Workers and job seekers caught in a troubling fight

Koh Hyun-kohn


The author is the executive editor at the JoongAng Ilbo.
 
 
“If the 'Yellow Envelope Act' takes effect next March, I will have to make a choice — either move production overseas or increase automation. Now we are told to negotiate with subcontractor unions we have never even met. I see no point in staying.”
 
That was the somber assessment of a midsize company owner I spoke with recently. He said he was exhausted by both difficult management conditions and ongoing labor disputes. It did not sound like corporate exaggeration. “Automation is not as simple as it seems. Many processes still require human labor, and the costs are high. Realistically, moving abroad is the alternative,” he added. His company employs more than 1,000 workers. If the factory goes overseas, most of those jobs disappear. A bill designed to protect workers could instead take their livelihoods away.
 

Members of the six major business associations and the Federation of Korean Industries chant slogans during a rally in front of the main building of the National Assembly in Yeouido, western Seoul, on Aug. 19, urging revisions to the amendment of the Labor Union Act. The front banner reads, “Oppose the amendment to the Labor Union Act that increases illegal strikes and reduces jobs.” [YONHAP]

 
Concerns extend to major firms. General Motors Korea, which works with more than 3,000 suppliers, has also faced talk of withdrawal. Company President Hector Villarreal warned that “labor-management conflict in Korea creates serious risk” and said headquarters in the United States may reconsider its business here. With losses mounting, the Yellow Envelope Act only adds pressure. If GM leaves, more than 11,000 direct jobs vanish, and thousands more at suppliers. Local economies in Bupyeong District in Incheon and Changwon in North Gyeongsang, where the plants are located, would take a heavy hit. At a time when U.S. President Donald Trump is demanding jobs and factories be brought back to the United States, Korea risks pushing them away.
 

Korean Confederation of Trade Unions Chairman Yang Kyung-soo, second from left, union members and Progressive Party members celebrate after the passage of the amendment to the Labor Union and Labor Relations Adjustment Act, known as the Yellow Envelope Bill, at a plenary session of the National Assembly in Yeouido, western Seoul, on Aug. 24. [YONHAP]

 
The Yellow Envelope Act — an amendment to Articles 2 and 3 of the Labor Union and Labor Relations Adjustment Act — began with good intentions. It was meant to ease the heavy damages imposed on workers involved in strikes. But lawmakers also added provisions allowing subcontractor unions to bargain directly with parent companies. That has become the greater controversy. Even before the bill’s implementation, subcontractor unions are already demanding better conditions from large firms. Businesses fear they may have to face hundreds or even thousands of unions each year. Subcontractors themselves worry that militant labor actions could prompt big companies to cut ties altogether.
 
The bill also expands labor disputes to include restructuring, mergers and acquisitions and workplace relocations — decisions central to management. In effect, companies could need union approval to restructure, even in a crisis. Already, strikes are on the rise. The government insists the bill reflects global standards. Yet most European countries, including Germany, do not allow management decisions of this kind to be strike issues. The law’s vague language — such as “substantial control” or “impact on workers” — invites confusion. Guidelines are unclear, precedents are scarce and most disputes will end up in court. Supreme Court rulings can take years, and judgments may vary. For law firms, it is a windfall. For companies, it is prolonged uncertainty.
 

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Workers may feel they have won, but losing jobs is no victory. Investors expect more automation under the bill, and robot-related stocks have surged. That may look like progress, but it only underscores how traditional jobs are at risk. Job creation is slipping further out of reach. In July, a record 420,000 young Koreans in their 20s reported they were neither working nor looking for jobs. This is not because they lack will but because quality jobs are scarce.
 
Korea has seen this before. The sharp increase in the minimum wage under the Moon Jae-in administration was presented as a simple matter of fairness: Why not help low-wage workers? But the outcome was different. Small businesses that relied on such labor could not keep up. While the administration and powerful unions claimed victory, small proprietors closed their shops. Part-timers were left unemployed. Vulnerable groups ended up fighting each other in the system the government had set up.
 
The same risk lies ahead. Officials appear to underestimate the seriousness. One senior policymaker said, “If companies leave Korea, we can amend the bill later.” That is reckless. Another said, “Unions will consider the national interest.” That is naive. The Ministry of Employment and Labor has promised to create procedures for unifying bargaining channels among subcontractor unions. But the bill has already passed and will take effect in six months. Time is running out.
 

A banner providing information on the minimum wage is displayed at the Seoul Western Employment and Welfare Plus Center in Mapo District, western Seoul, on Jan. 2. The minimum wage for this year is set at 10,030 won per hour ($7), equivalent to a monthly wage of 2,096,270 won. [YONHAP]

 
Labor Minister Kim Young-hoon has even renamed the ministry, emphasizing labor over employment. Only one of six core projects addresses job creation, with the rest focused on protecting existing workers. Job seekers are left in the cold. Critics note that the minister’s background as a union leader may have shaped the focus. Once the bill takes effect, fewer jobs may mean a bitter fight between those trying to keep what they have and those still waiting for their first opportunity. The country risks a new “battle of the weak,” just as part-timers once clashed with small businesses during the minimum wage hike.


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.