[Construction Firms Fear Overlapping Fines]"Safety Investment Must Be Added to Bid Criteria... We Need Incentive-Based Measures"

In April last year, 119 emergency responders and police were conducting search-and-rescue operations for missing persons at the collapse site of the Sinansan Line double-track railway Section 5-2 in Gwangmyeong, Gyeonggi Province. Photo by Yoon Dongjoo

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Experts point out that, to eradicate industrial accidents, measures that guide and incentivize accident prevention are more effective than punishment-focused, ex post responses. Many question the effectiveness of punitive measures imposed only after an accident, noting that fatal industrial accidents have continued despite a series of measures centered on tougher penalties. While there is a need to heighten awareness of safety, they argue that carrot-type policies that motivate companies should be implemented in parallel.

Hong Seongho, Senior Research Fellow at the Construction & Economy Research Institute of Korea, said, "The Serious Accident Punishment Act has already proven that it is difficult to sustain tougher regulations and that such regulations do not change fundamentals," adding, "If, on top of that, economic sanctions such as fines are further strengthened, companies may end up spending money on expedient ways to avoid punishment instead of investing those costs in safety, creating unintended side effects."

Even after the Serious Accident Punishment Act, a powerful regulatory law that allows for prison sentences of at least one year for business owners, was introduced in 2022, the number of deaths has not changed significantly. According to a legislative impact analysis report on the Act by the National Assembly Research Service, the number of industrial accident fatalities was 2,080 in 2021, before the law took effect. However, the figure was 2,223 in 2022, 2,016 in 2023, and 2,098 in 2024. This is why critics say the impact of the Serious Accident Punishment Act has been limited.

Experts believe that incentives for construction companies that reduce and prevent safety accidents should be directly linked to areas that determine their competitiveness, such as winning contracts. Senior Research Fellow Hong said, "What construction companies value most is 'orders,' and they fear most the absence of work because that means there is no profit," adding, "Rather than imposing penalties unconditionally, if companies can prove what they have done well and receive incentives in the bidding process for construction contracts, it would be highly attractive for construction companies."

For example, evaluation items such as training for foreign workers or proactive investment in safety could be included in the criteria for selecting successful bidders. Companies that perform well would receive merits, and those merits would translate back into winning new contracts, thereby creating a "virtuous cycle structure."

There are also calls to improve the chronic problem of poor employment quality in the construction industry. Ahn Hongseop, President of the Korea Construction Safety Association, said, "Even large construction companies are doing everything they can to prevent fatal accidents, yet several accidents continue to occur every year," adding, "They bring in day laborers and rely on the supervision and oversight of labor inspectors, but the most fundamental problem is that manpower is viewed only in terms of cost. In this situation, the government merely strengthening punishment is putting the cart before the horse."

President Ahn explained that only when systems such as a proper wage system are introduced across the industry can industrial accidents be prevented. At present, in domestic construction sites, project owners tend to select bidders who offer lower prices, which in turn encourages bidders to submit low-price bids. He diagnosed that this kind of low-price bidding competition leads to low wages and the illegal employment of foreign workers.

By contrast, he argued that setting a floor called a "proper wage" can prevent wage undercutting and discourage additional cuts through re-subcontracting. The proper wage system is a scheme in which, for public construction projects, the ordering institution sets a reference wage (market daily wage rate), and workers are paid at least that level of wage at both the prime contractor and subcontractor stages. If the proper wage system is introduced, partner companies will not be able to squeeze labor costs, and appropriate wages will flow to workers, thereby enhancing their skill levels.

President Ahn said, "If you go to construction sites, the majority are foreign day laborers, so skilled workers are not being cultivated. In this situation, for construction to be carried out safely, the state must put proper systems in place," adding, "If a company has a high-cost structure, it will lose bids, so it is difficult for individual firms to establish a stable employment structure." He continued, "The government must move forward without compromise, for example by adding language such as 'the proper wage system applies to public construction bidding' to the rules," and added, "The quality of employment is directly linked to the level of safety."

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