Companies linked to serious industrial accidents to be barred from public bids

Workers are seen alongside building materials at an apartment complex construction site in Seoul, Aug. 11. Yonhap

Companies that have been involved in serious industrial accidents will be barred from bidding on government-contracted projects, the Ministry of Economy and Finance said Wednesday.

The measure is in line with President Lee Jae Myung’s broader initiative to strengthen labor rights by improving workplace safety and increasing corporate accountability in cases of negligence.

According to the ministry, the construction sector is expected to be most affected, as the nature of the work often exposes laborers to a higher risk of fatal accidents. Company executives have often been accused of evading responsibility for incidents.

“A new qualification requirement related to safety will be added as a condition for eligibility in competitive bidding,” the ministry said in a statement.

The ministry said the new rule was approved Wednesday during a committee meeting on public procurement policy chaired by Second Vice Minister of Economy and Finance Lim Ki-keun.

“This approval reflects the government’s intent for the public sector to take the lead in strengthening safety measures in response to a recent series of serious industrial accidents,” it said. "Workplace safety will also become a more decisive factor in determining successful bidders for government-contracted projects."

For instance, construction safety, which was previously categorized as an optional item, will now become a mandatory evaluation item for projects valued at over 10 billion won ($7.14 million).

“This change reflects criticism that the optional system had limited effectiveness, as most companies already scored near the maximum in the main evaluation criteria,” the ministry said.

In addition, the government will strengthen standards for calculating safety-related expenses, including indirect labor costs, to ensure that bidding companies allocate sufficient resources to protecting workers.

A new clause will also be introduced in construction contract guidelines to allow contractors to voluntarily suspend work if safety issues arise during a project. In such cases, penalties such as late completion fines will be waived to encourage proactive safety measures by builders.