Pyramid contract ‘Mul-yang team’, causes death
Subcontracting companies are referred to ‘absolute yes men’ in shipyards. It helps prime contractors improve their competitive power by securing employment flexibility and low labor cost. It also guarantees the elasticity of employment by reducing the number of subcontractors in the yard during recession while they earned the cost reduction benefit by extending it in boom days.
The typical example was dismissing subcontractors instead of permanent employees who are under labors union protection during the congestion of shipbuilding industry since 2008, economic crisis. 
The reason why this is feasible is because subcontracting companies are almost a part of the prime contracting shipyard, not just a client-customer contract. It means they are simply a department aligned with ‘command-order’. Prime contractors exercise the same level of control as those subcontracting companies’ production department in the construction quantity and cost overall related matters. Subcontracting company’s management capability is merely referred to securing manpower but nothing else.
The effect was considerable as shipbuilding industry was more labor-intensive than manufacturing business so they gradually increased the number of subcontractors. According to the report ‘The spread of subcontractors in shipbuilding industry and the current number by process’ published by a labor researcher from Metal Union, The Korean Confederation of Trade Unions in 2014, 35,712 permanent employee technicians and 105,041 subcontractor technicians were counted from the major 9 shipyards in 2013. The ratio of employees and subcontractors was 294.1% and simply, that means there are 1 employee to 3 subcontractors in shipyards. In 2003, the ratio was only 107.5% and 33.3% in 1993, even further back 20 years ago.
When did this subcontracting system start? To understand it, we should examine the subcontracting system developing process for Hyundai Heavy Industry (refer to HHI below), ‘the world largest shipbuilding company’.
Subcontracting system started from ‘Delegated management system’
According to the report ‘the development and spread of subcontracting system: a case study of HHI’ published by sociologist Prof. Woncheol Shin at Pusan National University, it has existed from the very first time shipyards were born. In early 1970, it launched under the name of ‘Delegated management system’ in HHI and it was a type of indirect labor management system which at that time the management had a lack of direct control capacity for work productivity. 
The reason why HHI adopted a subcontracting system was because the management did not have an efficient supervising system to control the work process. There was no consideration or system that existed back in early 1970s in shipyards in regards how to manage workers or which work to order.
By the late 1970s, however, this confusion has disappeared. The management learned how to manage productivity and started to control workers directly from experiences. They also comprehended the production process and directly managed the workforce as their management competency reached over a certain level. Eventually, the subcontracting system was considered an obstacle in the productivity improvement.
Hereby, HHI started directly hiring subcontractors to employees so the number of 12,629 subcontractors in 1978 went down to 5,423 in 1983 and it kept going down during this period. However, it skyrocketed from 6,084 in 1980 to 17,114 in 1984.
Disappeared subcontractors after labor strife, but…
Since then, HHI did not switch subcontractors to employees. After securing a certain number of employees, they also left a certain number of subcontractors to utilize in employment control period and for particular work process.
However, their plan was undone by labor strife in 1987. Employees and subcontractors both claimed labor rights and this played a role in eliminating subcontracting jobs in HHI in 1989. Workers suggested the offer for converting subcontractors to employees. 
A number of problematic issues have arisen since then. Since the labor strife in 1987, the HHI’s turnover rate in production workers has decreased but new hire has also stopped at the same time due to labor congestion. Moreover, pay has increased every year due to pressure from unions.
To respond to the situation, HHI started to increase the number of subcontractors from 1990s so that they can protect workforce from the expansion of union influence as well as cost reduction and labor flexibility.
The government, however, was very passive in regulating the move, namely indirect employment. Conglomerate-oriented unions were the same. Employers have more extended the subcontracting structure in turn and this is the reason why there are subcontracting here. 
‘Individual contract system’ on construction site to ‘Mul-yang team in shipyard
The problem is that this subcontracting system is becoming more subdivided as time goes. As the scale grew, the subcontract formed a subdivision. It is basically a secondary subcontract called ‘Mul-yang team’, same as ‘individual contract system’ on construction sites. The ‘Mul-yang team’ is referred to those who are working anywhere they are asked. Subcontracting companies hire these people for a short term (1-3 months) when they have a shortage of staff to meet the contracted date to complete project. The Mul-yang team workers are paid more than subcontractors as they have to work intensively. 
The complaint from subcontractors during the time was the discrimination between them and permanent employees such as less bonus and exception from welfare benefits provided by shipyard even though they were delegated with much harder works. This is why most skilled subcontractors are moving to Mul-yang team.
Quoting from ‘Labor condition status study for Mul-yang team in shipbuilding industry 2015’ published by Metal Union, it was found that shipyard D has 13,000 Mul-yang team workers among 30,000 subcontractors in Apr 2015. Shipyard S’s 60% of subcontractors were also a Mul-yang team.
Nowadays, ironically, the 1st subcontracting companies are being considered safe in employing structure so even a new word ‘subcontractor original’ was generated for those workers. 
Accelerating workers’ deaths
The attention point is that those Mul-yang team workers are the victims of occupational injury. The director of HHI union Mr. Hyoung-kyun Kim explained the reason why more occupational injuries are being occurred in Mul-yang team;
“The primary contract company pressures subcontracting companies to lower prices. So those subcontracting companies in turn more focus on the process efficiency over safety to save labor costs. This is the reason why they call Mul-yang team. Though individual worker’s price is higher than subcontractors, they are more efficient. As a result, it is being done this way, efficiency over safety by adding a large number of Mul-yang team. This makes work environment more unstable and this trend is ongoing.
Another concern is that Mul-yang team frequently move from one place to another. They move when they are nearly used to the site. On the other hand, they have to get used to new working environment all the time. A welder who worked on the same site, for example, is well aware which valve gives better gas. He also knows which signalers have what habits so he can work through his pace. A new worker, however, does not know those things at all. Shipyard workers should co-work connectively but it is difficult for newcomers.
Moving around without settling is a problem. It plays a factor that makes their after-work life insecure. Mul-yang team workers live in accommodation provided by the company, so they can’t stay with their families and carry on stable lives. Namely, their life structure is insecure and this brings problem at work site.
Half of the fatalities that occurred at HHI in 2014 actually were in Mul-yang team. This complicated pyramid system is accelerating subcontractor’s deaths over labor flexibility.

Front page  http://laborhealth.or.kr/41059


Preface of   Click

Table of Contents


1. Fall to sea! Why didn’t they call 119 ?  click 


2. “Wish I could remove the word of ‘suicide’ covered with my husband” click 


3. 13 deaths within a year at the ‘death factory’… what happened? click


4. [Infographic] People in the ‘hell ship’, how were they killed? click


5. ‘Shipyard ghost story’, the same death in 2014 as 1994 again? click


6. Head opened, leg broken.. No Worker’s Compensation! click


7. Blowing the whistle “How did I blackmail them?” click


8. ‘Smashing’ subcontracting companies, ‘choking’ workers  click


9. “Occupational injury?” You didn’t call 119, did you?  click


10. “Nobody stops running on a single log bridge” click


11. “What is should be like… what it really is like”   click


12. ‘Old’ blacklist, still valid?  click


13. “Jeong Mong-joon is coming to HHI to collect bills”  click


14. Pyramid contract ‘Mul-yang team’, causes death   click


15. Norwegian Press reported ‘Hyundai Heavy Industry Worker’s fatality’… 

     “Shocking information” click