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Can Korea rejuvenate its shipbuilding sector?

If Korea wishes to address its manpower issue in the yards, the recovery needs to begin from within

It is heartening to witness Korea manning up to having a hand in their manpower shortage, according to a media outlet. Business Korea acknowledged in a commentary, “The shipbuilders are supposed to build a much larger number of ships starting from the second half of this year, but skilled subcontract workers are showing no signs of returning after the large-scale restructuring in the mid-2010s.”

Severity of manpower deficiency
Korea’s shipbuilding sector is a force to be reckoned with; given its biggest contender is China. The tight competition is well-known with both exchanging first and second places in newbuilding rankings. However, why is Korea suffering a severe manpower deficiency?

Business Korea revealed that the number of subcontract workers plummeted from 133,346 to 51,854 from December 2015 to February 2022. What stood out in the observation was shipbuilders’ cash flows. These companies have been in the red for years and a number of new shipbuilding processes are yet to start. In addition, most of their contracts are heavy-tail and the price of thick plates hiked dramatically. Essentially, the contract mechanics meant the biggest payments will only come at the final stage of building. That leaves shipbuilders no options but to self-fund the operations in initial phases.

Not only they are in no position to pay more to subcontractors, the piece added that an extremely high intensity of labour and a wage close to that in the general manufacturing sector contributed to the exodus. Such is a telling alarm not on cash flow, but inadequate fund allocation.

It also mentioned the companies are talking about an exemption from 52 work hours per week as a measure. However, the Korea Labour Institute pointed out it is no solution and what is really necessary is a work environment attractive to young workers. Industry sources disclosed that shipbuilders will eventually have to pay more to subcontractors, and they need to guarantee the mass layoffs will not be repeated. The latter can only be nipped in the bud with proper fund allocation, not tweaking manpower operation mechanics.

Marine Online News Team
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