[Column] Are Foreign Workers the Answer for Shipyards?

[Asia Economy Reporter Oh Hyung-gil] The Hyundai Heavy Industries lawsuit over ordinary wages, which has dragged on for 10 years, has come to an end. The labor and management agreed to pay approximately 630 billion KRW in wages to about 38,000 current and retired employees, placing a significant financial burden on the company. Other shipbuilders facing similar lawsuits are also becoming tense.

On the same day, the government announced at a field discussion held in Yeongam, Jeollanam-do, that it would ease the experience requirement for visas issued to skilled foreign workers in the shipbuilding industry from 5 years to 4 years. The number of skilled worker visas issued annually will also be increased from 2,000 to 5,000.

[Image source=Yonhap News]

These two scenes starkly reveal the reality of Korea’s shipbuilding industry, which once dominated the world. In the process of overcoming sluggish market conditions, trillions of won in deficits have accumulated over several years, and problems have piled up due to missed opportunities for restructuring. While management burdens increase, it is becoming difficult to find workers on the ground.

In particular, following the ordinary wage lawsuit, the court’s ruling that subcontracted workers must be directly employed has spread concerns throughout the industry. Not only shipbuilders but also companies across all sectors such as POSCO, Hyundai Steel, Hyundai Motor, Kia, and Samsung Electronics are expected to be affected.

If all demands from workers for expanding regular employment and wage increases are accepted, labor costs will inevitably rise. Research and development or facility reinvestment will become relatively difficult.

What is the situation of our shipbuilding industry? Korea lost its top position to China, which entered the shipbuilding industry with low wages as a weapon, and Singapore and Indonesia are rapidly catching up. Recently, it has been holding its ground with LNG ship orders riding the wave of eco-friendly trends, but the situation is not easy.

The policy to maintain shipbuilding competitiveness by increasing foreign workers is nothing more than a stopgap measure. It is urgent to establish a mid- to long-term shipbuilding industry policy considering sustainability. Shipbuilders complain that support reflecting their social role in creating hundreds of thousands of local jobs is desperately needed. Institutional improvements such as work allocation due to wage gaps between primary and subcontractors must also be prepared. The road ahead is long, but the 'sagong (沙工)' is nowhere to be seen.

[Image source=Yonhap News]