Big three shipbuilders left out of Korea’s new shipping industry support program

The Ministry of Employment and Labor has finally designated Korea’s shipbuilding sector as a special employment support industry after a review process of less than 50 days.

“The Special Employment Support Program applies to a combined 78-hundred companies, which also includes shipbuilding companies and their subcontractors. The program will go in effect starting July 1st for one year until June 30th next year.”

The shipbuilding sector has been suffering from sluggish demand, low international oil prices and increasing global competition.
The Korea Offshore and Shipbuilding Association had predicted that a maximum 63-thousand employees could lose their jobs by the end of next year.

But with today’s decision, companies and workers in the shipbuilding sector will receive funds to maintain their workforces, as well as money for job training for re-employment and other employment benefits.
The support program is worth 750 billion won, or 640 million U.S dollars, and participant companies will be required to cooperate with a government-directed restructuring program.

Missing from the list of beneficiaries are the country’s three largest shipbuilders — Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Samsung Engineering.
The labor minister said the three companies all have the capacity to continue their business operations without additional support as of now, and noted that none of them have finished their internal negotiations with their labor unions regarding potential layoffs.

“The big three companies are relatively well off compared to the mid-sized companies that are already under court receivership. Also, we think that the big three companies need to agree on a satisfactory self-rescue plan with their labor unions before the government intervenes.”

Korea’s big three shipbuilders reported losses of 6.4 trillion won, or 5.5 billion U.S dollars, in offshore plants for 2015 alone.
The three companies’ labor unions have characterized the government’s omission as a punishment directed at averting a massive strike the unions have been organizing to protest the possible layoffs.
Source: Arirang