Safety law, in effect from Thursday, stumps industrialists

Industry

Published: 24 Jan. 2022, 19:20

Safety law, in effect from Thursday, stumps industrialists

A worker of Hanyang Construction examines an apartment construction site in Changwon, South Gyeongsang. The new safety law will go into effect on Thursday, Jan. 27. [YONHAP]

Companies are on edge as a new industrial safety law is set to take effect Thursday.

They are keeping relatively quiet about it, wary of the public outrage following the fatal accident in Hwajeong-dong, Gwangju, that left five workers missing and one dead.

An executive for a civil engineering company headquartered in Seoul is growing fretful over the strengthened safety law. His company updated safety instructions in line with the guidelines issued by the government, but the new rules left more questions than answers.

If the company hires a flagman for a road construction project, the labor cost will be incorporated into the safety management budget. On the other hand, if the company signs a contract with another company to inspect a manhole for the same road project, the labor cost will not be included in the total construction expenses.

Every worker paid by a company is supposed to be protected by the new law regardless of employment status, but the case gets complicated if the labor expense is not directly included in the contractor's construction costs.

"It is unclear who should be held liable for safety management in such cases," said Kim, "so people are worried that we might take all the blame all of sudden."

Enacted last year, the Severe Accidents Punishment Act holds the business owners, or chief executive, liable if safety measures are insufficient.

Heads of companies are subject to a minimum prison sentence of one year or a fines of up to 1 billion won. For corporate entities, the fine could go as high as 5 billion won.

The severity of punishment is making companies anxious, as even a single accident might lead to a total shutdown of the business.

"Large companies will somehow manage, but small- and mid-sized companies will probably have no choice but to go out of business," a manufacturing industry insider said. "Some say that they would rather just close down the company than be arrested doing business."

Large companies are feeling the heat as well.

Daewoo Shipbuilding Marine and Engineering held a seminar on the reinforced safety law last month, attended by their partner companies.

New chief security officers (CSO) or CEOs are being appointed in construction companies where industrial accidents happen more often and large shareholders have a bigger influence in the management decisions.

Samsung C&T named its first CSO with the management authority equivalent to an executive vice president, while GS Engineering & Construction appointed the new CSO at the level of the top executive position.

Some mid-sized companies also are scouting professional management to replace management by large shareholders.

"Construction companies are avoiding responsibility even before the law goes into effect," said ruling Democratic Party lawmaker Jang Kyung-tae, criticizing CEOs of Hanlim Construction, Yojin Construction & Engineering and Hanshin Engineering Construction who stepped down from CEO positions ahead of the implementation.

Hiring the professionals with safety management experience is also one of the priorities.

GS E&C and Ssangyong Engineering & Construction recently posted job openings for on-site safety managers.

A growing number of companies are encouraging workers to suspend the operation in case of emergencies.

"Companies used to avoid work suspension due to production loss," said Jeon Seung-tae, head of the industrial safety department of Korea Enterprises Federation, "but now the situation is completely different."

"We had no fatal accidents for a decade until last year when two cases occurred," said an anonymous employee at a domestic engineering company. "I just wish that we are not the first to be punished."

The public sector is getting nervous as well.

"It will be a difficult situation to say at least if a public institution becomes the first to be punished by the law," said a government official who requested anonymity.

The public sector is where it all began. The death of a 24-year-old contract employee Kim Yong-gyun who worked in a Korea Western Power thermal power plant in Taean County, South Chungcheong, triggered public support for stricter safety measures.

According to a Ministry of Employment and Labor report released Jan. 11, the number of fatalities in projects conducted or led by the public institutions totaled 244, from 2016 to last year.

Korea Electric Power Corporation, Korea Rural Community Corporation, Korea Expressway Corporation, Korea Railroad and Korea Land and Housing Corporation were the institutions with the highest number of industrial accidents.

The government has been holding meetings on weekly basis over industrial accidents from the second half of last year, led by the Ministry of Land, Infrastructure and Transport and the Ministry of Employment and Labor.

Public institutions are also struggling to fill in the safety management posts suddenly in high demand.

An unidentified state-owned company established a new department for safety management, but had a hard time setting up a team of some 30 people.

Korea University of Technology & Education under the Ministry of Employment and Labor plans to introduce a business course for industrial safety management in March.

Experts are skeptical if the public sector will be able to afford the additional investment in safety management.

"What's important is that a company will be subject to penalty only when the accident happened due to lack of safety management system," said Kwon Hyuk, professor at Pusan National University Law School.

Kwon said that the government should put emphasis on the fact that the CEOs won't be held accountable if adequate safety measures have been implemented beforehand.

"In order for the law to function properly, the government should lessen the corporate anxiety by sending a clear message that making active investments in safety measures will prevent the CEOs from being punished."

BY BAEK IL-HYUN, KIM GI-CHAN [shin.hanee@joongang.co.kr]