South Korea faces shortage of shipbuilding workers

South Korea is one of the top countries in the world to receive the most shipbuilding orders.  In the first half of the year, South Korea added 9.8 million in compensated gross tonnage (CGT), to lead the world’s total order volume in July. Top Korean shipbuilders like Hyundai Heavy Industries is expect to achieve their sales goals this year.  

However, there is a shortage of skilled personnel to fulfil the new orders as thousands of experienced workers left during the downturn in 2015.  The industry needs at least 10,000 more workers and because of the urgency of the matter, the government recently allowed more foreign workers to be employed.  Nevertheless, experts and politicians from opposition parties have questioned whether this option is best for national interest.

Since 2015, the number of shipbuilding workers are declining because of retrenchment and pay cut, which resulted in a mass exodus to other industries like semiconductor.  As of February 2022, the number of workers was only half, about 99,000, of what was in 2015 (187,000), according to the Geoje City Office. 

To cut cost, shipbuilders paid their in-house workers 30 percent less than what it was in 2015, and also used subcontract workers.  As such, many young jobseekers avoided the industry and the average age of the shipbuilding workers is 50 years old.  Shipbuilders are open to hiring more foreigners, who are generally paid much less that locals.

The current law mandates non-Korean-to-Korean ratio among workers should not exceed 20 percent per subcontract company. The government will keep this quota but will increase the absolute number of non-Korean by giving out more work visas.  

For example, more foreign welders and painters are now allowed, and the trade and industry ministry estimated that with this visa relaxation, the industry will soon see the total reaching 9,000 foreigners, a 10-fold increase as compared to the current number.

On the other hand, workers and unions said this government’s plan is not sustainable and is just a temporary fix.  The Korean Metal Workers’ Union said in a statement the government is taking the easy way out and is not doing the right thing by overhauling the industry to make it more attractive to the locals.

The labor union of Hyundai Heavy Industries said with the inflow of more foreigners, there is the risk of overreliance and when they leave, they will take away their experience and skillsets with them.  The union said the government should invest in the development of Koreans instead.

At a press conference held in front of the Ulsan Council on September 22, politicians from opposition parties, the Labor Party, Justice Party and Progressive Party, said the fundamental problem of labor shortage in the shipbuilding industry stems from low pay.  They added that with foreigners, industrial accidents are also waiting to happen because of miscommunication due to languages and culture.

Kang In-seok, ship painter, said shipbuilders should guarantee basic working rights if they want to attract more workers. 

“Subcontract workers are getting minimum wage.  They don’t have benefits and don’t get paid for public holidays, weekends, and personal leave.  Shipbuilders have to do better.  They cannot have their cakes and eat it too.  Politicians always say they want to improve the working conditions of the subcontract workers.  But they are all talk and no action,” Kang said.

Photo credit: iStock/ Iam Anupong

Sunny Um

Sunny Um

Sunny, our South Korea correspondent working out of Seoul, is a journalist with a passion for community journalism and an interest in economics and politics.

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