[COVER STORY] Labor rigidity hinders Korean shipbuilders' ability to take more orders

Korean shipbuilders are facing a significant challenge in expanding their production capacities, despite having an extensive pipeline of orders spanning several years. The primary obstacle they are encountering is not related to technological advancements or infrastructure, but rather the country's inflexible employment practices and the cyclical nature of the industry.

The Korean shipbuilding sector struggles with workforce planning, as quickly hiring workers to scale up production to meet additional orders can lead to excessive labor costs when the market subsequently declines. This financial burden discourages shipbuilders from expanding their permanent workforce, as they prefer to maintain a leaner workforce during downturns.

Chinese competitors, on the other hand, are rapidly expanding their capacity, taking advantage of their flexible labor arrangements. Domestic industry officials are concerned that China's growing shipbuilding experience may eventually diminish Korea's technological edge. As the shipbuilding industry is characterized by large fluctuations between booms and downturns, industry experts argue that flexibility is crucial for adjusting production capacity in response to market conditions.

An unnamed industry official stated, "As shipbuilding is a cyclical industry with large swings between booms and downturns, flexibility is needed to adjust production capacity in line with market conditions."