SEOUL, Dec. 27 (Yonhap) -- The government on Friday issued a license for a new affiliate of the state-run rail operator in its uncompromising stance against opposing strikers, ending decades-long loss-incurring rail monopoly.
The move followed the rupture of negotiations between the labor and management of the state-run Korea Railroad Corp. (KORAIL) that took place earlier in the day in an attempt to end the 19-day-long rail walkout. After the breakdown, the management issued an ultimatum for thousands of strikers to come back to work by midnight or else face punitive measures.
"A local district court in Daejeon approved a registration for a new KORAIL subsidiary shortly before, and we've immediately issued a license for it," said an official of the Ministry of Land, Infrastructure and Transport, which is in charge of the railways.
Later Friday night, Transport Minister Suh Seoung-hwan said in an emergency briefing that the new era for rail competition will begin and that the affiliate Suseo KTX Corp. will be a starting point of a rail reform.
The minister stressed that the move was unavoidable to upgrade the service quality and reduce the loss of tax payers' money to make up for KORAIL's huge chronic deficits.
"We hope (the debt-ridden) KORAIL will be reborn as a sound company that receives public love via a competition in good faith with its affiliate and will open a rail renaissance," the minister said.
Labor and management of KORAIL unsuccessfully gathered at the negotiating table earlier in the day to discuss a government plan to establish a subsidiary to run part of the high-speed train services.
After the talks, KORAIL President Choi Yeon-hye warned that the company has no choice but to take actions against the striking employees who do not return to work by midnight.
Shortly after the announcement, the union said it has an intention to stop the walkout if the government withdraws issuing the license for the new affiliate that will provide a service scheduled to run from Suseo-dong in southern Seoul to the southeastern port city of Busan.
"The government has to make a decision not to issue the license," union head Kim Myung-hwan said at a press conference, further assuring that the latest development is not indicative of the talks breaking down as the union plans to return to the negotiating table.
Despite the union's demand, the government once again reiterated that it will not negotiate with unionized workers on the issue of withdrawing the license.
More than 8,700 KORAIL workers walked off the job on Dec. 9 in protest against the government decision to issue a license for the new affiliate. The union suspects the move is a precursor to privatizing the rail monopoly.
The government has repeatedly assured that it has no intention of privatizing the planned subsidiary and has promised to revoke the subsidiary's rail service license if stakes are sold to private investors.
But labor leaders, opposition parties and other critics say they can't buy the assurances, saying that privatization would lead to massive layoffs and fare hikes.
On Friday, President Park Geun-hye stressed that the subsidiary's establishment is aimed at fostering healthy internal competition to improve efficiency at the rail monopoly struggling with mounting debts.
"There is a saying in economics that there is no such thing as a free lunch," Park said during a meeting with economic ministers in the central administrative city of Sejong. "Loss from lax management of rail would end up a burden on the people."
The resumption of talks came after the Jogye Order, the country's largest Buddhist sect, pledged to help resolve the dispute in response to an appeal from the deputy union leader.
Park Tae-man, a deputy union leader, fled to the temple on Christmas Eve with three other members of the union wanted by police to avoid arrest and seek help from the religious community.
The police have court-issued arrest warrants out for 25 union leaders for waging what the government calls an "illegal" strike.
The sit-in, the longest ever for the country's railroad, has caused major disruptions for commuters and with cargo transportation in particular.
Passengers across the country experienced inconvenience after the KORAIL was forced to cut passenger train services by around 24 percent for the fifth day in a row.
The daily amount of cargo shipments has dropped to an average of 30 percent of the normal volume, stoking concerns over the impact on the shipping industry.
Earlier in the day, a militant umbrella labor union decided to completely suspend its ties with the government and its participation in labor-related government panels.
The Korean Confederation of Trade Unions (KCTU) also decided at its leadership meeting to stage second and third strikes on Jan. 9 and 16 in protest against the government's "suppression of labor circles."
The umbrella union has already threatened a general strike for this Saturday soon after police failed to arrest KORAIL union leaders allegedly hiding in the KCTU's main office in Seoul in their raid on Sunday.
"We'll strongly expand and intensify our anti-government struggles until Feb. 25, when President Park's first year ends," the union said.
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