The construction industry has called on the government to expand infrastructure investment, clear unsold homes through balanced regional development and provide support to revive the construction market, as smaller regional builders face a deepening cash squeeze. Industry officials also voiced concern that a series of regulations — an amendment to the Occupational Safety and Health Act and a proposed special act on construction safety, both carrying fines for industrial accidents — could shrink the industry and stand in the way of the government's push for a rapid increase in housing supply.
Han Seung-koo, chairman of the Construction Association of Korea and chairman of Keryong Construction, said at a press briefing held at a restaurant in Nonhyeon-dong, Gangnam District, Seoul, on the 21st that conditions are hardest for smaller companies outside the capital. "Large companies are also having a tough time, but the ones in real trouble are the small and mid-sized firms in the regions," he said. "The association has some 13,000 member companies, and apart from the top 50 or so large builders, the rest are in serious difficulty."
Han said activity at the lower end of the market has stalled. "When the household economy is healthy, small firms put up small buildings to lease out or build studio units, but right now that has stopped," he said. He added that the problem goes beyond construction costs. "There is no sign of a recovery in construction activity at all," he said. "Many of them are seriously thinking about handing back their construction licenses."
Han gave a positive assessment of the 2% increase in the social overhead capital budget in next year's government spending plan, while asking the government to put together support measures that firms can feel on the ground. "Construction activity at the bottom of the market is not moving at all," he said. "We hope the government will design policies that can get the bottom of the market moving."
According to the Construction Association of Korea, 378 general construction firms reported business closures in the first half of this year, up 16% from 326 a year earlier. The number of companies with an interest coverage ratio below 1 — meaning operating profit is not enough to cover interest payments — rose about 2.8-fold to 173 in 2025 from 62 in 2021.
The association also expressed strong concern about tougher safety sanctions. On top of the Serious Accidents Punishment Act, fines under the Occupational Safety and Health Act and the push to enact a special act on construction safety could add to the industry's burden, it said. The construction safety bill, sponsored by Rep. Moon Jin-seok of the Democratic Party of Korea, would require project owners to allow adequate construction periods and reflect appropriate construction costs, while allowing authorities to suspend the operations of construction companies, designers, supervisors and architects for up to one year, or impose fines of up to 3% of revenue, when a failure to meet safety management obligations results in casualties. Kwon Hyuk-jin, standing vice chairman of the association, criticized the move as overlapping regulation. "The government talks about supplying housing no matter what, but under these conditions I am skeptical about whether the construction industry can put all its efforts into expanding housing supply," he said.