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SUMMARY
A Study on the Policy for the Prevailing Wages in Construction Project
JongWuk Ahn , Hyunji Yoo, Jongso Lee, Chijoo Lee
Key words: construction workers, prevailing wage laws, construction costs, policy impacts
The purpose of this study is to verify some details for preparing the fair wage system in Korean construction industry. Due to the multi-layer subcontracting structure of the construction industry, contractors and workers become easy to undercut by low wage competitors. The decline in wages makes young people not interested in this industry, and leads to both of the decrease in skilled labor forces and the increase in foreign workers. To protect workers and the productivity of Korean construction industry, the introduction of the “prevailing wage laws” is under consideration.
In Korea, there is only one example where wages for specific industry are different from the national minimum wage, “the minimum wage for seafarer.”
The minimum wage for seafarer is yearly decided through the policy advisory committee of government department. In the United States, Davis-Bacon and Related Acts(DBA or prevailing wage laws) requires contractors and subcontractors working on federally funded projects to pay their workers no less than the “prevailing” wage, what others locally pay their laborers for similar projects.
SUMMARY ･ 93 As a key negative effect of the prevailing wage laws, construction costs are expected to increase. In order to examine this effect, we examined the bid prices of the pilot projects and found that factors affecting the increase in construction costs are the calculation of average price, the criteria for handling tiebreakers, and the unit price by work type. These factors and their impacts should be comprehensively considered in the future in-depth analysis.
The policy proposals in this study are as follows. First, in order to determine the ‘fair’ wages for construction workers, wage surveys should be enhanced in quality and accuracy and wages should be differentiated according to the skill levels. Second, an in-depth analysis on the cost-effect of introducing the prevailing wage law is required to improve the bidding system in fine detail.
Lastly, it is necessary to establish a committee for construction wage, composed of related organizations and experts. The committee will make some decisions about building database or carrying out research for determination of the construction wages.
