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The Korea Fair Trade Commission (KFTC) and the construction industry announced on the 28th that they conducted a ‘Construction Industry Mutual Prosperity Cooperation and Fair Trade Agreement Ceremony’ aimed at eliminating long-standing unjust practices in the construction field. Both sides committed to essential actions such as timely payment of fees, removal of retention money, creation of a dispute resolution committee for subcontractors, and modification of unfair specific terms.

As reported by the KFTC, the event was attended by the Chairman of the Fair Trade Commission, the leader of the Korea Specialty Contractors Association, and representatives from 19 leading construction companies, such as Samsung C&T and Hyundai Engineering & Construction. The collaboration agreement covered timely payment of fees, elimination of retention funds, revision of unjust special clauses, stabilization of a subcontractor payment connection system, quick adjustment of supply prices in emergencies, and the creation of a subcontractor dispute resolution committee.

The KFTC mentioned, “Continuously providing just approximately 90% of progress payments to subcontractors and postponing the rest until the end of the project has led to challenges for subcontractors in covering labor expenses and acquiring materials.” It further noted, “Both sides consented to make cash payments within the legally mandated timeframes and completely eliminate retention money.”

In cases where unjust specific terms—like shifting safety costs and waste management expenses to subcontractors—continue to exist, construction firms have committed to self-audit and eliminate these provisions. After reports indicated that subcontractors have faced extra costs due to increased raw material prices resulting from the Middle East conflict, the main contractors and subcontractors have agreed to jointly create standards and processes for quickly adjusting supply prices during emergencies such as wars.

Furthermore, large-scale construction companies have committed to establishing and managing internal dispute resolution mechanisms for subcontractors, aiming to promote effective communication and independent solutions with subcontractors concerning matters like conflicts over payment and changes in pricing.

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