Shipbuilding ‘big three’ excluded from gov’t help

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Shipbuilding ‘big three’ excluded from gov’t help

The government finally designated the shipping and shipbuilding industries as special industries, making them eligible for government support, but three major companies were excluded.

“We expect large-scale readjustment of employment in the second half,” Lee Ki-kwon, the minister of employment and labor, said Thursday. “We have decided to exclude the three major shipbuilders in the first round of designation.”

Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries were excluded because their labor unions have refused to accept the restructuring plans devised by the companies, which include layoffs and pay cuts.

“Considering the huge wage gap between the employees of the three shipbuilders and smaller business partners, we believe that labor and management need to show stronger commitment to the self-rescue plans by changing their wage systems to base them on work performance,” Lee said.

The minister also said that compared to the smaller shipping and shipbuilding companies, the three major shipbuilders have more orders and better ability to pay wages.

Their current situations are relatively better than at smaller companies, but they have yet to provide details of their readjustments to their workforce.

It was a clear message from the government that it will not tolerate companies who dawdle with turnaround plans or that go on strike.

Currently, the unions of all three shipbuilders have voted in favor of strikes.

The shipping and shipbuilding industries are the first to receive such government support since the “special industry” system was adopted in December.

Layoffs have already begun in the nation’s shipping and shipbuilding industries, especially at smaller companies. The recent U.K. vote to exit the European Union has further dampened the outlook for the industries, with global trade expected to shrink further.

According to a Labor Ministry report earlier this month, new applications for unemployment payments amounted to 73,000 in May, a 10.8 percent increase compared to a year ago.

The total number of people receiving government unemployment allowances has risen 4 percent to 396,000, while total payments have increased 16.2 percent during the same period to 423 billion won ($367 million).

The number of new applications for unemployment allowances in South Gyeongsang, where many of the nation’s shipbuilding docks are located, surged 57.7 percent in the first five months of this year compared to a year ago.

A Statistics Korea report showed that the unemployment rate in South Gyeongsang has risen to 3.7 percent, 1.2 percentage points higher than a year ago. The increase is the highest out of any region in the country.

The Korea Offshore and Shipbuilding Association predicted that by the end of next year, between 56,000 and 63,000 workers in the industry will lose their jobs.

The government will provide support, including living expenses for the employees of some 7,800 small and midsize shipping and shipbuilding companies including business partners, for a year until June 30, 2017. This includes unemployment pay, tax and insurance payment delays, and financial support for job training.

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