Faltering Retirement

The Okpo shipyard of Daewoo Shipbuilding & Marine Engineering.
The Okpo shipyard of Daewoo Shipbuilding & Marine Engineering.

 

The tradition of a guaranteed retirement age is showing signs of breaking down in the Korean shipbuilding industry. Rumors about early retirement are flying around in an increasing number of local shipbuilders, due to their deteriorating profitability in the field of offshore plant operations. The companies are also looking to give up on their deferred retirement schemes, which have allowed employees retiring at 58 to work for four additional years.

Hyundai Heavy Industries is currently moving to prevent the re-employment in the wake of its 1 trillion won (US$978 million) operating losses recorded in the second quarter. Predicting that the large-scale losses would continue during the rest of this year, the company is expected to encourage some of its employees to retire voluntarily.

Samsung Heavy Industries, which also posted operating losses in the first quarter, has recently received requests for voluntary retirement from its employees aged 50 or higher. None of them have actually left their workplace so far, though.

Similar rumors are spreading even in the profit-making Daewoo Shipbuilding & Marine Engineering. It was said that around 10,000 out of 35,000 employees would have to leave the company, although this turned out to be a false rumor.

In the meantime, some people are saying that the possibility of such restructuring as of late is to put pressure on labor unions, that is, to minimize wage increases during the ongoing wage negotiations. The shipbuilding industry is in the face of the ordinary wage issue nowadays, which means at least some increase in salary is unavoidable. At present, the talks are proceeding with difficulty in both Hyundai Heavy Industries and Samsung Heavy Industries.

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