Gyeonggi Province Increases Budget by 5.9 Billion Won for Fair Contract Review

[Suwon Ilbo=Reporter Park No-hun] Gyeonggi Province has increased its budget by 5.9 billion won this year for contract review based on 'fairness' to protect worker welfare and provincial safety.

There is often a misconception that contract review is a process of cutting budgets; however, this case stands out as an example of budget increases.

From January to the end of October this year, Gyeonggi Province conducted preliminary reviews of 2,608 contract cases worth 1.4491 trillion won and achieved savings of 79.2 billion won, the province announced on the 22nd. The budget increases totaled 5.9 billion won, while budget reductions amounted to 85.1 billion won.

Contract review is a system under the Local Contract Law in which local governments review and examine whether the planned prices for projects such as construction, services, and goods purchases initiated by local governments are underestimated or overcalculated, examining the appropriateness of cost calculations.

The province explained that this year, it specifically conducted reviews with a focus on ensuring fair wages for facility management workers, cleaning service workers, and construction workers by carefully examining whether labor costs were properly reflected in design amounts.

Looking at specific examples of budget increases, the province adjusted the wage unit price that was initially designed as general laborers on a road expansion project to appropriate job categories such as formwork carpenters, concrete workers, and landscaping workers, thereby increasing labor costs by approximately 86.45 million won to ensure appropriate wages are paid to skilled workers.

For a B facility electrical and telecommunications construction project, labor costs that were uniformly reduced by 70 percent were fully reflected at 100 percent, resulting in an increase of 354.14 million won.

The province explained the reason for the increase, noting that setting costs too low due to budget constraints could lead to poor construction practices or wage payment defaults.

When reviewing C city main building window replacement work, the prevailing wage unit price applied at the 2019 design stage was applied to the 2020 bidding stage, increasing construction workers' wage budget from the original 88 million won to 90.53 million won.

For D memorial park cleaning and maintenance services, the standard applied in the first half of 2020 was changed to the second half standard to ensure sanitation workers' wages are guaranteed.

Additionally, the province carefully examined whether expenses necessary for protecting worker rights were properly reflected.

For E public institution building management services, the province adjusted annual leave allowance from 15 days as originally designed to 26 days in accordance with the Labor Standards Act amended in July 2018, thereby increasing labor costs by approximately 240,000 won to ensure workers receive 26 days of annual leave allowance in their first year.

There were also cases where omitted retirement mutual aid fund contributions were reflected. In F facility electrical and telecommunications construction, 4.44 million won was increased, in G facility restroom improvement construction, 2.72 million won was increased, and in H area landscape lighting equipment improvement construction, 1.59 million won was increased.

The retirement mutual aid fund contribution is a system designed to protect construction workers who have difficulty receiving statutory severance pay by requiring employers to contribute mutual aid funds in proportion to working days. The province explained that while projects valued at 100 million won or more are required to reflect this contribution, it is often omitted.

Ma Sun-heung, Gyeonggi Province's Contract Review Officer, stated, "While there are sometimes misconceptions that contract review damages the interests of small construction companies by cutting construction costs, its role in preventing unfair transactions beforehand and protecting the vulnerable is far greater," and added, "We will conduct fair and reasonable contract reviews that everyone can appreciate, ensuring that provincial taxpayer funds are used appropriately where needed."