[Editorial] Toyota labor union leads transformation, while South Korea gets stuck in profit distribution

The bonus dispute at Samsung Electronics has spread to other companies, sparking a battle over distribution. Firms appear fixated on immediate gains, with little regard for future investment. Separate from the bonus controversy, disputes over employer status have also spread across major parent companies since the Yellow Envelope Act took effect. As these two major issues shake the labor market, warning lights are flashing for corporate management. South Korea has become one of the world's 10 largest economies, but the country is now engulfed in disputes over how to split near-term profits while neglecting the future.
The bonus dispute at Samsung Electronics became the starting point and the spark. Similar conflicts are breaking out across the country. The labor dispute at Kakao is intensifying to the point that it threatens the company's survival. Kakao's union argues that poor management decisions have created job insecurity and that executives are monopolizing excessive compensation. It has also demanded a halt to restructuring and spin-offs, along with guarantees of employment stability, and announced that it will begin a partial strike on the 10th of this month.
Beyond the labor dispute, KakaoTalk is effectively a national messenger service and a platform that is close to public infrastructure. If the conflict deepens and a strike is launched, tens of millions of users and small business owners who depend on the Kakao platform for their livelihoods will bear the damage directly.
The employer-status debate opened by the Yellow Envelope Act is also spreading rapidly. On the 1st, the Ulsan Regional Labor Relations Commission held a second hearing on a bargaining request filed by the Korean Metal Workers' Union involving subcontracted workers at Hyundai Motor Company.
The controversy and conflict over the scope of a parent company's employer status are quickly spreading across industrial sites. As disputes over responsibility between parent firms and subcontractors deepen, companies will either restructure their subcontracting systems or avoid investment altogether. As expected, the Yellow Envelope Act is undermining companies' willingness to invest.
This is no time for labor and management to quarrel over how to divide the spoils. The economy is now facing a triple challenge: a global slowdown, tariff pressure from the U.S., and the shift to AI. With the exception of a few companies, many must worry about survival, making distribution conflicts especially troubling. South Korea's rise to the ranks of the world's 10 largest economies was made possible by labor and management working together to boost productivity and expand the pie.
A report by KEF titled 'Implications of Toyota's Labor-Management Relations' shows how serious South Korea's labor relations problems are. According to the report, the Toyota union chairman declared a transformation at this year's labor-management council, saying, "If we keep doing things the way we have, fixed costs will only keep rising." He also signaled a determination for the union to move first, rather than waiting for the company or blaming others. In particular, the remark by the Toyota labor union vice chair on AI transition stands out: "We need to think about what skills I can offer and what my value added is." That is a stark contrast to the reality in South Korea, where hardline unions use strikes as a weapon and dig in their heels. Toyota's ability to maintain its position as the world's No. 1 automaker comes from this spirit of mutual growth between labor and management.
South Korea's economy faces the challenge of navigating both the low-growth trap and the wave of AI automation. To meet that challenge, labor and management must join forces around productivity innovation and win-win cooperation for the future. Both sides should take seriously the warning that if everyone becomes obsessed with grabbing a bigger share, there may be nothing left to divide.