“Reduce the breathing of natural positions such as the chairman and chairman of the association”…’Innovation after 58 years’, full improvement of construction-related mutual aid associations

Photo = Yonhap News
Photo = Yonhap News

[뉴스워치= 윤영의 기자] The operation method of the three construction-related mutual aid associations, including construction, specialized construction, and machinery facilities, will be completely renovated in 58 years. Accordingly, it is expected that excessive benefits of the union’s employees will be drastically reduced.

In the 1960s, the mutual aid association was established as a mandatory investment by construction companies in a situation where the financial function was insufficient, such as depositing construction deposits in cash at the client, and is operated with a guarantee fee borne by the members.

In accordance with the Framework Act on the Construction Industry, investment in a mutual aid association is a prerequisite for registration and guarantee subscription in the construction industry. In order for construction contractors to perform construction work, it is mandatory to sign up for the contract fulfillment and defect repair guarantee.

Accordingly, the three mutual aid associations have grown into large financial institutions with a total investment of 12 trillion won, a guarantee scale of 146 trillion won, and an annual sales of 900 billion won, and have played a role in supporting the growth and stability of the domestic construction industry.

In recent years, the construction industry is undergoing fundamental improvement, such as the abolition of industrial regulations between general and specialized construction industries, and construction companies are also strengthening their innovation capabilities in preparation for changes in market conditions. Accordingly, there is a need for a mutual aid association to strengthen competitiveness and establish a potential risk management system in order to actively respond to the rapidly changing construction industry environment.

For this, it is pointed out that it is urgent to have a transparent and efficient decision-making system while making bold management innovations on their own. Accordingly, the Ministry of Land, Infrastructure and Transport prepared the’Mutual Aid Association Management Innovation Plan’ and the’Steering Committee Reorganization Plan’ after collecting opinions from stakeholders such as industry and mutual aid associations and consulting related organizations.

The mutual aid association has a relatively easy business structure, mainly for the sale of legal guarantee products. However, criticism has been raised that the financial benefits of employees are too high. In the midst of this, the Ministry of Land, Infrastructure and Transport-Mutual Aid Association-Association organized a T/F on the 10th to devise autonomous management innovation measures for the mutual aid association, such as branch reorganization, employee cost reduction, and investment efficiency.

The financial industry is pursuing customer convenience and cost reduction through expansion of online services and simplification of procedures, but it is pointed out that the mutual aid association operates a number of small branch offices on the premise of the existing face-to-face method, thereby reducing management inefficiency and competitiveness.

The three mutual aid associations decided to drastically reduce the number of branches. In the case of construction deductions, the current 39 branches will be reduced to 34 branches by the end of this year, and 7 headquarters and 3 branches by June 2022. Specialized deductions were to be reduced from 32 branches to 28 and gradually reduced to 20 branches by February 2025.

Despite the fact that the sale of legally obligated products accounts for half of the profit, the mutual aid association is criticized that executives and employees receive excessive business expenses, incentives, welfare expenses, etc., taking into account the business characteristics of the mutual aid association and the level of other financial institutions. The benefits will be greatly reduced. The operating cost is linked to sales, and the limit is managed at a reasonable level and the transparency of execution management is strengthened.

For management at the level of public institutions, the’Guidelines for the use of business expenses, etc.’ will be prepared, and external activities expenditures expended in cash will be recorded and will be consolidated and reduced by January 2025. Incentives are paid when prerequisites such as target rate of return of surplus funds and risk management are achieved through labor-management consultation, and the payment level is linked to profitability and rate of return exceeding the target.

For executive severance pay, the multiple of monthly salary is reduced from 1.5 to 3 times to one, and annual compensation costs are significantly reduced in the number of days covered by labor-management consultation. In addition, although the large-scale surplus fund formed from member investment amounts to about 4 trillion won, the target rate of return is set at 5% by 2025, according to the point that the rate of return is too low compared to other annual funds. Year) +2.0%’ level.

To this end, the construction mutual aid plan is to gradually increase the proportion of investment in profitable assets from 2% to 25% this year and 50% by 2024.

In addition, the Steering Committee will be reorganized for transparent and fair decision-making by the mutual aid association. It is obligatory to introduce direct and anonymous voting methods so that members can be elected fairly and objectively. In this case, when only the president of the association, who is also a member of the association, maintains an ex officio operating member, the rules for ex officio office of the association president shall be deleted, taking into account the disputes on equity with majority and minor exporters, non-member companies, and regional representatives. Since the chairman in charge of the executive is subject to the supervision of the steering committee, the chairman is also excluded from the ex officio management committee for check and balance.

To enhance the professionalism of the Steering Committee, one of the Steering Committee Chairman and Vice Chairman is appointed as an expert, and for more members to participate, the term of office is shortened from 3 years (no consecutive term limit) to 2 years and limited to 1 consecutive term.

The management innovation plan for the mutual aid association will be initiated in earnest after approval by the general meeting, and the reorganization of the steering committee will be implemented in April after the revision of the Enforcement Decree of the Construction Act.

In this regard, Kwon Hyeok-jin, Director of Construction Policy Bureau, said, “As the mutual aid association has played a strong support for the domestic construction industry, this reform will be the rock for the next 100 years of the construction industry. While monitoring, we plan to take care to ensure that the reform of the mutual aid union can be completed without a hitch.”

Reporter Yoon Young-eui [email protected]

Source