[Editorial] Yellow Envelope Act Takes Effect on the 10th, Side Effects in Collective Bargaining Must Be Minimized

The Yellow Envelope Act, an amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act that the business community opposed until the very end, will take effect on the 10th. The core of the law is to strengthen the responsibility of principal contractors and expand the bargaining power of unions at subcontractors. It also contains many provisions that could upend the existing order of labor–management relations, such as restricting companies’ ability to claim damages for losses caused by union strikes. The corporate sector voiced strong opposition and submitted demands for changes, but these were not accepted.
Employers are deeply worried about the confusion that may follow once the law is implemented. Labor groups, by contrast, are seizing on the enforcement of the law as an opportunity to expand union rights and are vowing to fight more aggressively. Under these circumstances, the law’s stated aim of promoting labor–management coexistence is unlikely to be realized and may instead produce serious side effects. The government must move swiftly and act as a balanced mediator to prevent turmoil at workplaces.
The biggest concern is that the Yellow Envelope Act’s vague provisions and problematic clauses could lead to unlimited bargaining demands and an excessive number of strikes. The definition of "employer" has been ambiguously expanded to include anyone who can "substantially and specifically control or determine working conditions." As a result, large numbers of indirectly employed workers at subcontractors are likely to demand collective bargaining directly with the principal contractor. This could trigger severe disruption in industries with complex principal–subcontractor structures, such as automobiles, shipbuilding, and construction. In the auto industry, which deals with tens of thousands of parts suppliers and partner firms, companies may effectively be forced into year-round, continuous bargaining. In a global race where time is critical, unlimited bargaining by unions poses a serious risk to businesses.
"Decisions on working conditions and business management decisions that affect working conditions" have also been added to the scope of issues that can be the subject of industrial action. This means mergers and acquisitions, asset sales, and the expansion of overseas production facilities can all become grounds for strikes. A bizarre situation could arise in which companies are unable to invest abroad if unions do not consent. While companies’ rights to defend themselves against unfair labor practices by unions are not sufficiently guaranteed, the law restricts their ability to file damage suits over strike-related losses, which is another highly problematic clause. On the eve of the law’s implementation, on the 9th, Minister of Employment and Labor Kim Young-hoon said, "Do not be overly concerned about conflicts that have not yet occurred," but conditions on the ground are far from easy.
Labor groups have already announced large-scale campaigns. Within the Korean Metal Workers' Union (KMWU) and the Korean Public Service and Transport Workers' Union (KPTU), both affiliated with the Korean Confederation of Trade Unions (KCTU), tens of thousands of workers at dozens of subcontracting firms have sent formal notices demanding bargaining with principal contractors. The Federation of Korean Trade Unions (FKTU) will hold a ceremony on the 10th to declare a drive to organize 2 million members under the Yellow Envelope Act. It plans to support struggles by subcontractor unions and increase its current membership from about 1.2 million to 2 million. Korea’s labor–management relations have long been criticized for being dominated by confrontation and conflict rather than coexistence and harmony, becoming a major drag on national competitiveness. All sides must recognize the risk that the Yellow Envelope Act could push labor and management deeper into a quagmire of confrontation instead of putting them on a path of coexistence.
The law also contains elements that could fuel conflict between unions themselves, as interests diverge between principal-contractor unions and subcontractor unions. If subcontractor unions succeed in winning wage and bonus increases directly from the principal contractor, conflicts of interest may arise with workers at the principal firm who share the same financial resources. If differences between the principal-contractor union and multiple subcontractor unions are not smoothly resolved and bargaining drags on, companies will be saddled with double or triple bargaining burdens. It is said that many firms are trying to keep a low profile, telling themselves they must at least avoid becoming the first company embroiled in a Yellow Envelope Act dispute. In such a subdued atmosphere, it is difficult for businesses to play a leading role in growth. The law needs to be supplemented, and there must be firm and fair judgments against excessive demands.