The Korean Railway Workers' Union is seeking improved pay and working conditions and an expansion of the KTX bullet train services to include lucrative routes to southern Seoul, which are only allotted to the other high-speed railway, called SRT.

A major impact on businesses was unlikely as South Korea's key export items, such as semiconductors and cars, do not rely on rail, but some officials in sectors including cement, steel and petrochemicals warned against a prolonged walkout.

The strike, the first since November 2019, came after a collapse of negotiations late on Wednesday between the union, the transport ministry and Korea Railroad Corp (KORAIL), the state-run train operator. The work stoppage is due to end at 9 a.m. on Monday (Sunday midnight GMT).

The union accused the government of causing public confusion and seat shortages by splitting profitable routes between the two train operators, which it said should integrate to cut costs and boost efficiency.

The transport ministry dismissed the union's claim and the strike as "illicit," vowing stern action.

KORAIL chief Han Moon-hee apologised for inconvenience to passengers and urged the workers to return to work.

"This strike has no legitimacy because it targets government policy issues that cannot be resolved through negotiations," Han told a news conference.

The ministry estimated cargo trains would run at 21%-47% of their normal capacity. KORAIL said it would operate about 68% of the KTX routes, and 75% of metro subways outside the morning rush hours.

According to the Korea Cement Association, rail accounts for 40% of cement transport, and any protracted strike could affect firms during the fall's peak building season.

"We have secured some inventory in preparation for the strike, but it's not a lot. If the strike lengthens, we will have to convert to land transport, which will drive up costs and hit profitability," a cement company official said.

(Reporting by Hyonhee Shin and Joyce Lee; Editing by Stephen Coates and Gerry Doyle)

By Hyonhee Shin and Joyce Lee