The shipbuilding industry, amid a super cycle boom, is facing the challenge of expanding its proportion of domestic employment. On the ground, reliance on foreign labor has grown due to chronic labor shortages and the burden of labor costs, but concerns persist regarding difficulties in safety management due to language barriers and qualitative limits on productivity. Experts advise that instead of focusing on short-term fixes, the industry should seek sustainable solutions for its industrial structure.
According to the Korea Offshore & Shipbuilding Association on March 20, the proportion of migrant workers in the domestic shipbuilding industry’s workforce increased from 3.2% in 2007 to 22.7% in 2024. Amid this trend, the ‘Big 3’ shipbuilders are contemplating reducing their proportion of migrant workers. The industry leader, HD Hyundai Heavy Industries, has decided on a policy to reduce the number of directly hired foreign workers and employ more domestic workers. Other major shipbuilders are also internally reviewing plans to hire domestic workers instead of foreign labor.
Government Stance Encourages Expansion of Direct Domestic Employment in Shipbuilding
This is closely related to the recent government atmosphere of encouraging the expansion of direct domestic employment in the shipbuilding industry. Last month, at a town hall meeting in Ulsan, Minister of Employment and Labor Kim Young-hoon expressed a negative stance on the indefinite expansion of the Ulsan metropolitan area-specific visa, stating, “I will consult with the Ministry of Justice” on this matter. Previously, at President Lee Jae-myung’s town hall meeting in Ulsan held in January, the issue of the increasing number of foreign workers in the shipbuilding sector was discussed, with remarks made to the effect that the structure of reliance on foreign labor needs to be re-evaluated.
The government appears to have set this direction based on the judgment that the growing reliance on foreign workers in the shipbuilding industry is affecting domestic jobs and that the benefits of the economic boom are not reaching the local economy. Based on the results of discussions at a policy meeting held on the 11th of this month, the Ministry of Justice plans to reform the visa system to focus on skilled foreign workers with specialized technical skills.
Until now, on-site jobs that domestic workers tend to avoid have been filled by foreign workers. According to the government, as of this January, 206 people have received the Shipbuilding Skilled Worker (E-7-3) visa. Separately, the foreign workforce in the shipbuilding industry includes approximately 8,000 people on the Non-professional Employment (E-9) visa and 13,000 on the General Skilled Worker (E-7-3) visa. However, the industry explains that securing skilled foreign workers is not easy, as they frequently return to their home countries after a certain period or move to other industries with better treatment.
Exodus of Skilled Workers and Qualitative Limits… Seeking Technological Breakthroughs
However, many believe that a rapid adjustment of the workforce structure will be difficult due to concerns about a labor vacuum and the risk of expanding fixed costs. An official from a shipbuilding company lamented, “While we are striving to increase the domestic employment ratio, adjusting the proportion of foreign labor is the most sensitive internal issue recently, as it can directly impact the field.”
There is also an analysis that, in the medium to long term, the industry must hurry to fill the gap in demand for skilled workers and transition to new technologies to secure sustainable competitiveness. The three major shipbuilders are already accelerating their transformation into smart shipyards that integrate Artificial Intelligence (AI) technology through investments in intelligent autonomous shipyards or smart yards. The government is also keeping pace. The Ministry of Trade, Industry and Energy will invest a total of 320 billion won in the ‘Shipbuilding and Offshore Industry Technology Development Support Project’ this year, with 94.9 billion won (approximately $64.1 million) allocated to the ‘AI·Digital Shipyard’ sector and 37.8 billion won to the ‘AI Autonomous Ship’ sector.
“A Sustainability Strategy for the Entire Shipbuilding Industry Must Be Established”
Amid these developments, experts continue to analyze that solutions must be found from a more long-term perspective. Dr. Park Jae-hyun of the Korea Marine Equipment Research Institute said, “As the Korean economy has grown, wage levels have risen sharply, significantly impacting the labor-intensive shipbuilding industry.” He stated, “We should not stop at merely discussing the adjustment of foreign labor; we must establish a sustainability strategy for the entire shipbuilding industry.” He emphasized, “It is a time when a structural transition based on technological competitiveness is needed, along with a vision backed by related investments.”
Yang Jong-seo, a senior researcher at the Overseas Economic Research Institute of the Export-Import Bank of Korea, stated, “While the workforce structure was reorganized around foreign workers as domestic skilled labor that left during past restructuring did not return, there are limits to maintaining competitiveness in the long run.” He said, “A certain level of domestic skilled labor is important to maintain core technology and productivity.” However, he also added, “Investment in automation and digitalization is also essential to simultaneously solve labor shortages and cost issues.” He conveyed, “As China is rapidly expanding investment in related technologies under government leadership, active support is also needed domestically.
Source: Business Korea
