Shipbuilders are reviewing ways to reduce foreign workers and increase domestic hiring, following President Lee Jae-myung's view that hiring more domestic workers is desirable to revitalize regional economies. Some warn that corporations could face difficulties such as labor shortages and rising labor costs.
According to the shipbuilding industry on the 14th, Hanwha Ocean and Samsung Heavy Industries have recently conducted internal reviews on hiring domestic workers instead of foreign labor and are said to plan to finalize the plan within the first quarter of this year. HD Hyundai has also decided to reduce directly hired foreign workers and hire more domestic workers.
Many analysts say President Lee's recent remarks prompted shipbuilders to consider expanding domestic hiring.
At a Ulsan town hall meeting early this year, the president questioned, "Would the influx of foreign workers help the regional economy?" Lee also said, "Isn't foreign labor taking away job opportunities for domestic workers?" and added, "It is strange to claim world-class competitiveness by hiring people for 2.2 million won and making profits of several trillion won."
After these remarks, HD Hyundai set a policy to minimize the number of foreign workers it directly employs. At HD Hyundai Heavy Industries and HD Hyundai Samho, about 4,000 people, or 17.4% of the roughly 23,000 directly employed staff, are foreign nationals.
Shipbuilders believe that expanding domestic hiring can boost productivity over the long term. They aim to create a virtuous cycle by developing domestic workers with longer tenures into skilled workers while the shipbuilding industry is in a boom and has some leeway.
Lee Eun-chang, a research fellow at the Korea Institute for Industrial Economics & Trade (KIET), said, "In the past, when the shipbuilding industry struggled, foreign workers filled labor shortages, but now that the industry's conditions have improved, there is no need to insist on hiring foreigners," adding, "Expanding domestic employment is also positive for cultivating skilled workers."
However, some in the industry argue that increasing domestic hiring will not be easy. They say domestic workers will shun these jobs even with better treatment because the work is physically demanding and most work sites are on the outskirts of regional areas.
Kwon Hyo-jae, a researcher in the Department of Naval Architecture and Ocean Engineering at Seoul National University, said, "There are tasks, such as steel plate painting pretreatment, where hiring does not work unless it is foreigners, even if you pay double," adding, "We should first distinguish whether the job is done by both foreigners and Koreans or not, and then have the discussion."
There are also concerns that corporations' labor costs will increase. In shipbuilding, where skilled labor is crucial, labor accounts for about 20% of total costs. If domestic hiring rises and labor costs increase, it will affect order competitiveness. In particular, there are concerns that competition with Chinese shipbuilders could become unfavorable.
An industry official said, "Because the quality of Korean-built ships is superior, shipowners are choosing domestic lines while accepting a price difference of around 10%," adding, "If labor costs surge and the price gap with Chinese-built ships widens, there is a possibility that Korea will fall behind in order competition over the long term."