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By Park Jae-hyuk
Subcontractors specializing in framework construction have decided to suspend their work starting Wednesday, as most builders have refused to accept their request to raise payments in light of the skyrocketing prices of raw materials, according to industry officials, Tuesday.
Last month, a group of framework constructors sent a letter to the nation's top 100 builders urging them to increase payments for their work by 20 percent.
Their demands were mainly attributed to an unexpected increase in costs caused by the pandemic-led global supply chain crisis and difficulties in importing raw materials from Russia in the wake of the country's military conflict with Ukraine.
"Before we received orders last year, we were not able to anticipate the sharp rise in material and labor costs or the delayed supply of ready-mix concrete and rebar," the subcontractors said in the letter. "It is inevitable for us to request adjustments in the contracted prices."
They initially asked the builders to promise by Tuesday to raise their payments, but almost 90 percent of the builders have remained reluctant to accept the requests, despite a meeting last Friday between the builders and the subcontractors, which was hosted by the Korea Specialty Construction Association to prevent the shutdown of construction sites nationwide.
Both sides failed to reach an agreement at the meeting, which was attended by only about 10 builders, according to the association.
As a result, more than 180 subcontractors agreed to stop framework construction work on Wednesday. They have yet to decide when to resume their work.
The builders have cried foul over the request for a payment hike, arguing that they also have suffered from rising labor costs and tougher regulations, such as the Serious Accidents Punishment Act, which could send a company's CEO to jail if a fatal industrial accident occurs at the company's workplace.
"If the shutdown is protracted, it may damage our business, so we will monitor every possible risk," said a spokesperson from one of the major builders.
Industry experts did not expect the conflict to be settled in the short term.
"Demand for rebar will increase further during peak construction season in spring, so its price will not be stabilized easily," Korea Research Institute for Construction Policy researcher Lee Eun-hyung said. "The conflict will not be resolved in the short term, because it is especially difficult for small- and medium-sized private builders to accept the requests of their subcontractors."
The researcher added that a hike in housing prices is unavoidable.
There is also speculation that domestic builders may face additional conflicts with suppliers of other construction materials, as the military conflict between Russia and Ukraine is expected to keep pushing up the global prices of core materials.
Suppliers of ready-mix concrete have already informed builders that prices will be 25 percent higher this month, citing the global cement price hike after a setback in the supply of bituminous coal from Russia.
