Turn moribund shipbuilding towns into new industrial base

The government has unveiled measures to support Korea’s 7,900 ailing shipbuilders in maintaining the employment of their current workers in the midst of industry-wide restructuring. The nation’s top three major shipyards – Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. – are not subject to the job security program, the first since its introduction in late last year. According to the plan, the government will increase the ceiling of financial support for employment from 43,000 won (37.35 U.S. dollars) to 60,000 won (52.11 dollars) per person daily if financially troubled companies send employees on leave instead of laying them off. Financial aid for job training at small and medium-sized companies will also be increased from 240 percent of employment insurance premiums to 300 percent. In addition, employers can extend the deadlines for or postpone their tax and social security premium payments.

Such assistance may help cushion the shock of unemployment. However, barely maintaining jobs in an industry that has lost competitiveness is only a morphine shot. Bureaucratic job training programs cannot address the issue of potential unemployment of nearly 60,000 workers in the ailing shipbuilding industry. Less than three of 10 jobless workers find new jobs while receiving unemployment benefits. Vocational training programs teaching people how to cook is a waste of taxpayers’ money. The assistance may provide temporary painkilling effects, but enormous pain will begin again at the end of June, when the program ends.

The government has failed to move a step forward in the main process of downsizing the top-three shipbuilders. Although Employment and Labor Minister Lee Ki-kwon threatened to cut off government support if workers at the three shipbuilders go on strike, their labor unions do not budge a bit. The government also released a report projecting that the big-three shipbuilders are capable of maintaining employment because they have plenty of orders. If so, there is no need to include Daewoo Shipbuilding & Marine Engineering Co. among those eligible for government support. Daewoo has already received more than 4 trillion won (3.5 billion dollars) in taxpayers’ money to stay afloat. The government should start performing a surgery on the ailing shipbuilder. It should pay attention to Saenuri Party lawmaker Yoo Seung-min’s remark that the administration seems to have an optimistic view and be trying to put the shipbuilding and shipping industries on life support until its term ends.

In 2002, Malmö, a port city in southern Sweden, sold a huge crane at the Kockums shipyard to Korea’s Hyundai Heavy Industries for just one dollar. Since then, the city has risen up again by making strenuous efforts to build an environmentally friendly new town and nurture the food industry. Korea needs to change its way of thinking, converging the country’s skilled workforce with another industry to nurture the quaternary sector of the economy. It is time to stop having lingering attachment to a declining industry and think about what will be the post-shipbuilding industry.