."

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