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We'll Go Bankrupt, If You Don't Sign the Agreement Soon

Bak Yong-chae, Editorial Writer
입력 : 2018.04.17 18:59:47

We'll Go Bankrupt, If You Don't Sign the Agreement Soon

Is this a happy ending? Perhaps everyone will say so. Or maybe they believe it to be so.

Let's look back. It is 9 p.m. on March 30. The labor and management of Kumho Tire signed an agreement that mentioned the sale of the company to the Chinese company, Doublestar. This happened three hours before the deadline for court receivership set by the Korea Development Bank (KDB). That morning, Kim Dong-yeon, the deputy prime minister for economic affairs, said, "Court receivership is inevitable if there is no agreement," and Cheong Wa Dae released a statement saying, "We will not solve this problem with politics. This is the opinion of President Moon Jae-in." The labor union, which had claimed to be absolutely against the overseas sale of the company, eventually succumbed. Ten days after the resolution of the Kumho Tire incident, on April 10, the STX Shipbuilding case was settled in the same way. Although the labor and management of STX missed their deadline for the submission of the letter of comfort by one day to avoid court receivership, the Korea Development Bank accepted their agreement. "We will handle things according to the plan if things deviate from our principle. If they have no voluntary recovery plan, we will begin the process to apply for court receivership," the government and the Korea Development Bank said, and such pressure was effective.

Now the only problem remaining is General Motors (GM). However, the GM case is different in nature from the previous two cases. In the case of Kumho and STX, it was a matter of the government, the Korea Development Bank and management versus the labor union; but with GM, it is a three-way struggle with General Motors, the government and KDB, and the workers all requesting different conditions. At present, the situation is in the hands of GM. In February, General Motors presented a plan to shut down its factory in Gunsan, but the company said that it would assign the production of new models and maintain its factories in South Korea on condition that the South Korean government provides subsidies and that a labor-management agreement is reached. Meanwhile, the government and the Korea Development Bank claim they will provide funding after due diligence of GM Korea and a review of GM's plans to allocate the production of new models. The labor union claims that GM should first present a future vision of the company. Everyone is claiming, "you first."

Let's take another look. Lee Dong-geol, president of the Korea Development Bank said that Kumho and STX were successful examples. As he explained, they may be meaningful for they found an alternative just before a disaster. But are they really? Who would stand up to the words, "We will make you go bankrupt, if you don't sign the agreement?" especially when they come from those who hold your life in their hands. It was never a negotiation that the workers could win in the first place. With the surrender of the workers, the company will say they were able to gain an opportunity to recover by sharing the pain. But of course, this means that the situation is now that much worse for the workers.

The situation is particularly serious in the case of STX. Labor and management opted to cut wages and bonuses and have workers go on unpaid leave for six months every year for five years instead of restructuring the workforce, such as voluntary retirement or outsourcing parts of the production process. What will happen at General Motors? If labor and management fail to reach an agreement by this coming April 20, the deadline, GM threatens to turn the company over to court receivership. Meanwhile, the word on the street claims that the company has already begun the process for court receivership, that they sent the orders for new models that were to be allocated to South Korea to China, and that 300,000 workers will end up on the streets if the company goes bankrupt. The government and the Korea Development Bank continue to sit watching. It's not like we don't know the challenge they face, as they have to simultaneously tackle the problem of jobs and the input of taxpayers' money. But given the previous examples, we can easily guess that they plan to negotiate with General Motors, using concessions by labor as leverage.

So far, restructuring has been carried out unilaterally by capital with the government turning a blind eye. Since the government recognized a broad range of conditions for reducing the number of workers due to urgent business reasons, it is easy to put the blame on the workers. Aware of such problems, the Moon Jae-in government redefined the principles for restructuring last year and claimed that they would move away from the focus on the financial aspect and reflect industrial factors. Recently, the government said it would handle problems according to principle without any political intervention and stressed the division of politics and business in restructuring. But a look at the present situation gives a strong impression that such promises were simply in word only. Separating politics from business when it comes to restructuring seems fair at first sight, but it blocks workers, who are at a relative disadvantage, from having their say in the negotiations and eventually makes everything work in the favor of the Korea Development Bank. As a result, nothing has improved from the finance-centered restructuring.

In the South Korean society, another word for restructuring is layoffs. Reducing the workforce means workers will lose their way of life and fall into an abyss. For the workers, who had put everything into their work, the environment outside the company is never easy. If someone has to fall into the ocean to save a sinking ship, the least we could do is throw him a life vest, but at present, even that is not being done. No one was ever held responsible, a process necessary to prevent future shipwrecks. Business owners who put their companies in such trouble were never punished and the government and the Korea Development Bank, which poured in a bunch of the taxpayers' money, were never held responsible.

In the end, it was always the workers who had to share the pain. We are well aware that labor unions have become bureaucratic as they grew. But at least, we could refrain from dismissing the labor's arguments in the process of restructuring as an attempt to seek their personal interests. For the common people who can neither live nor die, the cold eye from society is hard to bear. There is no such thing as a happy ending when it comes to restructuring.


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