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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Seoul, October 12 — South Korea’s construction industry is facing its toughest year in a decade, as more than 2,500 construction companies have closed their doors so far in 2024. The dual impact of an economic slowdown and stricter government regulations has driven a sharp rise in bankruptcies across the sector — with regional areas such as Daegu seeing the number of general contractor closures double from last year.
According to data from the Korea Construction Industry Information System (KISCON), a total of 2,569 construction firms nationwide shut down between January 1 and September 30 this year. Of these, 486 were general contractors, up from 435 in the same period last year.
The regional picture is particularly grim. In Daegu, the number of closed general construction firms rose from 9 last year to 18 this year, while Gyeongbuk Province saw 17 closures for the second consecutive year. Among specialized construction firms, 2,083 businesses filed for closure nationwide, including 67 in Daegu and 142 in Gyeongbuk.
Industry analysts attribute the rise in shutdowns to the prolonged downturn in the real estate market, which has significantly eroded project profitability. Persistent headwinds — including surging raw material costs, a weak Korean won, and rising interest rates — have further squeezed construction margins.
Adding to the pressure, tougher enforcement of the Serious Accidents Punishment Act and other safety-related regulations has increased operational risks, especially for small and mid-sized builders. Industry observers warn that a single workplace accident could now push vulnerable contractors out of business.
Experts are calling for targeted stimulus measures to revive the sector, stressing the construction industry’s critical role in supporting upstream and downstream economic activity. “With the construction industry’s multiplier effect on employment and investment, policy support is urgently needed to prevent further erosion of the nation’s industrial backbone,” one construction association official said.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
