[COVER STORY] Labor rigidity puts Korean shipbuilders at disadvantage against China

Korean shipbuilders are struggling to expand production capacities despite order books stretching years ahead. Their main struggle is not about technology or infrastructure, but labor. They need to hire workers quickly enough to scale up and capitalize on additional orders, but they say Korea's inflexible employment practices, combined with the industry's cyclical nature, are complicating workforce planning: Hiring aggressively during a boom can leave shipbuilders with excess labor costs when orders decline, making them cautious about expanding their permanent workforce. While they are struggling with the rigid labor arrangements, Chinese rivals are rapidly ramping up capacity. Domestic industry officials worry that China's expanding shipbuilding experience could erode Korea's technological edge as Chinese shipyards build more vessels and hone their technical capabilities. “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,” an industry official said on condition of