Seoul,South Korea – September 21,2025 - Comprehensive labor safety measures announced by the government are poised to significantly disrupt South Korea’s construction market,perhaps paralyzing it,according to industry analysts. The measures, planned for phased implementation starting in the second half of this year adn fully enacted next year, include substantial penalties for safety violations.
Currently, penalties are capped at 5% of operating profit, with a floor of 3 billion won, dependent on the severity of accidents. However, the new regulations are expected to disproportionately impact smaller construction firms. While larger companies with operating profits exceeding 60 billion won may absorb the 5% cap, smaller firms face penalties consuming a significant portion of their earnings with the 3 billion won minimum.
Adding to the pressure, a revised special act on construction Safety is under consideration, potentially imposing penalties of up to 3% of total sales in the event of a fatal accident. Uncertainty remains regarding whether these penalties will be applied alongside, or in lieu of, the comprehensive labor safety measures.
If implemented separately, the combined impact coudl be devastating, particularly for mid-sized builders. Analysis of the first half of 2025 data indicates POSCO E&C would face the largest deficit, while Hyundai E&C and Lotte E&C would incur penalties exceeding their operating profits. Across seven major construction companies,the average penalty rate is projected at 70%.
“The comprehensive measures currently announced are excessive considering the principles of self-responsibility and the principle of proportion,” stated an official from a large law firm.
The announcement comes as the construction industry grapples with ongoing concerns about workplace safety and a series of high-profile accidents.
