Riding an Unprecedented Supercycle but No One to Work... Fears of a Sandcastle Boom for K-Shipbuilding

Direction Is Set, but Path to Expanding Domestic Hiring Remains Murky
Without Sufficient Compensation, Attracting Young Workers Is Unlikely
Calls Grow for Government Incentives

Despite a growing order backlog and a return to profitability, shipyards are still grappling with persistent labor shortages. Due to a wage structure perceived as low compared to the intensity of the work, domestic young people are turning away from these jobs, solidifying a structure in which foreign workers fill the gap. The main issue is that many foreign workers return to their home countries after short stints, which prevents the accumulation of skilled labor and limits the positive consumption effects on the local economy.

Panoramic view of HD Hyundai Heavy Industries Ulsan Shipyard. Provided by HD Hyundai Heavy Industries

Recently, major shipbuilding companies have recognized that this structure could weaken the industry's long-term competitiveness, prompting a revamp of their employment strategies. They are internally considering plans to gradually adjust the share of foreign workers and expand domestic hiring. Since the shipbuilding industry has entered a supercycle—a boom period driven by increased global orders—the companies aim to bolster the transfer of technical skills and organizational stability by increasing directly employed staff, even if it means bearing a certain level of labor cost burden.

As of the end of January 2026, the combined total workforce of HD Hyundai Heavy Industries and HD Hyundai Samho stood at approximately 57,000. Of these, around 23,000 are direct employees, with about 1,700 being directly employed foreign workers, making up roughly 10%. When including partner companies, the proportion of foreign workers approaches 20%. Considering that the number of foreign workers was only in the thousands in 2021 but has more than quadrupled in the past few years, the pace of this structural change is remarkably rapid.

The situation is not much different at Samsung Heavy Industries and Hanwha Ocean. At Samsung Heavy Industries, out of about 10,000 direct employees, around 1,397 are foreign workers; including partner companies, the foreign worker proportion remains in the 20% range. At Hanwha Ocean, among a workforce of 10,000 direct employees and 20,000 at partner companies, foreign workers at partner companies account for about 25%. All three major shipbuilders are now contemplating ways to reduce dependence on foreign labor and expand the influx of domestic workers.

This structure has formed against a backdrop of chronic labor shortages. On-site jobs such as hull construction and welding are physically demanding and involve outdoor work. During past industry slumps, overtime work and pay rates both fell, reducing incomes and fueling avoidance of these jobs among younger generations. Although the industry has recently returned to profitability, its reputation as a 'tough industry' has not been easily shaken.

Ultimately, the labor gap has been filled by foreign workers entering with E-7 and E-9 visas. However, according to the industry, it generally takes more than five years of work experience to become skilled in high-difficulty tasks like advanced welding, yet it is rare for foreign workers to remain for more than four to five years. As a result, after a certain period, workers return to their home countries or move to other industries, repeatedly interrupting the accumulation of technical skills.

However, there is concern that no clear solution is immediately apparent. While the direction has been set to reduce the proportion of foreign labor and expand domestic hiring, it is difficult to implement large-scale wage increases or investments given that the industry is only just emerging from a prolonged downturn. Ultimately, sufficient compensation and improved working conditions are key, but the industry continues to struggle to find concrete ways to realize these goals.

An industry official said, "During the boom in the mid-2000s, even college students flocked to part-time jobs at shipyards, but during the downturn, unstable wage structures and working hours diminished the appeal. If performance continues to improve over a long period and working conditions stabilize, it is possible that more people will return." However, there are also calls for systematic measures such as support for training costs or incentives for partner companies to foster skilled workers in the long term.

This labor structure extends beyond internal corporate issues to impact the local economy. Vacancy rates for commercial properties in shipbuilding hubs such as Ulsan and Geoje significantly exceed the national average. When domestic workers were the majority, a considerable share of wages circulated within local businesses, but now, with much of foreign workers' income sent abroad, the spillover consumption effect on the local economy is limited.

Recently, President Lee Jaemyung commented that increasing the number of foreign workers could encroach on domestic jobs and may not benefit local economies, prompting the shipbuilding industry to reconsider its direction. However, there is also a strong recognition that raising wages alone is not enough to attract young workers. The lower perceived rewards compared to other industries like construction are also a burden.

Accordingly, some shipbuilders are expanding the adoption of robots and automation, particularly for simple repetitive processes. This reflects a sense of crisis that, unless the labor structure is fundamentally changed, the industry could face another labor shortage once the supercycle ends.

Ultimately, the shipbuilding industry's labor issue encompasses three main challenges: improving wages and working conditions to attract young workers, designing systems to cultivate skilled workers over the long term, and restructuring employment to connect more closely with the local economy. While the direction is clear, industry consensus is that without sufficient funding and policy support, finding solutions will remain difficult.

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