Opinion Leaders` Digest 03-15
Date : May 16, 2003
Author : JEON Yong-Deok, Professor of Economics and International Trade Dept, Taegu University ydjeon@taegu.ac.kr

Truckers' Collective Action

Truckers' collective action ended with promises of transportation fee raise, reduction of various taxes and levies and improvement of some systems related to transportation. The author analyzes and points out the mistaken concepts related to the collective action, economic reasons of truckers' collective actions, and problems of promised agreements between government and truckers' cartel. He also suggests some possible counter-measures in the market economy.

First, the author points out several grave mistaken concepts committed by the parties concerned. Some medias argued that the truckers are employees and their action is strike. However, the author shows that truck owners are not employees but enterprisers. The Supreme Court already established this case. Therefore, the truckers' collective action is not a variety of strike but truck owners' group actions. In other words, it was just a group action by one of the interest groups in this country. The truckers' collective action means that labor movement would decline and group action by the interest groups would stand out in our society. A rumor is going around that many other group actions will soon follow.

In this country, group actions are always possible because freedom of association and assembly is guaranteed. But the actions should be legal or lawful. Government authorities paid mere lip services, only by repeatedly emphasizing, "Illegal and unlawful actions are not allowed" even if the truckers in Pohang already violated law and order by blocking the gates of the POSCO and stopping cargo movements and thus inflicted a great loss to the POSCO and some transportation companies. This shows wrongful perception of this problem by the current government.

The law of fair trade also prohibits the group actions, as this may be understood as an illegal conspiracy. But The Fair Trade Commission never tried to address this matter. The Commission neglected it's own duty. Development of transportation and telecommunication proves that the scope of group actions would be enormous far over and beyond our imagination. Contrary to the law of fair trade, consumers or producers may have complete freedom to dispose their assets, in such a way as they may prefer. But they shall not violate others' lives and properties.

Any third parties or out-siders should not intervene in labor disputes by law. However, the truckers' cartel in Pohang nominated one of the senior members of Kyung-Buk Chapter of the Korean Federation of Trade Unions as their delegate for negotiation. Such nomination violated the trade union law.

The author lists several reasons and suggests solutions of the trucker's collective actions as follows.

First, since 1997, demand of trucking service didn't grow much (only 9% increased) while supply of service or number of trucks and size of truck fleet, increased sharply by 54%. This resulted in the decrease of trucking charges. The numbers of large and container trucks increased so sharply by virtue of cheap financial cost in investment in expansion of truck fleets. High labor cost encouraged larger trucks as well. Such situation also has made trucking business riskier than before. In addition, truck owners' managerial capability has become doubtful, too.

Second, the price of truck fuel, low-sulphur diesel, increased by about 60% in four years from 510-520 Won in January, 1999 to 825 Won in December, 2002. This price hike was due to the reforms of tax on fuels. The price of gasoline changed very little for the same period. Reform of tax system should allow the truckers a certain grace period to make themselves adapted in new cost-up situation.

Third, cargo volume is closely related with the economic performance. Performance of primary metal industry has been downward since 1999 while number of trucks and size of truck fleet expanded sharply. Some truck owners made wrong forecasting of trucking market.

Fourth, as a time-honored malpractice in trucking industry, truck owners surrender their titles of trucks to a trucking company. The company becomes to hold legally the titles of surrendered trucks while the trucks belong to the real owner. The management of company dictates the truck owners and charges them heavy royalties, regardless of cargo volumes they served.

Fifth, a representative of truckers' cartel argued high amount of multi-step cargo collecting brokerage and strongly blamed cargo brokers for exploiting truckers. However, cargo brokers provide service of cargo collection and function of middleman between truckers and cargo owners. In other words, they perform productive function in trucking industry. That means that brokers should not be blamed.

Sixth, truckers' cartel argued that they should be treated as laborers and, therefore, that they should keep three primary rights of trade union as their rights. In fact, trucker are not laborers but self- employed. The laborers' right under the constitution should be denied to them.

Seventh, reduction of fuel tax and toll charges and improvement of resting facilities along the highways would be burden to the publics. These should be borne by the truckers as their operational cost. This is against capitalistic market.

Eighth, the increase of trucking charges means a raise of distribution cost. It causes whole economy to suffer from cost-up and subsequent inefficiencies. In the long run, price hike of trucking service would reduce cargo volumes and cost inefficiency, leading to the contraction of trucking industry.

Conclusively, it is uncertain whether increased trucking charges would raise the income of truckers. Other economic parties would respond to such increased charges as well. And items of cost reduction claimed by the truckers are mostly those related with government. This would make truckers' expense shift to the publics. Collective action of interest groups will be expected to spread over the country, going in gear with current government's ideological tendency. Our task for making Korean economy efficient is how to control and tame such group action by the interest groups.¡á

(July 1, 2003 summarized and re-edited in English by JUNG Churle, a CFE Research Fellow, jungchrl@uniel.co.kr. Some corrections and changes were made in the wordings in this summery by the good advices from the author.)