South Korean cement output slashed as truckers strike

This week the South Korean government stepped in with a presidential executive order to force striking cement truck drivers in the country to go back to work. Some 76 teams of government officials began conducting on-site investigations with police to order 2500 cement transport workers to return to work.The striking truckers are demanding a certain guaranteed level of wages and resorted to collective action to try and see their demands met. About 7000 people rallied in 16 regions across the country for the strike on Wednesday, according to the Ministry of Transport.

Failure to comply with the government order could lead to the cancellation of licences, imprisonment for up to three years and a fine of up to KRW3m (US$22,500), said the Independent Commodity Intelligence Services (ICIS). However, many truckers appear set to defy the order with several unionised truck drivers shaving their hair in a public defiance of President Yoon Suk-yeol's back-to-work order.

The dispute has gained momentum since June, when the truckers first went on strike, and is made up of some 250,000 hardliner unionised truckers from the Korean Confederation of Trade Unions (KCTU). The Cargo Truckers Solidarity Union (CTSU), which is affiliated to the KCTU, launched a nationwide protest, calling for the extension of "Safe Trucking Freight Rate (STFR)" policy beyond December 2022. The STFR policy guarantees a minimum annual wage for the truckers, most of whom are self-employed, to help them manage the surging fuel price rises and deter dangerous driving. However, the policy will expire at the end of the year unless it is updated. The government has argued that there is no justification in broadening the STFR and that the truckers are curently paid well enough. 

Lee Chang-yang, Minister of Trade Industry and Energy, met with cement industry stakeholders at Asia Cement's Jecheon cement plant, North Chungcheong province, this week on talks over the dispute. Cement producers revealed that production could halt entirely due to lack of supplies. Lee explained that the government would act and "devise a plan to resume transportation and, if necessary, discuss and promote measures with the relevant ministries relating to minimising damage, such as the possibility of using military vehicles [for transportation]." 

Cement and construction sectors reel from strike action
This week, the Korean Cement Association reported cement output totalled 22,000t on Monday, just 11 per cent of the seasonal average in the September-December peak period. Between 24-28 November the industry’s losses amounted to KRW64.2bn, reported the Korean Times.

Moreover, the Ministry of Land, Infrastructure and Transport explained that cement output has effectively stopped, falling by 95 per cent compared to the seasonal average. Some 250 building sites are estimated to have stopped work due to scarcity of concrete, according to the Ministry of Transport.

House price falls and cost of living to hit economy
South Korea is also experiencing a fall in house prices. Nationwide house prices fell 0.32 per cent in November, YoY, while prices in Seoul slipped by 0.12 per cent, according to Kookmin Bank. This represents the biggest decline in nine years. Property is a major cause of the country's record-high household debt, and the slump is starting to impact construction companies.

The rising cost of living is eroding household income in the country. Private spending accounts for approximately half of the GDP, reports Reuters. In October consumer prices rose by 5.7 per cent, well above the Bank of Korea's two per cent target. Korea's GDP forecast has been revised downwards. The OECD has changed its growth forecast from 2.2 to 1.8 per cent in 2022, while the Bank of Korea has cut its GDP estimate from 2.1 to 1.7 per cent.