[fn Editorial] Finally Enforcing the Stronger Yellow Envelope Act, Are Companies Being Pushed to the Edge?

The Democratic Party of Korea and the government have decided to enforce the Yellow Envelope Act (Amendment to the Union Act Articles 2 and 3) within the July extraordinary session of the National Assembly. The Environment and Labor Committee of the National Assembly held a closed-door working-level meeting with the Ministry of Employment and Labor on the 28th, immediately convened a subcommittee on the bill, and began a full review. The ruling party and the government aim to pass the bill in the plenary session on the 4th of next month. Companies argue that there are numerous toxic provisions affecting management, but these concerns have been completely ignored. In this urgent situation where the economic growth plate is closing, we must question whether it is reasonable to recklessly tighten the grip on companies.

Industries in which domestic companies once held a dominant position are now in a period of great upheaval. Existing main industries are in a situation where survival is difficult without drastic restructuring due to the influx of low-cost products from China. Moreover, the future of companies is uncertain due to the tariff war initiated by the United States. Following Japan, the European Union (EU) has also successfully reached an agreement with the United States.

The domestic negotiation team will conclude final negotiations the day before the August 1 deadline for tariff imposition. There is a risk of the worst-case scenario where only we are subject to a 25% tariff. Even if the negotiations go as hoped, a mutual tariff of 15% would still be a significant burden for companies. Behind this wave, item-specific tariffs remain. Howard Lutnick, U.S. Secretary of Commerce, has warned that semiconductor tariffs will be imposed in two weeks. This is a direct hit to domestic companies like Samsung Electronics and SK Hynix.

It is frustrating that the government and the ruling party, who should be allies of companies, are instead tightening the grip on them with the Yellow Envelope Act. The Yellow Envelope Act was a bill that the Democratic Party, then the opposition party, pushed several times during the Yoon Suk-yeol administration but was repeatedly nullified by vetoes. The main point was to completely ban claims for damages related to illegal strikes. In a situation where companies do not have proper defense rights, there was a significant risk of suffering severe management damage due to strikes and lawsuits. This bill, which was nullified for such reasons, has been revived by the ruling party, which cannot ignore the labor minister from the labor union and the labor support base.

Moreover, the bill currently being promoted by the government and the ruling party contains stronger content than the one that was scrapped. A representative example is the expansion of the concept of labor disputes to allow unions to participate in major management issues. As it stands, high-level management decisions such as investment decisions and overseas business relocations could become subjects of labor disputes.

The business community protests, asking whether all major corporate decisions must be approved by the union. It is a natural point. Tug-of-war with the union could cause companies to miss the golden time in restructuring or mergers and acquisitions (M&A). It is a bill that could seriously damage corporate competitiveness.

The provision to expand the scope of users is also controversial. It allows subcontractor workers to demand negotiations with the main contractor's owner, and for companies with thousands of subcontractors, responding to negotiations could make normal management impossible. The government is pushing to raise the corporate tax that was previously lowered, and to enforce the concentrated voting system and mandatory buyback of treasury shares. If companies are made so immobile, they must realize that growth is a distant dream.