Fair Trade Commission discusses with Korea Federation of SMEs and Korea Specialty Contractors Association on 'Reflecting Raw Material Price Increases in Delivery Prices and Expanding Standard Subcontract Agreements'

Subcontracting Sector Business Associations and Practical Council

[Sejong=Asia Economy Reporter Joo Sang-don] On the 7th, the Fair Trade Commission held a working-level meeting with major business organizations in the subcontracting sector, including the Korea Federation of Small and Medium Business (KOSME) and the Korea Specialty Construction Association, to discuss measures for reflecting raw material price increases in delivery prices.

This meeting was organized to discuss policies regarding the worsening issues of unpaid payments and delivery price adjustments caused by the prolonged COVID-19 pandemic, economic recession, and rising raw material prices, and to actively listen to opinions from the field.

Participants discussed efficient utilization methods such as corrective measures, dispute mediation, and consent decisions to ensure subcontractors receive payments promptly. Despite recent sharp increases in raw material prices such as oil and iron ore, many subcontractors have been unable to reflect these in their delivery prices, leading to deteriorating profit margins. Therefore, discussions were held on various measures, including revitalizing the existing delivery price adjustment negotiation system to ensure subcontractors receive fair prices, as well as improving transaction practices in industries like shipbuilding and revising necessary individual provisions.

KOSME expressed agreement that "the biggest difficulty for subcontractors is the issue of unpaid payments," emphasizing the need for the government to continuously listen to voices from the field and prepare improvement measures. The Korea Specialty Construction Association also shared the Fair Trade Commission’s awareness of the urgency to resolve payment-related issues and expand the distribution of standard contracts.

A Fair Trade Commission official stated, "Based on the discussions at this meeting, the Fair Trade Commission plans to identify and promote key tasks in the subcontracting sector this year, such as rapid relief for unpaid payments," adding, "Additionally, the Fair Trade Commission will operate three subcommittees of the casework improvement task force (TF) to enhance case handling capabilities, including in the subcontracting sector."

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