On the 10th, in an internal parking lot at a shipyard in Geoje, Gyeongnam, delivery motorcycles for use by employees of subcontractors after work were parked in various places. Provided by shipbuilder’s partner “/>
On the 10th, in an internal parking lot at a shipyard in Geoje, Gyeongnam, delivery motorcycles for use by employees of subcontractors after work were parked in various places. Provided by shipbuilders
On the 10th, motorcycles for quick service and delivery were lined up in the area around Daewoo Shipbuilding & Marine Engineering’s Okpo Shipyard in Geoje-si, Gyeongsangnam-do. It was built for employees of in-house partners to leave work and jump into ‘two jobs’. A representative of a partner company said, “As the weekly overtime and weekend overtime allowances are reduced due to the 52-hour workweek system, more and more employees are working nighttime and weekend ‘three jobs’. There are a lot of people,” he said.
In the aftermath of the 52-hour workweek, which has been fully applied to SMEs from this year, job instability in the shipbuilding and root industries is accelerating. As real wages decrease due to reduced working hours, ‘exodus’ is a serious situation in which workers either go to work in large numbers or leave the production site.
In the shipbuilding and root industry, it was found that more than 40,000 production workers left this year. According to the Korea Economic Daily, 7,600 production workers left from January to August of this year as a result of analyzing 470 suppliers of five large shipbuilders including Hyundai and Samsung. This is about 15% of the total number of employees at internal partner companies (about 50,000). Kim Soo-bok, chairman of the Association of In-house Partners of the Five Shipbuilding Companies, said, “If the in-house partners, who are responsible for 80% of shipbuilding, run out of manpower, delays in delivery will inevitably reduce the competitiveness of the Korean shipbuilding industry.”
Most of the small-scale root industries have experienced a sharp increase in workforce churn since July, when the 52-hour workweek system was applied to workplaces with fewer than 50 employees. According to the cooperatives in the six fields, including surface treatment (plating) and heat treatment, the number of workers decreased by 30,000 people this year alone due to the continuous increase in the minimum wage and the surge in raw material prices.
Most of those who have left the shipbuilding and root industries are moving to workplaces with fewer than 30 employees, which are not yet subject to the 52-hour workweek, or to construction and plant companies with similar technology utilization and high wages. The remaining workers work in factories during the day and work part-time delivery and quick service at night, making a precarious livelihood. Yang Ok-seok, head of the Human Resources Policy Department of the Federation of Small and Medium Businesses, pointed out, “As the damage to SMEs is great, the 52-hour work week should be changed flexibly.”
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Mr. and Mrs. B, who are welders at the shipyard, recently started driving at night. After the 52-hour workweek system was implemented, Mr. B’s real income decreased to 2 million won a month, so he could not afford his children’s education and living expenses. Mr. B plays the role of a pick-up driver who takes his wife, and the wife does the surrogate driving. Mr. B’s wife sighed, “My husband goes to work every morning at the shipyard, so I’m in charge of the surrogate driving.” The departure of production workers who are tired of ‘two jobs’ is also accelerating.
Even if the minimum wage is raised, there is no way to escape
The shipbuilding industry is currently recording record-high order receipts, but its in-house partners are not smiling. This is because there is little real profit left due to low ship prices and a rise in heavy plate prices due to a sharp rise in raw material prices. The 52-hour workweek became like pouring oil here. All of the shipbuilders’ partners, which are responsible for 80% of the shipbuilding industry’s production, are small and medium-sized enterprises (SMEs) with fewer than 300 employees. “After the 52-hour workweek was implemented, the average wage in the shipbuilding industry decreased by about 1 million won per worker, back to the level it was 10 years ago,” said a president of a partner company of Hyundai Heavy Industries.
The hourly wage is much higher than the monthly fixed pay for the internal partners of shipbuilders. It is a wage structure that compensates for the lack of allowances due to the large number of overtime and overtime work, which is 1.5 times the basic hourly wage. This is why workers leave the company one after another on the 52-hour workweek. A president of a Samsung Heavy Industries partner company said, “Recently, a large number of people moved to the construction site of the Samsung Semiconductor factory in Pyeongtaek, Gyeonggi-do, and most of the workers who left the other partner companies went to the construction site in the metropolitan area. Because it can,” he said.
The manpower shortage in the shipbuilding industry is expected to get worse next year. This is because the ships that have been ordered one after another this year go through the design process and start the production process in earnest from next year. The Shipbuilding & Offshore Plant Association predicted that the shortage of manpower in the shipbuilding industry would gradually increase from 1,500 in the first quarter of next year to 4,700 in the second quarter and 8,900 in the third quarter.
Even in the root industry, where more than 90% of small businesses with fewer than 50 employees, there is a serious workforce churn. More than 50,000 foreign workers, who make up about 10% of the workers in the root industry, are increasingly moving to small businesses where overtime or overtime work is possible or to rural areas where wages are higher and the risk of industrial accidents is low.
The reason that root companies, along with the shipbuilding industry, became one of the major sectors affected by the 52-hour workweek is because overtime and overtime work account for a high proportion of wages. Both industries have in common that production disruption has become inevitable as the supply of foreign workers is blocked due to the youth’s reluctance to find employment. As the wages of simple and unskilled workers have risen sharply due to the sharp rise in the minimum wage, the number of skilled workers is also increasing sharply. Lee Eui-hyun, president of the Korea Metal Industry Cooperative, pointed out, “They are leaving the company because they cannot afford to raise the wages of skilled workers who have been honing their skills for decades.”
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In the root industry, where the workload is concentrated in a short period of time due to sudden orders from primary contractors, there are frequent cases where the 52-hour week system cannot be observed. Complementary measures such as extending the unit period of the flexible working system from within 3 months to a maximum of 6 months have been implemented since last April, but the predominant response is that there is no significant effect. A president of a root company in the Sihwa Industrial Complex explained, “The flexible working system is a system that even workers are reluctant to because there is practically no change in wages.”
Various expedients are also emerging to prevent employee churn. It is a method of paying in cash without stamping the attendance stamp or leaving overtime pay on the books. When night work is needed, it is known that there are many cases of ‘dispatching’ manpower with other companies in the same industry and paying in cash without leaving the daily wage on the books. The president of a manufacturing company in Gimpo, Gyeonggi Province, said, “The delivery date is near, but we cannot find foreign workers, so we are hiring illegal immigrants.”
Choo Moon-gap, head of the economic policy division of the Federation of Small and Medium Businesses, said, “The 52-hour workweek system was enforced without considering the reality of the small and medium-sized business industry that has been struggling with the chronic manpower shortage and the situation in which entry of foreign workers was blocked due to the corona virus. It is a law that makes small businesses a potential criminal.”
By Ahn Dae-gyu/Min Kyung-jin, staff reporter powerzanic@hankyung.com
