Government Supports Construction Market Revitalization Including Ensuring Fair Compensation for Construction Companies

Operation of Public-Private Joint Special Team (TF)
Easing Company Burdens and Improving Local Contract System
to Support Small and Medium Enterprises

The government is set to improve the local contract system through a bottom-up approach led by contracting parties to revitalize the regional construction market. Measures to ensure appropriate compensation, such as raising the minimum bid rate, will be discussed, along with efforts to address unreasonable system issues.

On the 13th, the Ministry of the Interior and Safety announced the launch of the "Public-Private Joint Special Team for Improving the Local Contract System to Revitalize the Regional Construction Market and Small and Medium Enterprises," and stated that the first meeting will be held on the 14th at the Government Seoul Office.

Yonhap News

This improvement of the local contract system is being promoted in response to the ongoing decline in construction investment since the fourth quarter of 2023, which is expected to continue decreasing this year, highlighting the need for support to recover the regional construction market. The special team is led by the Director-General of the Local Finance and Economy Bureau of the Ministry of the Interior and Safety and includes construction-related associations, private companies, contract-related private experts, and local governments.

The special team will move away from a government-led system improvement approach and seek local contract system improvements that are helpful to actual construction companies and perceptible on-site through a bottom-up approach led by contracting parties and experts. The main discussion topics include ▲ measures to ensure appropriate compensation such as raising the minimum bid rate ▲ measures to ease company burdens such as raising the general management expense ratio and indirect labor cost ratio ▲ strengthening support for small and local companies such as awarding additional points to companies in population-declining areas ▲ expanding rights protection measures such as broadening the scope of local contract dispute mediation.

Additionally, difficulties raised by companies and local governments will be closely analyzed to actively identify and improve unreasonable practices or system issues. At the first meeting, the special team will discuss the operation plan and conduct working-level meetings over the next month to finalize system improvement tasks and aim to revise related laws and regulations by the first half of 2025.

Han Soon-gi, Director-General of the Local Finance and Economy Bureau, said, "Currently, our economy is experiencing delayed recovery as production growth slows mainly in the construction industry, making support for the recovery of the stagnant regional construction market essential. We will work together with the private sector and government to devise practical measures that benefit the construction industry and enhance the vitality of the regional construction market and small and medium enterprises."

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