Shipbuilders run into bottlenecks due to lack of foreign workers

South Korean shipbuilders are having difficulty securing a labor force to keep up with production. Quitting their job because of low pay levels and the 52-hour workweek system uniformly mandated by the government, highly skilled local workers have only slowly returned to the sector. Instead, the industry has tried its best to hire foreign workers. However, not only does it take a long time for them to go through immigration and start working on the site, but also there are a significantly low number of foreigners. Shipbuilding companies are anxious about their clients possibly complaining about any delay in orders already placed in large amounts.

Last year, the top three players-Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering-overachieved their goal in order winning for two consecutive years, meaning that they have enough work to do for the following three to four years. As Russia's invasion of Ukraine has disrupted energy supply chains, there has been a growing global demand for liquefied natural gas (LNG) carriers, a highly-priced type of ship, for which South Korea maintains a distinctive competitive edge. Nevertheless, the issue is that it is tough for them to find workers who can build ships.

Statistics show that the number of workers in shipbuilding halved from over 200,000 in 2014 to 90,000 or so last year. Most of the jobs reduced involve welders and other onsite workers. Over time, many workers have left the industry, which fared poorly, where they could not even receive overtime pays due to the 52-hour workweek system. For some time, the industry will have no choice but to try to hire as many foreign workers as possible.

Under these circumstances, last April, the South Korean government removed a limit on the number of foreigners who can stay on a special work visa related to the shipbuilding industry. Only 90 foreign welders or so were secured by the end of the year because there was some delay lasting five months as the Ministry of Trade created bottlenecks, Industry and Energy, the Ministry of Justice, and other related authorities in charge of examining documents. This is mainly because new verification agencies took charge instead of verifying work proficiency levels among foreign workers, and only a limited number of government officers have been involved in related tasks.

Shipbuilders expect that as many as 13,000 production positions will be left vacant by the third quarter of this year. Short-staffed too long, they will not be able to get their projects done in time, leaving them responsible for paying a large compensation to order placers. Parts of hard-won projects have been subcontracted out by some South Korean shipbuilders, way behind schedule, to Chinese companies.

The government has worked to encourage export while expecting the country's exporters to see a decrease of 4.5 percent this year. To boost exports, it should act to resolve issues that require urgent action on the site, such as shipbuilders’ lack of manpower supply.