S Korea agrees rail reforms

Workers have threatened to step up strikes

South Korea's parliament has passed a bill to restructure the country's railway system, on the third day of a nationwide rail strike.

Under the restructuring, part of the loss-making railway operations will be split off and a government company will be set up to take charge.

The bill was passed by 121 votes to seven late on Monday, a parliament official said.

Industrial action has disrupted transport across the country, with less than one in eight cargo trains and barely half the country's scheduled passenger services running.

More than two thirds of commuter trains in cities, however, are functioning.

Union leaders rejected government demands to end the action by late Sunday night, saying that their requests for dialogue had been ignored.

In response, as railway executives threatened to fire striking workers, aides to President Roh Moo-hyun - himself a former union lawyer - said that talks were off the agenda.

The strike was illegal, they said, since it was aimed at blocking the bill's restructuring of the loss-making railways, rather than being about labour issues.

But unions say their action is legitimate since the government's privatisation plans will inevitably lead to job losses.

Tougher line

The worry among some now is that the action will spread.

Both the country's two largest union federations are planning action on Monday to decry the arrests of hundreds of striking railway workers over the weekend.

President Roh's background in the union movement has caused some investors to insinuate that he might be soft on his former colleagues, a view reiterated after the government reached a deal earlier in June with striking workers at state-run bank Chohung.

Credit ratings agencies are thought to have softened negative comments in the wake of the harder line his government is now taking.