"Frequent Rework Driving Up Construction Costs"...Ministry of Land to Revise Skills Grading System [Construction Crisis Report]

Systemic Reform Needed: Linking Skills, Quality, and Wages
To Prevent Rework, Quality Must Come First
A Skills-Based Grading System Over Seniority
Skills Grading System Overlooked On-Site
Urgent Need for Reform Connecting Proficiency, Quality, and Wages

Amid growing concerns that the employment of undocumented immigrants is threatening jobs for domestic workers, experts point out that simply regulating the employment of foreign workers will not solve the problem. Above all, there are calls for a fundamental transformation of the industry to encourage domestic workers to return to construction sites. Institutional frameworks that prioritize skilled workers and guarantee fair wages must be established to expand domestic employment and improve corporate profitability.

Kim Yonghak, President of the Korea Construction Skilled Workers Association, stated on August 1, "Although construction costs have risen significantly, a closer look reveals that additional expenses due to rework are often a major cause." He added, "If construction is done properly from the start, unnecessary use of raw materials can be avoided, which helps reduce costs." Most key materials are contracted in advance before construction begins, so price fluctuations have a limited impact on the overall construction cost. However, if work is done incorrectly and requires rework, materials must be used again and labor costs are incurred twice, leading to increased expenses and a significant decline in profitability. Ultimately, this results in losses for construction companies.

To address this situation, experts stress the necessity of fostering skilled workers, guaranteeing fair wages, and establishing quality management systems. The construction sector is difficult to manage under general labor laws due to its unique characteristics, such as unstable employment, multi-tiered subcontracting, and frequent labor mobility. This is why the “Act on the Improvement of Employment, etc. of Construction Workers” was enacted in 1998 as a special law comprehensively regulating employment improvement, welfare, and retirement allowances.

Three-Stage Reform Linking Skilled Workers, Wages, and Quality Needed

Experts emphasize that a systemic approach is necessary for a fundamental solution. In particular, they believe that a three-stage, interconnected framework-comprising the construction skills grading system, unit task real-name system, and fair wage system-should be established, and the effectiveness of these systems should be enhanced. By evaluating workers’ skills through the grading system and accumulating records of who performed which processes via the real-name system, it becomes possible to determine appropriate wages based on actual ability. The skills grading system alone cannot fully assess work quality, and the real-name system alone does not link to wages, but when all three are connected, a transparent on-site system is created where “skilled workers are properly compensated.”

From the perspective of construction companies, such institutional integration can help control construction costs and improve profitability. Stable construction quality reduces defect rates and the likelihood of rework, which in turn decreases the need for additional materials and labor, resulting in cost savings. Once this structure is established, a virtuous cycle can be achieved: increased influx of talented workers leads to improved quality, reduced rework, and ultimately lower construction costs.

First, the current grading system should be operated based on job proficiency. The current system divides workers into entry, intermediate (3 years or more), advanced (9 years or more), and expert (21 years or more) grades according to years of experience. However, in practice, job proficiency is valued more highly than years of experience. Since the grading criteria remain focused on formal years of service, even highly skilled workers may not receive appropriate treatment if their grade is low. Conversely, workers who have only accumulated years of service may receive high grades. This undermines the morale of skilled workers and erodes trust in the grading system itself.

The effectiveness of the grading system can be enhanced by transparently managing who performed which tasks through the “unit task real-name system.” In practice, workers’ names can be recorded for each process via a mobile application, along with before-and-after photos and compliance with manuals, allowing the accumulation of data on the quality and responsibility of skilled workers. Based on this data, the fair wage system can be implemented so that highly skilled workers receive higher wages commensurate with their abilities. For construction companies, maintaining records of individual workers’ responsibilities allows for clear identification of the causes of defects in each process, making quality management easier.

The fair wage system requires that workers be paid at least a certain level of wages determined by the client. This system was introduced to prevent wage reductions for workers during the subcontracting process. Since 2023, the government has been piloting this system for public projects worth 30 billion won or more.

Construction Skills Grading System Overlooked On-Site...Reform Plan to Be Prepared Within the Year

The skills grading system was introduced in 2021 to systematically manage construction labor. Its core purpose is to improve the treatment of skilled workers and enhance construction quality and on-site safety by systematically managing the experience and capabilities of construction workers. The aim is also to attract new workers and alleviate labor shortages caused by an aging workforce.

However, the system has not been properly implemented due to construction companies’ reluctance, as they are concerned about additional costs. An official from the Ministry of Land, Infrastructure and Transport stated, "The skills grading system is not functioning properly because there are no tangible benefits. Even if workers obtain grades, construction companies are reluctant to offer preferential treatment due to cost concerns, making it difficult to activate the system."

He added, "Currently, the Construction Workers Mutual Aid Association has been conducting a research project since May through the Korea Construction Economy Industry Association to develop standards for deploying skilled workers and to explore ways to utilize the grading system. Once the research is completed at the end of next month, we plan to announce improvement measures within the year."

The Ministry of Land, Infrastructure and Transport had planned to announce improvements to the skills grading system in December last year, but was unable to do so due to the sudden 12·3 Martial Law incident.

Order of Articles in the ‘Construction Crisis Report’ Series

<1-1> Construction Sites at a Standstill, Daily Workers’ Lives Collapsing
<1-2> "Three to Four More Bankruptcies Expected"…Mid-Sized Builders Targeted for Restructuring
<2-1> PF: Once a Financial Lifeline, Now a Trap
<2-2> Easing Multi-Home Regulations, Key to Reviving Regional Real Estate
<3-1> "Every Day Is Nerve-Wracking"-Shaken Subcontractors and Downstream Industries
<3-2> Even Major Companies Could Not Avoid Wage Arrears
<3-3> LH and Local Governments Also Facing Wage Arrears
<3-4> Even the President Stepped In...Urgent Need for Vertical Structure Reform
<3-5> This Company Survived Without Illegal Subcontracting
<3-6> United on Collapsing Sites
<4-1> Foreign Construction Workers Encroaching on Domestic Jobs
<4-2> From ‘Regulating Foreigners’ to ‘Protecting Domestic Workers’
<4-3> The Root Cause of Deteriorating Profitability: Frequent Rework