South Korea’s so-called “yellow envelope” law, which expands the rights of unionized workers, will take effect in March next year. The government seeks to balance worker protections with the concerns of big business.
Amendments to the Law on Trade Unions and Labor Relations were approved by the National Assembly in August. Guidelines will be formulated later this month, following discussions with businesses.
The new law will place limits on lawsuits filed by companies against workers for damages resulting from strikes. This follows a previous case in which SsangYong Motor – which now operates under the name KG Mobility – obtained a court order requiring strikers to pay more than $3 million to cover the consequences of stopping operations.
Following this decision, citizens sent donations to affected union workers in yellow envelopes, hence the law’s nickname.
According to the revised law, unions will be able to challenge administrative decisions of companies. Currently, the challenges are limited to working conditions.
The new law will also guarantee the right of unions representing subcontractor workers to negotiate directly with the contracting company.
South Korean companies have expressed concerns about these provisions. Business groups led by the Korean Chamber of Commerce and Industry have criticized the yellow envelope law, saying it would legalize illegal strikes.
Critics say the law would pave the way for endless lawsuits filed by hundreds, if not thousands, of unions. Under the amendment, strikes will be permitted in response to personnel decisions, mergers and acquisitions, and production reductions.
The law will apply to all companies operating in South Korea, including foreign ones.
Foreign companies may be reluctant to expand or invest in South Korea, a lawyer said. Lawsuits could occur if a company decides to withdraw from South Korea.
“We want to have a factory in South Korea, but dealing with many subcontractors is very risky,” said an executive at a Japanese food manufacturer.
In South Korea, there is a large and growing disparity in capital and wages between large conglomerates (chaebol) and small businesses. This polarization fuels worker discontent.
“Establishing a basis for negotiations between main contractors and subcontractors and achieving win-win situations will lead to real growth,” said Minister of Labor and Employment Kim Young-hoon.
Others express doubts about whether a law protecting union activities will lead to industrial expansion, with one company saying it would “rather use more robots than complaining workers.”
About The Author
