South Korea cracks down on illegal subcontracting at Seoul construction sites

South Korean authorities have intensified their crackdown on illegal practices within the construction industry, focusing on the Seoul metropolitan area. A concentrated inspection campaign, conducted from May 11 to 29, targeted 75 suspect construction sites. This initiative, utilizing AI analysis to identify potential violations, resulted in the detection of 29 instances of illegal subcontracting involving 26 companies across 18 sites.

The inspections revealed a significant number of violations, with subcontracting to unregistered construction businesses accounting for the largest share, with 20 cases. One notable instance involved a subcontract for temporary fence installation at a new officetel construction site in Gwangjin-gu, Seoul, awarded to a company lacking the required construction business registration. Additionally, four cases involved subcontracting to unqualified entities.

Further violations included five instances where companies failed to meet the criteria for re-subcontracting. In one case, M Co., a contractor for a new apartment complex construction in Seongdong-gu, Seoul, re-subcontracted excavation and temporary facility work worth 6.34 billion won to B Construction. B Construction then subcontracted part of this work, related to waterproofing and ground reinforcement, to S Technology for 506 million won, despite not meeting the re-subcontracting requirements and lacking the client's prior approval.

Beyond illegal subcontracting, the inspections also addressed payment issues. Out of 12 reported cases of unpaid construction machinery rental fees, 11 cases totaling 125.8 million won were resolved. For the remaining unresolved cases, legal proceedings or processing through compensation and security associations are underway. The Ministry of Land, Infrastructure, and Transport has requested administrative actions from local governments and will pursue criminal charges against the violating companies.

“

Construction machinery rental fee arrears directly harm construction machinery rental business owners and site workers. We will strengthen regular inspections focusing on sites with reported arrears and suspicious illegal subcontracting, and strictly address any violations found.