South Korea's martial law incident brings memories of shipbuilding disruptions

The recent imposition of martial law in South Korea has rekindled memories of the nation’s tumultuous past, particularly the labour unrest that once plagued its shipbuilding industry.

Although now rescinded, the move was reminiscent of the authoritarian measures of the 1980s, which brought about routine disruptions, by way of labour strikes, at the country’s shipyards, a major South Korean economic sector that has, lately, seen a significant resurgence.

Towards the end of the 20th century, South Korean shipyards were epicentres of labour activism. The Great Workers’ Struggle of 1987, for instance, saw massive strikes that not only disrupted production but also played a pivotal role in the country’s democratisation process. During this period, financial institutions, wary of potential delays and losses, often mandated insurance policies to cover risks associated with labour disputes.

Fast forward to the present, and we see a South Korean shipbuilding industry in the middle of a remarkable boom. But this period of prosperity is not without challenges.

The orderbook has expanded so substantially over a short period that it is leading to lengthening lead times for newbuilds. Recent analyses indicate that average lead times have extended to over three years, a trend attributed to robust demand and constrained yard capacities.

This surge has also positioned South Korea as a formidable competitor to China’s supremacy in shipbuilding, with both nations vying for dominance in the global shipbuilding market.

And the shipbuilding industry, like maritime, is grappling with a shortage of skilled labour, a predicament that has intensified labour-management tensions.

In August 2024, unions from major shipbuilders, including HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries, planned joint strikes to demand higher wages and improved welfare benefits amid the ongoing boom, according to local media. Such actions underscore the persistent undercurrents of labour unrest that, if unaddressed, could disrupt production schedules and erode a competitive edge enjoyed by South Korean shipyards.

A declaration of martial law, short-lived and last-ditch as it was, has historically been met with strong resistance from labour unions and acted as a catalyst for strike and industrial action.

Evidence the huge numbers of South Korean citizens who swiftly gathered at the country’s parliament give testimony to how important the hard-won democracy is to the country – as a treasure that will not be given up easily.

The point is this: the political climate, as it now stands, marked by heightened tensions and a renewed threat of lost civil liberties, could serve as a catalyst for renewed labour unrest in the shipbuilding sector. And with the industry’s critical role in the national economy and its intricate ties to global trade, any disruption could have far-reaching implications.

With South Korea’s shipbuilders in fierce competition with Chinese counterparts, labour disputes and production delays could cede ground to Chinese shipyards, which have been aggressively expanding market share. And this competition is further complicated by geopolitical dynamics, with global powers scrutinising the strategic importance of shipbuilding capabilities.

Though likely not a consideration in its enactment, the martial law declaration, which was couched in terms of immediate security concerns, has risked unsettling the delicate balance within South Korea’s shipbuilding industry.

To navigate this precarious juncture, it is imperative for stakeholders to continue to engage in constructive dialogue, uphold democratic principles, and prioritise the welfare of the workforce. Only through such measures can tensions be eased, allowing South Korea’s shipbuilding sector to sustain its growth trajectory and maintain its standing in the global arena.