Issue Focus

The year 2021 marks the first year of reorganizing the construction industry production system (elimination of industry regulations, improvement of industry systems and adjustment of registration standards) that has started after long discussion and coordination, and thus, mutual market entry between general and specialized contractors is taking place from public construction. Afterwards, its implementation will be expanded in phases until 2024. However, in April 2021, only after 4 month from the onset of the reorganization of the construction production system, as the pilot project revealed the limitations in the entry of small specialized contractors into the mutual market for general construction, the National Assembly proposed a bill to amend the Framework Act on the Construction Industry (Agenda No. 2109615) to improve the situation. The amendment bill presented the following two revisions. First, an amendment was proposed to exempt the compulsory registration standards for general contractors in case that a specialized contractors is consigned to general construction under 1 billion won (excluding government-supplied materials and value-added tax). Second, in order to protect small specialized contractors, the scope of the Framework Act, in which general contractors are already excluded from specialized construction projects under 200 million won, is expanded by 2023 with the stipulation that the amount of government-supplied materials and value added tax included in the estimated construction cost is to be excluded when calculating 200 million won. However, this amendment bill is considered to represent a unilateral asymmetric regulation providing competitive advantages only to a specific industry sector, which abrogates the agreement between labor, management and government to seek mutual entry on the basis of new investment related to the reorganization of the construction industry production system, and contains the institutional changes that hinder the attraction of investment in construction businesses by the law, thus, instigating again the conflict in the industry that has been going on for the past 40 years. Thus, in this study, the two amendments contained in the bill are reviewed in depth based on various data such as various statistics that could allow determination of the industrial situations. As a result, a total of 13 problems and limitations were derived. Given all these, it is considered that premature revision of the law should be avoided in the early stages of improvement in the construction production system.