Posted : 2013-12-30 17:01
Updated : 2013-12-30 17:01

Assembly key to reforming KORAIL

Korea Railroad Corp. (KORAIL) union leader Kim Myung-hwan, center, shouts a slogan with his colleagues after announcing the end of the longest strike in the industry at the headquarters of the Korean Confederation of Trade Unions in downtown Seoul, Monday.

By Kim Jae-won

An agreement to form a special parliamentary panel to prevent privatization of rail services and end a 22-day strike by rail workers, signed by Rep. Kim Moo-sung of the governing Saenuri Party, Rep. Park Ki-choon of the main opposition Democratic Party and KORAIL union leader Kim. / Yonhap
The National Assembly will be key to improving the efficiency of the Korea Railroad Corp. (KORAIL) without privatizing the company as it agreed Monday to form a parliamentary subcommittee aimed at reforming the loss-making rail operator.

The current bone of contention is a new subsidiary of the company which will run a new bullet train service starting from Suseo, southern Seoul by 2016.

It has pitted the union against management as the former sees it as the first move to eventually privatize the company while the latter argues that it is imperative to set up the subsidiary in order to improve the overall competitiveness of the company.

The union wants the subcommittee to guarantee that the state run company will not be privatized, but the ruling Saenuri Party is reluctant to discuss it.

"We can discuss all the issues for the development of the railway industry. However, in terms of the privatization of KORAIL we don't need to discuss it further because the government already announced that it won't sell the company to the private sector," said Rep. Kim Moo-sung of the ruling Saenuri Party.

But the main opposition Democratic Party (DP) seeks to set up regulations which will ban the Suseo KTX subsidiary from being privatized.

Under the current scheme, KORAIL will own a 41 percent stake in it while public funds will have the remaining 59 percent stake.

Experts say that the committee will also discuss other issues, such as sanctions against union leaders who led the 22-day strike and establishing a holding company which will be in charge of multiple subsidiaries, specializing in logistics, train management, facility maintenance among others.

Observers say labor and management may need time to reconcile following the angry clashes between them during the walkout. Needless to say KORAIL President and CEO Choi Yeon-hye will have to deal with a leadership crisis given her tough stance on the unionists such as the suspension of thousands of employees who participated in the strike. She also insisted that there was little she could do during the negotiations since the government had the final word.

Experts say the huge debt incurred by KORAIL as a direct result of the walkout may also further worsen the financial viability of the company, which is already struggling to repay some 17 trillion won of liabilities. The company incurred trillions of won of losses recently due to its failed investment in a big real estate development project in Yongsan, central Seoul.

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