Transformation of employment structure and industrial relations in the korean trucking industry
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Transformation of Employment Structure and Industrial Relations in the Korean Trucking Industry Lee, Byoung-Hoon (Dept. of Sociology, Chung-Ang University) Contents 1. Overview of the Korean Trucking Industry 2. Evolution of Cargo Transport Policy

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Transformation of employment structure and industrial relations in the korean trucking industry l.jpg

Transformation of Employment Structure and Industrial Relations in the Korean Trucking Industry

Lee, Byoung-Hoon

(Dept. of Sociology,

Chung-Ang University)


Contents l.jpg
Contents Relations

1. Overview of the Korean Trucking Industry

2. Evolution of Cargo Transport Policy

3. Operating Structure of Cargo Truckers

4. Working Conditions of Cargo Truckers

5. Industrial Relations of the Trucking Sector

6. Some Implications


Overview of the korean trucking industry i l.jpg
Overview of the Korean Trucking Industry (I) Relations

  • Total area (South & North Korea): 222,154 km² (Britain: 244,100 km²)

  • South Korea: 99,313 km²

  • Population (South Korea): 48 mill

  • Max. Length of Route in S. Korea: 450 Km

  • Export-driven Economic Growth

DMZ


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Overview of the Korean Trucking Industry (II) Relations

  • Commercial road cargo transport comprised of three sub-types

    - General cargo (GC): over 5 ton trucks

    - Individual cargo (IC): 1~5 ton trucks

    - Delivery cargo (DC): trucks below 1 ton

  • Market segmentation:

    - Within-region cargo by truck below 3 tons

    - Truck betw. 3~8 tonsfor both within-region and across-region cargo

    - Across-region cargo by truck over 8 tons

  • Road cargo transport amounting to over US$ 10.5 billion as of 2002

    - Road cargo transport: 60% of total national logistics cost

    - Corporate logistics cost: 11% of revenues (i.e. U.S 9.2%, Japan 5.5%)

    - Share of road cargo transport in corporate logistics: 92%


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Overview of the Korean Trucking Industry (III) Relations

  • Rapid growth of cargo trucks in late 1990s

※ Employee of trucking sector betw. 1997 and 2003:

Increase from 151,521 to 319,405 (by 13.6% yearly)

Market deregulation and financial crisis


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Evolution of Cargo Transport Policy (I) Relations

  • Regulation stage: 1960-1980s

    - Policy approach to nurture and enlarge cargo transport firms by regulating licensing qualification

    - Prohibition of cargo carrier license lease and promotion of direct cargo operation

    * Deregulation of road cargo broker business introduced from mid 1980s (no. of cargo broker: 1,286 in 1987 => 6,957 in 2002)

  • Partial deregulation stage: 1993 - 1997

    - Transition of price control from the permit to the report system (Feb. 1993)

    - Abolition of cargo district regulation and trucking business supply control (Oct. 1993)

    - Change of cargo contract from the permit to the report system (May 1997)


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Evolution of Cargo Transport Policy (II) Relations

  • Full-scale De-regulation stage: 1998 -

    - Enactment of “the Cargo Transport Business Law” (Aug. 1997) for setting out the market-driven reform of the trucking sector

    - Price control abolished for free market competition and cargo carrier license lease allowed (Jan.1998)

    - Transition of cargo business licensing to the reporting system and simplification of cargo business types (Jul/ 1999)

    - Reduction of minimum qualification for general cargo business from 25 to 5 trucks (Jan. 2000)

* Oversupply in the cargo market:no of. cargo trucks grew by 96% in 1997-2002, compared to 14% of cargo volume increase

* Excessive competition by small cargo transport firms: 97.3% of firms w/ below 5 trucks

*Worsening the working condition of cargo truckers


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Operational Structure of Cargo Truckers (I) Relations

  • Yoke of cargo carrier license lease(CCLL)

