Mayor Park Won-soon 'Construction Job Innovation' ... Raising Social Insurance Enrollment Rate to Early 20% Range
Encouraging Long-term Employment with Weekly Holiday Pay ... Expecting Up to 28% Wage Increase Effect
[Asia Economy Reporter Jo In-kyung] To significantly increase the social insurance enrollment rate of construction workers, which remains in the low 20% range, the Seoul Metropolitan Government has decided to fully cover the 7.8% social insurance (National Pension and Health Insurance) contribution?the first among local governments nationwide. On the 28th, Mayor Park Won-soon held a press conference to announce the 'Construction Job Innovation' plan centered on this policy, stating that it will be first applied to public construction projects commissioned by the city within the year and will be expanded to the private sector.
Mayor Park explained, "Construction jobs are representative of poor employment structures and labor environments, yet they have a high employment inducement effect. This initiative will transform approximately 80,000 construction jobs at Seoul city public construction sites into quality jobs and serve as the first step to strengthening employment safety nets in the post-COVID era."
The city will first fully support the approximately 7.8% social insurance premiums (National Pension 4.5%, Health Insurance 3.335%) previously borne by construction workers. Currently, the social insurance enrollment rate among construction workers is low even compared to other irregular workers, remaining in the low 20% range (National Pension 22.2%, Health Insurance 20.8%). Workers who work five days a week will also receive the 'weekly holiday allowance,' equivalent to one day's wage. As a prerequisite, the city will prohibit the comprehensive wage system and mandate the use of a 'standard employment contract' that clearly distinguishes between base salary and weekly holiday allowance. Through this, the city aims to increase long-term employment of construction workers and transition wage payments from the current 'daily wage' system to a 'weekly wage' system.
To encourage construction workers to work longer at a single site, the city will actively provide weekly holiday allowances and social insurance premiums, and offer employment improvement incentives to companies where the proportion of domestic workers exceeds 90%. Since currently only about 25% of construction workers are eligible for weekly holiday allowances, the city expects that employment improvement incentives for companies will be an important premise to ensure the effectiveness of weekly holiday allowances and social insurance in encouraging daily workers to remain longer at a single site.
The city anticipates that the announced construction job innovation plan will result in up to a 28% wage increase for individual construction workers.
This plan will be fully applied starting with public construction projects commissioned by the city within the year. The city expects the total construction costs to increase by approximately 3.6% (65 billion KRW) due to this policy but plans to secure funding through bid price differences without additional budget allocation.
Mayor Park stated, "To turn crisis into opportunity, expanding social safety nets, including 'universal employment insurance,' is essential. Fully supporting social insurance premiums for construction workers is one such measure. We will transform the vicious cycle where short-term employment excluded from social security weakens construction competitiveness into a virtuous cycle where new skilled workers enter and good jobs are created."
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