Government Principally Bans Multi-Tiered Subcontracting in Public Sector

The government has set a policy to principally prohibit multi-tiered subcontracting in an effort to correct unfair practices within the public sector and enhance worker employment stability. It plans to increase on-site stability by guaranteeing contract periods of two years or more, unless special circumstances warrant otherwise.

The government conducted a fact-finding survey on subcontracting and sub-subcontracting contracts in six public sectors: power generation, energy, airports, railways, roads, and ports. The survey revealed serious issues of employment instability, including wages decreasing through subcontracting tiers for the same or similar work, and over half of contracts being for one year or less.

President Lee Jae-myung had previously ordered improvements to subcontracting practices in the public sector last year. At the time, President Lee pointed out that "the largest employer in Korea is the government's public institutions, and the government is acting immorally," urging a responsible stance from the government.

Accordingly, the government has included measures to prioritize direct employment when illegal dispatch is determined by the Ministry of Labor or courts. Multi-tiered subcontracting, identified as a channel for intermediate exploitation, will be prohibited in principle, and contracts will explicitly state provisions guaranteeing employment succession even when the contractor changes. Contract periods will be guaranteed for two years or more "unless special circumstances exist" to prevent 'fragmented contracts.' Additionally, the minimum bid rate for service contracts will be raised by 2 percentage points, and labor costs will be clearly itemized and disclosed in separate calculation statements.

The government plans to finalize specific guidelines containing these provisions in the latter half of the year.