    - Independent GC truckers affiliated to a cargo transport firm for leasing carrier license with payment of CCLL fee(US$ 1,100-2,300/month)

    - 90% of GC truckers under the CCLL

    (KCTWU’s 2003 survey: 30.3% changed status from direct employment to dependent carrier, 69.7% new entrants leasing cargo carrier license for trucking operation)

    - Background of the CCLL practice:

    [Transport firm]: avoidance of statutory employment cost and business fluctuation (i.e.: KOREX having only 4.8% of 884 trucks in direct employment)

    [Cargo truckers]: lack of GC business capacity (sales network) and qualification (operating over 5 trucks)

    - Related issue: no legal protection of trucker’s vehicle ownership from transport firm’s arbitrary disposal and mortgage loans


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Operational Structure of Cargo Truckers (I) Relations

Employed truckers

Large cargoowner

  • Illegal multi-layer cargo brokering system

Cargo transport firm

Contracted truckers

(long-term based)

overflowed

Contracted truckers

(cargo-based)

Small cargoowner

Broker agent

overflowed

Contracted truckers

(cargo-based)

Broker agent

  • Proliferation of cargo broker agents (run by many cargo owners and transport firms) taking advantage of asymmetry of cargo market information

  • 2003 MOCT survey: 3.7 tiers brokering for cargo transport (25 brokers involved per cargo transaction in practice)

  • - 60-70% of transport payment by cargo owner given to truckers (4-10% deduction for brokering fee per layer) by bill (not cash)


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Working Conditions of Cargo Truckers (I) Relations

  • General profile of cargo truckers

    - 100% male drivers at the age of 42.7 on average

    - 87.8% of truckers having education of high school & below

    - Job experience of 14.1 years and CCLL practice of 8.7 years

  • Operating conditions of cargo truckers

    - Monthly operating distance of 9,447.9 Km and empty haul operation of 2,147.1 Km (22.7%)

    - Total weekly working hours 80.7 hours = driving 64.2 + other operation 16.5

    - 5.1 sleeping hours per day, 15 days sleeping in the truck (to operate in the discount time zone of highway), and 4.2 days off per month

    - 0.6 serious traffic accident in 2002, mainly resulting from sleepy driving

    - over-loaded haul operation: very often 25.3%, sometimes 44%

    (for making more money 50%, or forced by cargo owner/ transport firm/broker agent 38.7%)

(Source) KCTWU’s survey on 931 members in Mar. 2003


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Working Conditions of Cargo Truckers (II) Relations

  • Living conditions of cargo truckers

    - Monthly net income: KW 1.238 Mill. (about US$ 1,150) loss = gross income KW 4.188 Mill – gross expenditure KW 5.426 Mill. (fuel cost 49%, brokering fee 6.9%, CCLL fee 3.4%)

    * If including depreciation cost of vehicle, monthly net loss increasing to KW 1.70 Mill.

    - Household debts reaching KW 35.0 Mill

    - Limited protection of social welfare:

    . medical insurance 95.8% (thru individual membership)

    . occupational accident insurance 9.8%

    . unemployment insurance 18.1%

    . national pension 1.9%

  • Key concerns of cargo truckers

    - Soaring diesel fuel price, lowered transport fare, no recognition of vehicle ownership by transport firms, multi-tier brokering system, and etc.

    * 55.4% of cargo truckers considering job change

(Source) KCTWU’s survey on 931 members in Mar. 2003


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Industrial Relations of the Trucking Sector (I) Relations

  • Korea Cargo Transport Workers Union(KCTWU)

    - Organized by independent cargo truckers in Oct. 2002

    - Affiliated to Korea Cargo Workers Federation, Korea Confederation of Trade Union

    - Change of membership: 1,200 in Oct. 2002 => 5,000 in Jan. 2003 => 29,000 in Aug. 2003 =>

    18,070 in Feb. 2004 (5.7% of total cargo truckers)

