South Korean prime minister Han Duck-soo has urged sub-contracted workers of Daewoo Shipbuilding & Marine Engineering (DSME) to resume work after being on strike for more than 40 days, saying that the government will take their side in any negotiations.
Since 2 June, the sub-contracted workers have refused to work unless DSME increases their wages by 30%, a situation that precipitated the shipbuilder going into emergency management mode five years after averting a financial crunch.
In 2017, the revelation of hidden losses and kickbacks by its former CEOs sent DSME into a financial crisis, resulting in a state-backed bailout led by Korea Development Bank and the Export-Import Bank of Korea.
On 6 July, after more than a month of industrial action, DSME entered emergency management mode as the strike cost South Korea’s second-largest shipbuilder at least US$400 million. Besides the work stoppage, inflationary pressures had increased the costs of raw materials, and sanctions against Russia resulted in the cancellation of LNG carriers meant for the Arctic LNG project.
Speaking at the 3rd National Affairs Inspection and Coordination Conference, Han said, “I would like to urge the members of the union to resume dialogue as soon as possible.”
Han acknowledged that inflation went up to 6% in July, a 24-year high, a level not seen since the Asian financial crisis in 1998.
He said, “The more this happens, the more the burdens must be shared by all economic stakeholders. Unfortunately, the DSME subcontractors’ strike is being prolonged and there’s a growing concern for our country’s economy. It should have been a time for our shipbuilding industry, which has been struggling for years, to recover. It’s so unfortunate that newbuildings are being disrupted at this critical time, pouring cold water on our economic recovery. If these unlawful acts continue, we have no choice but to respond according to the law.”
The striking workers have been camping out in three vessels under construction, preventing non-striking colleagues from completing the ships, prompting the South Korean government to decry their actions as illegal.
DSME has around 8,000 directly employed shipyard workers and 10,000 subcontractors.
Industry, Trade and Energy minister Lee Chang-yang noted, “Last year, the volume of ship orders hit its highest level in eight years, but as commodity prices rose, (shipbuilders) recorded a deficit. If the strike is prolonged, it could add to the difficulties for DSME, where public funds have been injected. We’re concerned that failure to meet the delivery time for ships will reduce the overall credibility of the shipbuilding industry, which will negatively affect future ship orders.”
Martina Li
Asia Correspondent
