In 2023, the Korean shipbuilding industry is experiencing a surge in orders for the first time in a decade. However, a severe labor shortage has become a critical issue. Despite the demand for workers, the industry struggles to attract and retain talent, particularly among the younger MZ generation.
The three major Korean shipbuilders, Korea Shipbuilding & Marine Engineering, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering, have seen a significant increase in orders. The docks are full, but the industry lacks enough engineers to build the ships.
Since 2014, the number of shipbuilders in Korea has dropped from 200,000 to 90,000. The current shortage of around 14,000 workers is expected to reach 43,000 by 2027. This labor scarcity could lead to large compensation payouts to ordering companies for delayed deliveries.
The workforce is aging, with most shipyard welders in their 50s and nearing retirement. Younger individuals are opting for careers in the automotive and electronics sectors instead. In a recent recruitment drive by Hyundai Motor, over 30,000 people applied for 400 positions, with some workers even leaving shipbuilding giant HHI for these roles.
The labor shortage in the shipbuilding industry is also attributed to the multi-level subcontracting structure. Workers in subcontracting roles often receive less than half the wages of prime contractors, resulting in high turnover rates.
Despite the current boom in shipbuilding, former workers who were laid off during downturns have not returned to the industry. The industry is now employing senior citizens and women over the age of 60 due to the lack of available younger workers.
As of January, South Korean shipbuilders’ global market share has fallen to 32.7%, down from 40% a year earlier. China’s share has increased from 46.6% to 57.4% in the same period, raising concerns that Korea’s shipbuilding industry may suffer the same fate as Japan’s, which lost its prestige due to a rapidly declining and aging workforce.
