The South Korean government will designate shipbuilding as a sector that needs “special state assistance” with the Finance Ministry and Labor Ministry providing aid to employees facing job losses due to debt restructuring.

Finance Minister Yoo Il-ho said Thursday that the government will seek to provide financial relief to those who lose their jobs in the wake of corporate restructuring, and help them receive proper training and education so they can find new jobs.


Shipbuilding employees in regions such as Ulsan, Busan, South Gyeongsang Province and South Jeolla Province will receive such aid. The government will also lower the burden for employers in paying taxes and employees’ social expenses as a means to maintain their highly-advanced workforce.

The Labor Ministry and Finance Ministry will set up regional centers that can help the unemployed get the training they need for new jobs.

This is part of efforts to speed up the industry overhaul and regain its competitiveness amid growing economic uncertainties, the Finance Ministry said.

“We seek to rapidly restructure companies facing limits to growth as part of structural reform,” Yoo said in an economic-related ministerial meeting.

“The government will try to minimize impact on jobs for the middle class.”

The Labor Ministry noted that the government will only provide such relief to small and medium-size suppliers and subcontractors, not to the country’s three big shipbuilders – Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

“The three big companies are still capable enough to maintain their manpower as they relatively have a large amount of shipbuilding orders,” the Labor Ministry said in a press statement.

It added that the three shipbuilding conglomerates will be carrying out their own self-rescue plans that will not immediately affect their workforce. The government is urging laborers of the three companies to actively take part in leading the self-rehabilitation programs with an equal amount of responsibility as their managers.

Some 63,000 laborers in the sector beset by the global economic slowdown are expected to lose their jobs, according to the Korea Offshore & Shipbuilding Association.

About 7,800 shipbuilding equipment suppliers and subcontractors will likely receive financial aid from the government until the end of June next year.

Business confidence in the shipbuilding sector has fallen to 53.7 on average over the last three months, well below 70 for the general manufacturing industry. A reading below 100 means that pessimists outnumber optimists.

Korea’s shipbuilding has been losing luster, with low-cost Chinese shipbuilders and Japanese companies with advanced technology gaining ground in global orders. As of May this year, the country’s three shipbuilding giants secured orders of 2,656 compensated gross tonnage, the lowest since April 2004 when their orders were 2,752 CGT, according to the Finance Ministry.

By Park Hyong-ki (hkp@heraldcorp.com)