Forced-labor allegations cloud Ulsan foreign worker program, raising export risk for Korean shipbuilding

A pilot program launched under the Yoon Suk Yeol administration to train and recruit foreign workers for the shipbuilding industry has been drawn into a forced-labor and human-trafficking controversy. Uzbek workers brought in under the program signed pledges committing them to pay the Uzbek government $2,000 a month if they changed employers or quit without company approval.

A total of 385 Uzbek workers had been placed at Ulsan-area shipyards through the program as of June, according to industry sources. Each signed a memorandum stating they would pay the Uzbek government $2,000 per month if they changed workplaces or stopped working without their employer's consent.

The concern is that the pledge effectively functions as a barrier to job changes. For a worker facing a $2,000 monthly charge every time they switch employers, moving to a different workplace is practically impossible.

Legal experts say the arrangement may violate South Korean labor law. Article 25 of the Act on Employment of Foreign Workers guarantees foreign workers the right to change workplaces under certain conditions, and Article 29, Paragraph 4 of the same law prescribes criminal penalties for anyone who obstructs that right. Article 7 of the Labor Standards Act also prohibits compelling workers to work against their free will through intimidation or economic coercion.

Attorney Choi Jeong-gyu of law firm Wongok filed a complaint through the government's public petition portal calling on the Ministry of Employment and Labor to conduct an investigation equivalent to a special labor inspection. He said the probe should examine the workers' visa status and the circumstances under which the pledges were signed, whether domestic employers, prime contractors, subcontractors and Ulsan city officials knew of the pledges, and whether the threat of fines had actually been used to block any worker from changing jobs.

"A fine of this magnitude — far beyond what a worker can bear — is economic coercion designed to prevent job changes," Choi said. "If the ministry says it cannot intervene simply because the fine is imposed by a foreign government, domestic employers will be able to indirectly block job changes through recruitment agencies or foreign governments, and the Foreign Employment Act and the Labor Standards Act will in effect be rendered toothless."

The Ministry of Employment and Labor said the fine system was "a scheme operated independently by the Uzbek government to prevent workers from abandoning their posts," adding that it had not been aware of the arrangement and was currently verifying the facts. Ulsan city has not responded to questions about whether it had prior knowledge. The Korea Herald contacted the city department responsible for the program to seek comment but was told the official in charge was on summer vacation.

The ministry and Ulsan city jointly launched the program in March last year to address a labor shortage in the shipbuilding industry. Workers undergo three months of vocational training in Uzbekistan before being placed at Ulsan shipyards under the Employment Permit System (E-9 visa). Ulsan city and HD Hyundai Heavy Industries established a local training facility in Uzbekistan, and the program expanded from an initial target of 280 workers to 385.

However, given that the program was a joint initiative of the ministry and the city, questions are being raised about whether either party could truly have been unaware of the fine pledge during implementation. Because long-term employment is central to the program's design, observers say it cannot be ruled out that the Uzbek side's fine arrangement was shared with or discussed by the Korean parties during the program's development.

The Ministry of Gender Equality and Family, which oversees anti-trafficking policy, has recognized the gravity of the situation and sent official letters to the Ministry of Employment and Labor, the Ministry of Justice and Ulsan city requesting that they verify the facts. A ministry official said that since both South Korea and Uzbekistan are signatories to International Labour Organization conventions on forced labor, "if such a contract existed, we also need to examine whether it is consistent with the intent of those international agreements."

Legal experts warn that the controversy could escalate beyond a labor rights issue into a trade risk for the domestic shipbuilding industry. The United States and the EU have been tightening regulations on products linked to forced labor, and the US previously issued a Withhold Release Order on South Korean sea salt following a forced-labor case at salt farms in South Jeolla Province.

"A forced-labor controversy can spread from a problem at a specific workplace into a question of trust for an entire industry," Choi said. "If the same issue is confirmed in shipbuilding, it could have a significant impact on the export competitiveness of South Korea's shipbuilding sector."