South Korea: Sacked car workers win long fight

February 28, 2014
SsangYong workers protest, 2009.

Seoul's High Court ruled on February 7 in favour of the 153 members of the SsangYong Motor Company branch of the Korean Metal Workers Union who were unlawfully laid-off in 2009.

At the trial, Chief Justice Cho Hye-hyeon ordered the car company to re-instate all the workers and pay each about $1000 in compensation. The court decision was met with tears of joy from workers and their families.

The trial judge found that SsangYong exaggerated the extent of its financial losses in an audit report by accounting firm Deloitte. This was used to justify laying off more than 2000 workers and smashing a KMWU stronghold.

Kwon Young-gook, attorney for the workers, said: “The court admitted that there could be rigging of accounts, an issue that had been raised by the labour union and other groups.”

The court order exposes the criminal 2009 mass layoffs at SsangYong in Pyeongtaek in South Korea's north-west.

The story began in 2004 when the Chinese company Shanghai Automotive Industry Corporation (SAIC) acquired 49% of shares in SsangYong motors. As a foreign investor, SAIC were granted a license to purchase shares on the grounds it invest a minimum of $1 billion in the company over a five year period.

Instead of investing in the company, however, SAIC stripped its assets and stole key technology for use in its main operations in China. SAIC wanted to get its hands on a hybrid diesel engine that had been developed through grants from the Korean government.

After stripping the company of its taxpayer-funded technology, SAIC withdrew from the country to avoid prosecutions from pending government investigations. The company then hired accounting firm Deloitte to exaggerate its debt-to-asset ratio to justify this cut-and-run policy.

During the third quarter of 2008, the debt-asset ratio of SsangYong was 150%. This was lower than major South Korean companies such as Kia (178%) and GM Daewoo (184%). To quality for insolvency, Deloitte wrote down SsangYong’s tangible asset value from $1.7 billion to $867 million. This inflated the company’s debt-to-asset ratio from 150% to 561%.

After SAIC left, the troubled company was taken over by the Korean government as it sought to find another foreign buyer. It was during this period that the right-wing Lee Myung Bak administration sought to smash the SsangYong branch of the KMWU as part of its war on organised labour.

The fraudulent accounting reports were used to justify mass layoffs. The union offered generous compromises, including taking large scale pay cuts of up to 50% and less working hours.

Despite this, the government refused all negotiations with the union. Workers responded with a 77-day factory occupation that ended after a brutal siege by armed scabs and riot police.

The Lee Mying Bak regime achieved its goal. Union leaders were jailed and it appeared that it had successfully smashed a militant arm of the Korean labour movement.

The company was then sold off at a rock bottom price to the Indian company Mahindra and Mahindra Limited.

Many workers gave up and moved on. Others committed suicide under the pressure of losing their livelihood.

However, 153 workers kept up the fight through staged daily protests for the past five years. This group took the case to court.

Outside the courtroom, Deuk-joong Kim, leader of SsangYong motors union, expressed the raw emotion generated by the decision: “I was in tears … for the past five years we protested in the streets, climbed a power transmission tower and occupied it for 171 days; we set up protest vigils at Daehanmun of Deoksoo Palace in Seoul for more than one year, living in makeshift tents.

“We criss-crossed the entire country to let people know of our story.”

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