Labor Shortage... Shipbuilding Industry Can't Smile Despite Record Orders

1Q Global Ship Orders
Strong Performance Taking Over Half
Skilled Workforce Supply Outlook Remains Challenging

[Asia Economy Reporter Choi Dae-yeol] "By the end of this year or next year, docks (spaces where ships are built) will be fully occupied, and a large number of workers will be needed, but at present, it is difficult to guarantee that the necessary workforce can be recruited in time. It is not easy to meet the desired labor costs, and since the shipbuilding industry has been so unstable, the perception has also worsened..."

This is the message from an anonymous source in the shipbuilding industry. Although President Moon Jae-in specifically mentioned the shipbuilding industry in his speech on the 10th, stating, "We will help ensure that skilled workers are supplied in a timely manner to sectors where employment expansion is expected," the mood on the front lines is far from bright. In the first quarter of this year, Korean shipbuilders swept up more than half of the global ship orders, performing well, but it is difficult to be optimistic about the supply of skilled workers with a certain level of experience, such as welding.

According to the industry on the 11th, the workforce related to shipbuilding, including small and medium-sized shipyards and subcontractors, peaked at about 200,000 in 2014 but has recently plummeted to around 90,000. It has shrunk to about half in six years. This is the result of the so-called Big 3 shipyards?Hyundai, Daewoo, and Samsung?enduring the prolonged downturn in the market over recent years through workforce restructuring such as voluntary retirement. Small and medium-sized shipbuilders also survived by selling shipyards or drastically reducing their businesses during this period.

The problem lies ahead. The domestic shipbuilding industry has overcome the drought in orders caused by COVID-19, and with expectations of global economic recovery and environmental regulations coming into view, it has secured a significant portion of ship orders pouring in since early this year. However, the supply of production workers to keep the frontline construction sites running is insufficient. Typically, shipbuilding involves design and other processes, and work in the dock begins about a year after an order is placed. To gain on-site experience, recruitment should start from the second half of this year, but the industry foresees this will not be easy.

Workers are protesting at the Metalworkers' Union rally to prevent the restructuring of medium-sized shipyards held in March 2018. Photo by Hyunmin Kim kimhyun81@

Considered an Unattractive Industry by Younger Generations
Peaked at 200,000 in 2014
Recently Halved to Around 90,000

An industry insider said, "With a 40-hour workweek, it has become difficult to do overtime or extra shifts, so labor costs cannot be maintained at past levels," adding, "Although shipbuilding remains one of Korea's key export sectors, frequent accidents and poor market conditions have made it an unattractive industry among younger generations, which is also a hurdle."

Government support is also expected to be limited. Since the shipbuilding industry competes internationally with foreign shipyards, direct government payment of labor costs is likely to be considered unfair support. Therefore, it is expected that the government’s available options will be limited to expanding employment infrastructure such as vocational training or reemployment programs for retirees. It is reported that establishing funds to reduce welfare benefit gaps between primary contractors and subcontractors is under consideration, but skepticism remains about whether this will have a real incentive effect.

A shipbuilding industry official said, "In the case of eco-friendly and smart ships, whose demand is expected to increase, Korea has sufficient competitiveness, such as maintaining technological superiority in construction for the time being," adding, "To establish a virtuous cycle in the recent market conditions, policy and institutional support that enables workforce inflow is urgently needed."

This content was produced with the assistance of AI translation services.