Joo made these remarks during a signing ceremony for a cooperation and fair trade agreement held at the Specialized Construction Hall. The event, attended by officials from the general and specialized construction sectors, aimed to eradicate unfair trading practices in the construction industry and establish a system linking subcontractor payments.
Previously, the Fair Trade Commission announced comprehensive measures to strengthen payment stability for small subcontractors, which include expanding payment guarantee obligations, introducing the right to request information related to primary contracts, and mandating the use of electronic payment systems to ensure timely payments.
In February of last year, the commission also announced a revision to the subcontracting law, significantly reducing exceptions to payment guarantees to ensure payment stability. Additionally, the scope of the payment linkage system was expanded to include not only the prices of raw materials but also major energy costs.
However, concerns persist that unfair practices continue in the field ahead of the law's implementation in August. In response, the Fair Trade Commission, along with 19 major construction companies and the Korea Association of Specialized Construction Contractors, agreed to the cooperation pact, which includes measures for prompt payment and the abolition of retention, correction of unfair clauses, establishment of the payment linkage system, rapid adjustment of delivery prices during emergencies, and the creation of a subcontracting dispute resolution body.
Specifically, the agreement aims to eliminate the practice of paying only part of the progress payment to subcontractors while deferring the remainder until project completion, establishing a principle of cash payment within legal deadlines. It also sets forth criteria and procedures for quickly adjusting delivery prices during emergencies, to be negotiated between primary and subcontractors. Furthermore, the 19 major construction companies committed to raising delivery prices by 134.3 billion won as part of the cooperation agreement.
Additionally, general contractors will establish an internal subcontracting dispute resolution body to facilitate discussions with subcontractors on issues such as payment disputes and price adjustments. To ensure the effectiveness of the cooperation agreement, a public-private consultative body will be formed to share information on the implementation status of the agreement and trends in the enforcement of the subcontracting law.
Joo remarked, "The construction industry is a core sector that underpins our economy, but it is not easy to change the deeply rooted unfair practices and structures in the field overnight. This cooperation agreement was established to eradicate the remaining unfair practices and promote a culture of genuine mutual growth."
He added, "The recent instability in international affairs, such as the situation in the Middle East, and the downturn in the construction market have exacerbated challenges across the industry. However, it is during such times that we must work closely together to overcome difficulties. I would like to thank the participants from the general construction industry for adjusting the delivery prices for subcontractors as part of our mutual cooperation efforts."
Joo urged, "Please ensure that urgent payment adjustments and the payment linkage system operate smoothly during emergencies such as wars. If you share the various tasks that the Fair Trade Commission needs to address, I will actively consider them for institutional improvements."
* This article has been translated by AI.
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