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Companies brace for logistics chaos as truckers begin strike
Unionized truckers under the Korean Confederation of Trade Unions (KCTU) engage in sit-ins at the Pohang Steel Industrial Complex in Pohang, North Gyeongsang Province, Thursday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
Key local manufacturers are bracing for a logistics crisis brought on by a strike by unionized truckers under the Korean Confederation of Trade Unions (KCTU), Thursday, in what market watchers say was bound to be repeated due to deadlocked negotiations over “unreasonable” labor demands, compounded further by a lack of preventative measures.
The all-out struggle amplified by 25,000 hardline union members, or less than 6 percent of the 440,000 truckers nationwide, is the second collective action of the year after the first one in June, which lasted about a week incurring about 2 trillion won ($1.5 billion) in losses in economic activities.
On Tuesday, the government decided on a three-year extension of a disputed law put in place to guarantee a minimum wage for truckers to help prevent cargo overloading and sleep deprivation. The law took effect in 2020 and was set to expire on Dec. 31.
However, the truckers have since refused to budge from their initial stance of demanding a full, unconditional extension of the law and more industrial sectors to be affected by the regulation.
The immense economic losses from logistics disruptions are entirely shouldered by the country's major exporters, as well as local retailers including breweries.
Minister of Land, Infrastructure and Transport Won Hee-ryong said Thursday that stern and unprecedented administrative actions will be in order, if the unionized truckers continue to wreak havoc and undermine the stability of the economy. The action ordered by the land minister will require strikers to begin work immediately, or face a suspension of their driver's licenses and possible revocation thereafter. A continued failure to comply will result in a maximum prison term of three years or a fine of 30 million won.
Strike was expected
“It is an action well expected,” an industry official said. “Thursday's strike was certain to be repeated whenever unionized workers threaten collective action.”
The June strike ended in a victory for truckers whose demands were met, in his view.
The Ministry of Land, Infrastructure and Transport said in June that truckers will be eligible for increased government subsidies in the event of an unexpected steep price jump in key global commodity prices.
Also accepted were demands for a complete exemption of criminal prosecution or investigation for those who engaged in the collective action, and greater government fuel tax benefits.
“Few market watchers would agree that their demands were justifiable, since the group acting for the sole advancement of their interests showed no regard for the far-reaching implications in the economy in the process. They are needed for the stable operation of the supply chain and logistics system, and they know it.”
Automobile manufacturer Hyundai Motor and its affiliate Kia said they have hired drivers at a per-day income of 150,000 won to transport vehicles from their respective manufacturing plants in Ulsan and Gwangju to nearby inventory locations.
HiteJinro, a local brewery and distillery, said emergency measures will follow upon signs of major logistics disruptions.
“No significant disruption has been reported as of yet, but we are bracing for the possible fallout from the collective action,” a HIteJinro official said. “We experienced a substantial labor struggle led by 130, or 20 percent, of our firm's workers, in the past summer, an incident we seek to avoid in the months to come.”
The truckers criticized the government and the ruling People Power Party. “They are in unison misleading the public. What they say is a logical step means enslaving the truckers to death,” one of the unionized workers said.