South Korea: Railworkers struggle shakes government

February 2, 2014
Korean Confederation of Trade Unions members stand face to face with South Korean policemen at their head office in Seoul Decemb

Thousands of railway workers returned to work on December 31 after a three-week strike. The workers were striking against government plans to set up a subsidiary company to operate a KTX bullet train service in competition with the state-run carrier Korail.

The 22-day strike was the longest railway strike in South Korean history. Workers across the world held solidarity actions in support of the workers.

Korail management and the right wing administration of Park Geun-Hye cracked down on the strike with full force. Arrest warrants were issued for the Korean Railway Workers Union (KRWU) leaders and almost 8000 workers had their positions suspended or terminated for their involvement in the strike.

Police attack

On December 17 police raided KRWU headquarters and confiscated computers and documents. State repression culminated on December 22 when 6000 riot police violently raided the headquarters of the Korean Confederation of Trade Unions in Seoul without a search warrant.

The siege lasted for more than 12 hours. Police violently smashed their way through the building with tear gas, water cannons and oxygen removal machines. More than 130 people were arrested. Despite smashing through the entire building, the police were unable to locate the wanted KRWU officials.

The strike ended on December 31. Negotiations between the KRWU and government led to an agreement to set up a parliamentary committee to discuss the issues that led to the strike, including the possibility of privatisation. The fight, however, is far from over.

The leaders of the KRWU are now in police custody awaiting sentencing. The government is refusing to drop its plans to set up a subsidiary KTX operator.

Korail management also refuse to drop disciplinary action against workers. The company is pursuing a law suit against the union for more than $4.6 million in damages.

Thousands of workers have been summoned by management appear before disciplinary hearings and undergo “education” programs.


The government claims privatisation is not on the cards, however that is hard to believe. Although 41% of the shares of the new subsidiary company will (at least initially) be owned by Korail, with the remaining shares to be owned directly by the government, the situation is far more complex.

The government knows that outright privatisation is unpopular. Therefore it is moving to cut off a large chunk of Korail’s revenue to put the state owned rail operator to the sword.

The high speed KTX line between Suseo Gangnam and Pyeongtaek is the country's busiest and most profitable line because it runs through the most wealthy business districts. This line alone makes up a large chunk of Korail’s revenue.

Because only 41% of the shares in the new subsidiary will be owned by Korail, the new subsidiary operation will cut Korail’s revenue from the profitable Suseo line. This has been confirmed by documents released by Korail senior management on December 10. These estimate the new operator will cut Korail’s revenue by about $500 million per year.

With Korail’s main revenue earner depleted, the government can allow Korail to snowball further into debt and use this as justification for selling the KTX lines off at dirt cheap prices to their private sector cronies.

There is also very little doubt that shares in the new subsidiary company will be sold off to the private sector. A document has been leaked to Korean newspapers outlining key plans to sell off shares to private bidders.

It is easy to see why the private sector has its eyes on the KTX line. The route is guaranteed to rake in profits of up to 20% without having to bear any of the risks associated with investing capital in construction.

KRWU chairman Lee Young-ik said: “The Suseo-Pyongtaek line is a goose that will always lay golden eggs. Why sell a goose to the private sector which never took part in feeding it?”

The Park administration’s privatisation plan is nothing short of legalised theft. It intends to hand over the nation’s most lucrative railway line (built with billions in taxpayer money) to private bidders for a fraction of its construction cost.

For rural and less populous lines, the loss of KTX revenue will mean service degradation and/or higher costs for taxpayers for line maintenance.

The government claims that “reform” is needed in order to make the rail system more “efficient”. It is blaming the unions for demanding “unreasonable” wages.

To support the government, Korean right-wing newspapers are running bogus stories of the average Korail employee earning more than $60,000 per year. Such claims are misleading. For a start, this “average wage” includes all persons employed by the company, including “class one and two employees” who form part of middle and senior management.

Those involved in the strike are from the lower end of the pay scale. It has been reported that some employees, such as ticketing agents, earn as little as $28,000 per year even after more than 15 years of service.

Furthermore, the union has already made many concessions to management. Since 2005, more than 10% of Korail’s workforce has been cut by large-scale redundancies and average real wages have fallen.

Debt crisis

Behind government rhetoric and blame games is the dark reality of Korail’s debt crisis. The bulk of Korail’s debts occurred due to management’s decision to invest in a failed real estate mega project with the private sector called the Yongsan International Business Zone.

The Yongsan development project was a $31 billion mega project involving Korail and some of South Korea's largest corporate conglomerates, known as the Chaebol.

The plan was to develop a Dubai-inspired luxury business hub for the rich and powerful. It came with the promise of reviving South Korea’s economic glory days of the '70s and '80s.

Despite the ambitious plans, the global economic crisis of 2008 hit the project hard. Last year, Korea’s real estate bubble burst and the entire project was abandoned.

The Yongsan development project was the epitome of corporate greed. Thousands of working class people were forcibly removed from their homes, which were demolished for the project. Five people were killed in a violent scuffle between homeowners and police.

Korail management gambled billions in public money on a real estate venture for the benefit of the rich and powerful. However, when the project failed, workers and the public had to bear the brunt of management’s mistakes.

A lot is at stake in this struggle. The fight is far from over and a general strike has been called for February 25. If the government gets its way, it will lead to further job cuts and the smashing of the KRWU ― a proud union with a proud heritage of struggle.

Militant struggle by the KRWU has won big gains in pay and conditions for railway workers. By smashing the KRWU, the government can lower wage standards across the board.

[This article was first published at Counter Fire.]

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