Worker A, employed by a secondary subcontractor handling semiconductor equipment maintenance, signed a so-called "fake 3.3 contract." Under this arrangement, workers who legally qualify as employees under the Labor Standards Act instead register as self-employed individuals paying 3.3% business income tax. While companies typically pressure workers into such contracts to reduce social insurance costs, A chose this arrangement voluntarily. The primary contractor had set labor cost rates so low for the secondary subcontractor that A tried to save money by forgoing the four major social insurance programs. Ninety-nine percent of workers at the secondary subcontractor were in the same situation.
The Ministry of Employment and Labor announced on the 19th that its targeted inspection of 108 workplaces suspected of using fake 3.3 contracts found 1,070 workers at 72 sites (67%) had signed such agreements. These workers had been operating as disguised self-employed individuals without legal protections under labor laws. Additionally, 1,126 workers, including the 1,070, suffered approximately 680 million won in unpaid wages. Inspectors discovered 256 additional labor law violations at 87 workplaces. Labor Minister Kim Young-hoon said, "We will thoroughly crack down on fake 3.3 contracts."
As Worker A's case demonstrates, subcontractor price-cutting can extend beyond inter-company business disputes to harm workers directly. At a labor policy forum held alongside the launch of the first Economic, Social and Labor Council, President Lee Jae-myung said, "There's this practice of slashing subcontractor prices. If there is polarization between SMEs and large corporations—a kind of exploitative relationship—this is also an important issue that needs to be addressed in the market."
