Construction Industry: "Introducing Minimum Wage System Will Reduce Jobs and Push Safety to the Backseat"

"Full Reconsideration of Minimum Wage System in Construction Industry" Demanded

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The construction industry has called for a complete reconsideration of the government's plan to introduce a minimum wage system for the construction sector.

On the 18th, six organizations including the Korea Construction Association, the Korea Specialty Contractors Association, the Korea Mechanical Equipment Construction Association, the Korea Electrical Contractors Association, the Korea Information and Communication Contractors Association, and the Korea Fire Protection Facilities Association stated, "Even in the United States, which previously introduced a minimum wage system for the construction industry, many states are abolishing or narrowing the scope of the system due to issues such as excessive increases in construction costs and job losses," adding, "Since the minimum wage system for the construction industry has a significant impact on the industry and the economy, we hope the government and the National Assembly will listen more carefully to the construction industry's opinions and reconsider the introduction of the system."

The government has been promoting the introduction of a minimum wage system for the construction industry, which forces public contractors to pay wages above a certain amount to prevent wage cuts for workers, and has been reviewing the implementation plan through the Construction Subcommittee Task Force of the Jobs Committee until recently.

In response, the construction industry has expressed concerns and dissatisfaction. The six organizations argued, "Given that construction workers' wages significantly exceed those of other industries, the introduction of a minimum wage system for the construction sector could lead to demands for industry-specific minimum wage systems in other sectors," and added, "This will inevitably cause exhausting social conflicts and confusion due to conflicts of interest between labor and management."

Furthermore, the construction industry maintains that claims about labor cost reductions due to the multi-tiered production structure stem from a lack of understanding of the wage payment structure for construction workers. The six organizations stated, "Labor cost reductions at construction sites come from reducing labor volume through productivity improvements, not from cutting individual workers' wages. Moreover, due to the characteristics of the construction labor market, where the supply of construction workers is not smooth, unilateral wage cuts are not realistically possible." They continued, "With the introduction of systems such as direct wage payment, institutional measures to prevent wage cuts are already fully in place."

The construction industry also views the introduction of the minimum wage system as conflicting with the government's youth employment policies. The six organizations said, "If limited labor costs paid by the client require paying all workers at least the median wage level, the construction industry will inevitably avoid employing inexperienced or new workers such as youth, considering productivity," adding, "This will exacerbate issues of job loss and reduced employment among vulnerable workers."

Additionally, the construction industry argues that without fundamental improvements to the bidding system, increases in labor costs will be directly passed on to companies, making damage to the construction industry unavoidable. They stated, "Companies may increase work intensity by using fewer workers or reduce investments in safety management," adding, "This is likely to have a negative impact on safety at construction sites."