South Korea economy faces risks as trucker strike enters 7th day
- 22,000-strong union is protesting soaring fuel prices and demanding minimum pay guarantees – 4 rounds of government negotiations have failed to secure a deal
- Petrochemical firms joined automobile and steelmakers in cutting operations due to inventory issues from transport disruptions from the truckers strike
South Korean petrochemical firms on Monday joined the automobile and steelmakers in cutting operations due to mounting inventories as transport disruptions from a strike by truckers spread quickly across Asia’s manufacturing powerhouse.
“The Cargo Truckers Solidarity union’s collective action to reject transport is spreading the damage to major petrochemical complexes in Ulsan, Yeosu and Daesan,” the Korea Petrochemical Industry Association said in a statement.
The 22,000-strong union is protesting against soaring fuel prices and demanding minimum pay guarantees. Four rounds of negotiations with the government have failed to find a compromise.
It was not confirmed whether companies have already cut operations, but a source at a major petrochemical company told Reuters most firms were still storing finished products with the hope of resuming transport.
Carmakers, hit hard as they were not able to receive a timely supply of components and transport finished products, also formed a task force team within their trade association to monitor the situation and call for an early resolution.
The government has urged the truckers to return to work but said it would seek to reflect their demands in the legislative process and keep trying to end the strife through dialogue.
The truckers demand an extension of subsidies, set to expire this year, that guarantee minimum wages as fuel prices rise. The government says it is up to parliament to change the legislation.
As the global economy struggles with supply bottlenecks, any prolonged slowdown in the production and shipments of chips, petrochemicals and autos could add to concerns of rising inflation and slowing growth.
South Korea’s inflation is set to hit a 24-year high of 4.8 per cent this year, the Organisation for Economic Cooperation and Development said last week, while cutting its growth forecast to 2.7 per cent from a December projection of 3.0 per cent.