South Korea government plans to hold first talks with striking truckers

South Korea’s government plans to meet the country’s striking truckers’ union for talks on Monday for the first time since a nationwide walkout began five days ago, as supply chain glitches worsened and construction sites faced concrete shortages.

With supplies of cement and fuel for gas stations running short, the government has elevated its warning of cargo transport disruption due to the strike to “serious,” the highest level in its disruption scale, the transport ministry said on Monday.

But a union statement on Sunday offered little prospect of a breakthrough in the dispute. “The transport ministry’s position is already set, and there is no room for negotiations, so this meeting is not a negotiation … the content is a demand for an unconditional return to work,” the union said.

The second major strike in less than six months by thousands of unionized truckers for better pay and working conditions was criticized last week by South Korean President Yoon Suk-yeol as taking the nation’s logistics “hostage” in the face of an economic crisis.

“We need to establish a rule of law between labor and management,” Yoon said on Monday, according to the presidential office. Yoon will personally preside over a cabinet meeting on Tuesday which will consider a ‘work force order’ demanding striking truckers return to their jobs, his office said.

According to South Korean law, during a serious disruption to transport the government may issue an order to force transport workers back to their jobs. Failure to comply is punishable by up to three years in jail, or a fine of up to 30 million won ($22,550).

The strike organizer, the Cargo Truckers Solidarity Union (CTSU), has criticized the government for only being willing to expand the minimum-pay ‘Safe Freight Rate’ system for three more years, instead of making it permanent and expanding its application as the union demands.

Industry disruptions

Disruptions to industry from the strike come with the export-dependent economy, Asia’s fourth-largest, already facing lower-than-expected growth next year, with the central bank downgrading South Korea’s 2023 growth forecast to 1.7 percent from 2.1 percent previously.

Container traffic at ports dropped to 7.6 percent of normal levels as of 5 p.m. local time (0800 GMT) on Sunday, the transport ministry said, down from 17 percent of normal levels in the morning.

Major steel companies POSCO and Hyundai Steel saw shipments drop to 5 percent or less last week compared with usual levels, according to two industry sources, who spoke on condition of anonymity as they were not authorized to discuss the matter with media.

Gas stations may run out of gasoline and kerosene this week, especially in large cities. While stations secured inventory before the strike, about 80 percent of truckers for major refiners such as SK Innovation’s SK Energy and S-Oil Corp are striking union members.

In the construction sector, ready-mix concrete work has been suspended since last week at 259 out of 459 sites nationwide, with almost all sites expected to run out of concrete by Tuesday, Yonhap news agency said, citing unidentified concrete industry sources.

The cement industry estimated an accumulated output loss worth about 46.4 billion won ($35 million) as of Saturday, with shipments down to 9 percent of usual levels, lobby group Korea Cement Association said.

“Non-union bulk cement truck owners, who are implicitly sympathetic or in fear of the cargo union’s illegal activities, are giving up cement transportation,” the association said in a statement.

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