The Ministry of Land, Infrastructure and Transport (MOLIT) and Korea Railroad Corp. (Korail) completed the consolidation of Korail's subsidiaries on the 23rd. The five existing subsidiaries will operate from that day as three specialized companies covering customer service, retail and logistics, and maintenance.
Korail Networks and Korail Tourism Development have been merged into a customer service company, tentatively named Korail Tourism Networks. Korail Retail and Korail Logis have become a retail and logistics company, tentatively named Korail Retail & Logistics. Korail Tech, which handles maintenance, was not part of the merger but will undergo a realignment of functions with Korail under the reorganization. The official names of the merged subsidiaries will be finalized by the end of the year after gathering employee opinions and consulting outside experts.
MOLIT, Korail and the subsidiaries jointly announced a list of "10 service improvements the public will feel from the consolidation." The list comprises five items on passenger convenience, three on safety and two on improving efficiency.
The earliest measure to take effect involves connecting transport services. Korail Tourism Networks, its tentative name, will offer a 30% discount on parking fees to all customers using rail tourism products from late October. A roadmap for building a connecting transport system covering car sharing, rental cars, city and intercity buses, and demand-responsive transport (DRT) is to be drawn up by the end of this year.
Korail Retail & Logistics, its tentative name, will expand promotions such as buy-one-get-one-free and three-for-two deals at Storyway convenience stores inside railway stations. It plans to shift some imported goods to direct transactions with overseas manufacturers and suppliers to cut out distribution layers, and to use the savings to strengthen price competitiveness.
Korail Tech will introduce artificial intelligence-based equipment for cleaning railway stations and step up restroom cleaning on conventional trains. For aging conventional trains, it plans to carry out special cleaning in which restroom fixtures are disassembled and then sterilized and disinfected with steam equipment. A plan to convert low-use vending machine spaces on KTX trains into luggage storage areas is also being pursued. The locations to be converted will be selected by the end of the year in consultation with Korail.
The consolidation plan began with the formation of a MOLIT task force on subsidiary restructuring last December. It was drawn up after a series of meetings with the union and five sessions of a labor-management-government consultative body, and was confirmed in June by deliberation and approval of the Public Institution Management Committee. Merger procedures including corporate valuation and business combination review followed. MOLIT plans to keep the labor-management-government consultative body running after the consolidation to discuss pending issues on wages, personnel and working conditions. The consolidation was pursued on the principle of maintaining existing employment, with no transfers of staff between institutions.
Kim Tae-byung, director general of MOLIT's railroad bureau, said, "This consolidation of subsidiaries is not merely about reducing the number of companies, but about clarifying each subsidiary's role and raising expertise in each field to improve convenience for rail passengers and strengthen safety." He added, "We will continuously manage key outcomes so that the public can feel the effects of the consolidation, and will keep communicating with labor and management on matters such as improving employee conditions, to support the stable settlement of the three-subsidiary structure."
The consolidation is complete, but a number of issues remain unresolved, including points of contention between labor and management. Ahead of the launch of the merged entities, workers at the subsidiaries began a joint general strike on the 21st. The union is demanding a shift to a four-team, two-shift system, the introduction of a seniority-based pay scheme, improvements to the wage and rank structure for grade-six employees, and holiday bonuses equal to 120% of pay. The union argues that closing gaps in employment status and conditions is unavoidable, given that indefinite-term contract workers at Korail Networks and permanent employees at Korail Tourism Development are being brought into a single company. No detailed plan or medium- to long-term roadmap has been presented on the criteria for aligning the different wage and rank structures, and difficulties are expected for some time in resolving the issue.
