Controversy over the so-called “yellow envelope law,” a pro-labor bill passed by the opposition-controlled South Korean parliament last week, is heating up again as domestic companies protest that the bill puts unwarranted pressure on businesses. Companies are concerned that the bill will lead to frequent labor union strikes and damage business operations.
The revised Trade Union and Labor Relations Adjustment Act, dubbed the yellow envelope law, aims to limit companies from claiming compensation from workers staging illegal strikes.
The contentious bill dates back to 2009, when the labor union at carmaker SsangYong Motor Company, now KG Mobility, went on strike to protest a massive layoff. Five years later, in 2014, the Supreme Court ruled that the 2009 labor union strike was illegal and ordered the workers to pay 4.7 billion won ($3.4 million) in compensation. The bill earned its moniker after labor activists and citizens raised small donations in yellow envelopes to support the workers, eventually leading to the amendment of the trade union law in favor of striking workers.
South Korea’s opposition parties passed the yellow envelope bill in the 21st National Assembly, but President Yoon Suk Yeol rejected it by exercising his veto. The bill was reintroduced in the 22nd National Assembly with some modifications to its content. The nation’s liberal opposition parties, including the Democratic Party of Korea, which holds 175 of the total 300 seats in the National Assembly, unilaterally passed the bill on July 31 along with a bill on providing cash handouts to the entire population.
The business community denounced the bill as “a regressive and harmful law that jeopardizes companies and the economy for political gain.” The nation’s six major business lobbying groups, including the Korea Enterprises Federation (KEF), the Korea Chamber of Commerce and Industry and the Korea International Trade Association, rallied in front of the National Assembly the day after the bill was passed. “The bill excessively protects labor unions’ illegal and extreme strikes while limiting companies’ claims to damages caused by these strikes,” the lobbying groups argued.
Companies claim that the bill could lead to a breakdown in labor-management relations by allowing labor unions and subcontractors to use frequent and illegal strikes as leverage. “If this happens, some companies will have no choice but to move their manufacturing bases outside of Korea where labor dispute risks are lower,” said a member of a lobbying group. The business community urged President Yoon to exercise his veto.
The ruling People Power Party (PPP) staged a 31-hour filibuster from August 2 to 4 but only managed to stall the opposition parties from passing the bill by a few days. The PPP argues that in addition to exempting unions from liability for participating in illegal strikes, the revised law is problematic because it allows non-employees to join unions.
The Democratic Party countered the PPP’s claims that “the Yellow Envelope Law promotes illegal strikes,” stating that the bill is “pro-market and pro-business.” Democratic Party floor leader Park Chan-dae said, “Respecting workers’ rights is the first step in promoting dialogue between labor and management, which is a prerequisite for a healthy market economy.”
“Companies making massive claims for damages against labor unions drive workers to the brink,” he added, calling such practices “totalitarian.”
With the nation’s ruling party and conglomerates pushing for the president’s veto, the bill will likely be scrapped again. Yoon has exercised his veto power 15 times since taking office in 2022, the second highest in the country’s history. The Yellow Envelope Law is one of the four controversial bills the ruling party has attempted to block for the past year.
