Ulsan cracks down on illegal subcontracting, wage arrears at construction sites

Illegal subcontracting and the chronic non-payment of wages and equipment fees at large construction sites in Ulsan have been eliminated, city officials said.

The Ulsan city government announced Wednesday that it formed a seven-member inspection team — including officials from the local construction association — and conducted a subcontracting participation probe at 21 construction sites, including apartment complexes, from April 16 to May 26. The probe confirmed that payment guarantee certificates for subcontracting fees had been issued at a rate of 100%.

The investigation also found no cases of unpaid wages or construction equipment rental fees, crediting the establishment of an electronic payment system and improved awareness at construction sites. However, the local subcontracting participation rate stood at just 13.62%, far short of this year's target of 37%, with officials flagging the expansion of local firm participation as a key challenge.

The low participation rate was attributed to the relatively weak capacity and supply base of local firms for large-scale and core construction work. The concentration of contracts in certain sectors — such as mechanical equipment installation and painting and waterproofing — has also made it difficult for new firms to enter the market.

In response, Ulsan plans to pursue 22 action tasks across four areas to raise the local subcontracting rate: expanding support for local firms' participation in private construction projects, implementing an activation program for the local construction industry, establishing fair order in the construction market, and building a foundation to reinvigorate the construction sector.