The Korean government will launch a major support program to support the Korean shipbuilding industry. It will provide 180 billion won (US$135 million) in support for the development of core technologies for future ships in 2023 alone and will also expand refund guarantees (RGs) to help Korean shipbuilders land orders. It also announced a policy to improve the foreign worker introduction system and foster human resources to meet demand for workers from the Korean shipbuilding industry.
On May 10, Korean MOTIE Minister Lee Chang-yang attended the christening ceremony for Korea’s first LNG bunkering vessel, “Blue Whale,” powered by the latest Korean cargo hold technology (KC-2) at Hyundai Heavy Industries’ Ulsan Shipyard in Korea. Along with Kim Joo-hyun, chairman of the Financial Services Commission (FSC), Lee announced the Korean government’s support plan in a meeting with those working in the shipbuilding industry.
According to the MOTIE, the Korean shipbuilding industry accounted for 40 percent of the global shipbuilding market by posting US$9.4 billion in orders, taking first place in the global shipbuilding order-taking standings in the first quarter of this year. In particular, it accounted for more than 70 percent of the high-value-added and eco-friendly ship market in the first quarter of this year such as winning orders for 17 (90 percent) of the 19 large LNG carriers, showing a significantly wide technology gap with the Chinese shipbuilding industry. The Korean shipbuilding industry’s backlog is also at its highest level since 2011 at 38.68 million CGT, which can translate into more than three years of shipbuilding work.
However, a large number of new orders are causing the Korean shipbuilding industry to suffer a severe labor shortage. It is expected to suffer an estimated shortage of 14,000 workers by the end of 2023. Korean workers’ demand for high wages due to rising inflation is one of the main reasons why the Korean shipbuilding industry is at a comparative disadvantage in competing with the Chinese shipbuilding industry with a low wage structure.
The government has been working to support the shipbuilding industry by improving the system for introducing foreign labor through several meetings between the Ministry of Trade, Industry and Energy and the Ministry of Justice, and securing more than 5,500 additional workers in the first quarter of this year out of the 14,000 needed.
Since the Korean government improved the E-7 (Foreign National of Special Ability) Visa System in April 2022, it has recommended 4,305 aliens for employment to the Korean shipbuilding industry through the first quarter of this year. Among them, 3,184 passed the Ministry of Justice’s visa screening and began to work in the Korean shipbuilding industry. The Korean government had established a separate quota (about 5,000 foreign workers) for the Korean shipbuilding industry and completed visa screening for 1,849 low-skilled workers in the first quarter of this year. It is planning to place them into shipbuilding sites in Korea soon.
As for Korean human resources, the Korean Ministry of Trade, Industry, and Energy (MOTIE) trained 463 people through the Regional Shipbuilding Human Resources Development Project. By the end of this year, a total of 2,000 Korean workers will be trained and put into the field.
The MOTIE and the Financial Services Commission announced additional measures, including expanding the number of RG issuing organizations, issuing additional RGs for large companies when their limits are exhausted, and expanding the scale of RGs in the meeting with shipbuilding industry insiders. The additional measures were taken in light of the recent expansion of orders to the Korean shipbuilding industry, rising ship prices, and an increase in the proportion of down payments. In accordance with the RG system, a guarantee organization pays back an advance payment to a client if the shipbuilder fails to build the ship in time or goes bankrupt.
Source: BusinessKorea
