Striking rail workers on Sunday threatened to stage a large-scale protest rally in Seoul this week unless the government withdraws its decision to set up a new rail operator that they claim is the first step toward privatization.

Thousands of unionized rail workers went on strike on Monday after the government decided to set up a separate rail affiliate as part of its efforts to "rationalize" its heavily indebted rail operations.

Korea Railroad Corp. (KORAIL) denied that its move to set up a separate operator has anything to do with the privatization of the rail service.

"Unless the government responds to the demand by Tuesday, about 3,000 rail workers will gather in Seoul to hold a protest rally two days later," the labor union of the state rail operator said.

The union also called on lawmakers to not give the new affiliate a license to operate a new bullet train service, alleging that they should form a subsidiary committee for the development of railway services under the parliamentary committee on transportation.  

It further demanded President Park Geun-hye respond to the ongoing "rail privatization" issue.

The new service will run from Suseo-dong in southern Seoul to the southern provincial city of Busan. After several delays, it is expected to begin operations in 2016.

The trade union said it will hold a rally in front of the headquarters of the ruling Saenuri Party on Monday to protest the government's move to privatize the state rail operator.  

KORAIL workers have opposed the establishment of a new state rail affiliate, arguing that it could eventually result in mass layoffs and fare hikes.

The state rail operator has removed more than 7,600 striking workers from their positions for their participation in the "illegal strike."

The walkout has so far only affected freight and some passenger train services, but it will affect bullet train services starting next week.

Citing safety concerns, however, KORAIL said last week it will reduce the number of KTX high-speed trains and subway services around the metropolitan area from next week.

Daily KTX services will be reduced by 10-12 percent starting from Tuesday and the operation of the normal-speed Mugunghwa trains will also be affected, it added.(Yonhap News)