    - 13 regional offices

    * Not legally recognized as trade union, due to truckers’ self-employed contractor status


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Industrial Relations of the Trucking Sector (II) Relations

  • Evolution of industrial relations

    - Nov. ’02 – Jan. ’03: KCTWU’s collective actions to demand the improvement of highway rest facilities, with success

    - Feb. ’03: 3-day strike action by Chungchung regional office obtaining 13-17% increase of cargo fare

    - Mar. – May 1, ’03: Series of public gatherings organized by KCTWU (members from 2,500 to over 10,000 participated)

    - May 2, ’03: Pohang regional office engaged strike action (triggered by a member’s suicide)

    - May 2-15, ’03: Series of transport stoppage by regional offices, costing the loss of US$ 540 Mill.

    - Apr. 19 – May 15, ’03: Central negotiation betw. KCTWU and the government/Korea cargo transport business association (KCTBA), reaching a national agreement

    - Jun.-Jul. ’03: sectoral cargo fare bargaining w/ little progress

    - Aug. 21-Sep.5, ’03: KCTWU launching a nation-wide strike action, yet failed under public pressure

    - Nov. 19, ’04: Industrial agreement signed by KCTWU-KCTBA

    - Dec. 12, ’04: Policy agreement reached by KCTWU-MOCT


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Industrial Relations of the Trucking Sector (III) Relations

  • Key contents of the trucking sector agreement

    [Policy agreement on May 15, 2003] : 11 items

    - Reduction of highway toll & extension of discount time zone

    - Expansion and improvement of highway rest facilities

    - Strict regulation of multi-tier brokering system

    - Prohibition of cargo carrier license lease

    - Prevention of over-loaded haul operation

    - Provision of occupational insurance service

    - Guarantee of policy dialogue re. labor rights of truckers

    - Tax exemption of truckers’ overtime operation

    - Establishment of tripartite body to discuss trucking reforms

    - Provision of 100% subsidy for the increase of fuel costs

    - Government’s facilitation to promote industrial bargaining betw, KCTWU and cargo transport business associations

    [Industrial agreement on May 16, 2003] : 7 items

    - Framing of sectoral negotiation – general cargo, container cargo, special cargo – and bargaining schedule


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Industrial Relations of the Trucking Sector (IV) Relations

  • Key contents of the trucking sector agreement (cont.)

    [Industrial agreement on Nov. 19, 2004] : 12 items

    - Guarantee of truckers’ vehicle ownership in the CCLL

    - Guarantee of union activities by KCTWU members

    - Eradication of multi-tier brokering and forced haul overload

    - Transparency of transport cost management

    - Devising joint proposal of dispute resolution to the government

    - Provision of children education assistance to fatal accident case

    [Policy agreement on Dec 17, 2004] : 7 items

    - Provision of 100% subsidy for fuel price increase in next 3 years

    - Periodical supervision of multi-tier brokering practice

    - Special award to report of forced overload haul operation

    - Enhancement of truckers’ mutual funds and parking facilities

  • Bargaining structure of the trucking sector

    - 2003: four layers (policy, industrial, sectoral, & local bargaining)

    - 2004: three layers (policy, industrial, and local bargaining)


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Some Implications of the Korean Case Relations

  • Two side-effect of neo-liberalist deregulation policy in the trucking sector

    - Promoting employers’ strategy to externalize trucking employment to the ‘dependent contractor’ or ‘self-employed labor’

    - Strengthening those truckers’ organizing cohesiveness and collective leverage, returning industrial issues to the government and employers

    → individualization of employment structure ironically leading to collective reaction by truckers

  • Force of deregulated market despotism creating counter-force of stakeholder-involved re-regulation

  • Issues to be tackled

    - How to identify the entity of ‘dependent contractor’ in statutory protection

    - How to upgrade out-dated practices of cargo transport market (i.e. CCLL. multi-tier broker..)

    - How to institutionalize the bargaining structure


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