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As truckers protest for the seventh day, South Korea Inc is under increasing pressure

Image: Reuters Berita 24 English -  The government estimated on Monday that a trucker strike in South Korea has cost critical industrial sec...

Image: Reuters

Berita 24 English -  The government estimated on Monday that a trucker strike in South Korea has cost critical industrial sectors more than $1.2 billion in delayed productivity and unfulfilled deliveries, as the damage spreads farther throughout the economy.

Due to a lack of room to keep unshipped products, the strike, which is now in its seventh day, has caused steelmaker POSCO to shut down some factories. Hyundai Motor has decreased production on some assembly lines, and cement manufacturers have lowered output as well.

Truckers are targeting large petrochemical complexes in Ulsan, Yeosu, and Daesan, according to an industry group, and typical daily shipments from plants have dropped 90 percent as a result of the strike.

It was unclear whether petrochemical companies were also curtailing production.

The Cargo Truckers Solidarity union is protesting rising fuel prices and calling for guaranteed minimum pay. Despite four rounds of negotiations with the government, no agreement has been reached.

According to a transport ministry estimate, 6,600 members, or nearly 30% of the union, went on strike on Monday.

The industry ministry said in a statement that the conflict cost the automobile, steel, petrochemical, and cement industries roughly 1.6 trillion won ($1.2 billion) in missed output and failed deliveries between June 7 and June 12.

There have been no substantial production disruptions at Samsung Electronics, SK Hynix, or other semiconductor companies as of yet.

Samsung Electronics, SK Hynix, and its suppliers, according to Kim Yang-pang of the Korea Institute for Industrial Economics and Trade, had at least two weeks' worth of raw materials on hand.

"It's uncertain how long the strike will last, but it will have a limited impact."

According to Reuters, semiconductor businesses do not likely to have an immediate impact on chip production because they have supplies of crucial materials.

Samsung did not respond to requests for comment. A request for comment from Hynix was not immediately returned.

The extended labour unrest is a key test for President Yoon Suk-yeol, who took office just five weeks ago, and might detract from his conservative agenda while also raising the possibility of long-term animosity with powerful labour unions.

The administration has urged truckers to return to work, but has also stated that it will endeavour to incorporate their requests into the legislative process and will continue to try to resolve the conflict through negotiation. It has also dispatched 100 military vehicles to assist businesses with supplies.

Truckers are asking for an extension of subsidies that guarantee minimum salaries when fuel prices rise, which are slated to expire this year. The Yoon government claims that changing the legislation is up to parliament.

Any extended delay in the production and shipments of chips, petrochemicals, and automobiles, as the global economy suffers with supply bottlenecks, might add to fears about increasing inflation and declining GDP.

South Korea's inflation is expected to approach a 24-year high of 4.8 percent this year, according to the Organization for Economic Cooperation and Development, which also lowered its growth forecast to 2.7 percent from 3.0 percent in December.

(1 USD = 1,285.9800 KRW)

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