[From Domestic to Overseas④] The '52-Hour Workweek' Restricting Overseas Construction Sites

Won Hee-ryong, Minister of Land, Infrastructure and Transport, is speaking at the Overseas Construction Companies CEO Meeting held on the 10th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

Overseas Orders Amount to $21.2 Billion So Far, Up 26% Year-on-Year

Discussions Ongoing Between Ministry of Land and Ministry of Employment on Regulatory Relaxation

Raising the Tax-Exempt Limit on Overseas Construction Workers' Income Is Difficult

[Asia Economy Reporter Kim Min-young] "When forming a consortium with overseas companies to carry out construction at foreign sites, there are cases where collaboration with local firms becomes difficult due to the 52-hour workweek system. We need to move toward relaxing the 52-hour regulation to reflect the characteristics of overseas construction sites." (Construction industry official)

Although the government recently set an annual order target of $50 billion and is driving the activation of overseas orders, various regulations such as the 52-hour workweek are being pointed out as weakening the competitiveness of overseas construction sites. Voices are growing that the application of the 52-hour workweek should be relaxed at overseas construction sites, considering the competitiveness of domestic construction companies in securing orders and the conditions for carrying out local projects.

According to the Overseas Construction Association on the 22nd, as of the 21st, the overseas order amount of domestic construction companies this year reached $21.2 billion, a 26.1% increase compared to the same period last year ($16.8 billion). Until the first half of this year, the overseas order performance of domestic construction companies was $12.04 billion, down 18.4% compared to the same period last year ($14.747 billion). This was the second-lowest figure since 2006 based on the first half of the year. The sluggish order performance surpassed last year's same period with $17 billion in July and showed a recovery trend by breaking through $18 billion in August.

This is interpreted as an effect of the overseas order volume increasing recently in line with the recovery of oil prices after a significant reduction in overseas infrastructure project orders due to the COVID-19 impact over the past two years. In addition, the overseas order sector, which had been concentrated on plants, has expanded, and the order regions have diversified not only in the Middle East, which was the stronghold of domestic construction companies, but also in Asia and North America, which is another factor for the increase in overseas construction order performance.

The industry unanimously agrees that to revitalize the overseas construction business, which is stretching its wings again, the application of the 52-hour workweek should be relaxed. The reason is that delays in delivery due to the 52-hour workweek could hinder future overseas order activities.

An official from the Overseas Construction Association said, "The biggest difficulty domestic construction companies face in carrying out overseas projects is the 52-hour workweek," adding, "There are times when it is difficult to proceed with construction due to climatic conditions in each country, but limiting working hours makes it hard to meet deadlines." He continued, "To avoid this, when hiring locals, domestic workers may face reverse discrimination." This means that hiring overseas workers to comply with the 52-hour workweek could lead to a decrease in employment of domestic workers.

An official from Company A in the construction industry lamented, "There are situations where the person in charge has to leave work due to working hour restrictions on the day important materials arrive," adding, "It is also awkward to say that work must be stopped due to the 52-hour workweek while working with local companies."

At a meeting in August where Minister of Land, Infrastructure and Transport Won Hee-ryong invited CEOs of major domestic construction engineering companies to discuss ways to activate overseas orders, attendees actively requested relaxation of the 52-hour workweek and the Serious Accidents Punishment Act. Regarding this, Minister Won expressed his willingness to support by saying, "We will actively resolve regulations that hinder overseas orders."

The Ministry of Land is currently discussing related matters with the Ministry of Employment and Labor, which is in charge of the 52-hour workweek. A Ministry of Land official said, "It is still under discussion with the Ministry of Employment," adding, "We are gathering companies' opinions and will prepare appropriate measures as soon as possible."

However, among the measures to attract overseas construction workers, the industry's request to raise the tax-exempt limit on overseas construction workers' income is unlikely to be realized. The income tax exemption limit for overseas construction workers was adjusted from 1 million KRW per month in 2008 to 1.5 million KRW per month in 2009, and then to 3 million KRW per month in 2012. The industry is asking to raise the tax-exempt limit, which has been stagnant for 10 years, considering inflation, but the Ministry of Strategy and Finance drew a clear line, saying, "We are not considering it at all."

The industry argues that unlike in the 1970s and 1980s, younger generations tend to avoid working at overseas construction sites, so tax benefits should be increased as incentives. Last year, the number of construction workers working overseas was 9,402, about half compared to 18,441 in 2016, five years ago.

A Ministry of Strategy and Finance official said, "The industries with a tax-exempt limit of 3 million KRW for income tax are only overseas construction and deep-sea fishing," adding, "It is an unprecedented tax benefit that cannot be compared with other industries."

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