Wednesday, September 18, 2019
Summer Labor Struggles Feared to Impede Recovery of Korean Shipbuilding Industry
Workers at Samsung Heavy Industries Rally for Wage Hike
Summer Labor Struggles Feared to Impede Recovery of Korean Shipbuilding Industry
  • By Jung Min-hee
  • August 22, 2019, 10:28
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Workers at Samsung Heavy Industries are starting rallies to pressure management in wage negotiations.

Summer labor struggles are getting into full swing in the Korean shipbuilding industry. Following their peers at Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (SDME), workers at Samsung Heavy Industries are starting rallies to pressure management in wage negotiations.

The Samsung Heavy Industries Laborers Council, which is regarded as the labor union of Samsung Heavy Industries, will hold a rally in front of the Samsung Global Engineering Center in Sangil-dong, Seoul on Aug. 22.

The council is demanding a hike in basic salary for the first time in four years since 2015. The company’s labor and management reached an accord on wage hikes last year that had been postponed since 2016. At that time, the two sides agreed on a freeze on the basic wage, a 3.3 percent increase in regular pay raise (a 1.1 percent per year) and a lump-sum payment of six million won.

The council argues that workers have sacrificed themselves over the past five years and will not make concessions anymore. It also says that the company is suffering a labor shortage after approximately 1,500 employees had to quit under an early retirement program. “Our wages have increased only 0.5 percent over the last five years. We also returned our basic salaries for up to two years and six months," the council says.

The Korean shipbuilding industry took the first spot in order receipts by beating China for three consecutive months until July. Yet the market situation is not so favorable for Korean shipbuilders because world shipbuilding orders have not recovered.

The Korean shipbuilding industry won orders for 270,000 CGT in July, about half of the world's orders of 550,000 CGT. Yet the figure represents a mere 28 percent of the orders (970,000 CGT) recorded in the same month last year. Order receipts until July are only half of the 6.65 million CGT posted in the same period of last year.

In July, world shipbuilding orders decreased 73 percent from the same month of last year. By July of this year, global orders added up to 11.18 million CGT, down 43 percent from a year before.

However, Samsung Heavy Industries recently landed an order for 10 crude oil carriers from an Oceania client for 75.3 billion won. So the shipbuilder reached 54 percent (US$4.2 billion), more than half of this year's target (US$ 8.8 billion). So far, Samsung Heavy Industries has been the only Korean shipbuilder that surpassed its order target. There is also concern that the council’s labor struggle before the Samsung Global Engineering Center in Sangil-dong, Seoul may put the brakes on Samsung Heavy Industries’ rebound.