The 'yellow envelope law (amendment to the trade union law)' has passed through the National Assembly, while global investment bank (IB) JPMorgan has evaluated Korea's automotive and shipbuilding industries as sensitive sectors. JPMorgan noted that labor relations could become a differentiating factor for stock prices going forward.

According to the financial investment industry on the 26th, JPMorgan disclosed this in a report. They stated that while changes may occur during the 6-month grace period based on government guidelines related to the yellow envelope law, medium-term evaluations are necessary as union negotiating power is increasing, along with considerations of overseas production ratios and labor costs.

The Korean Confederation of Trade Unions (KCTU), The Progressive Party, and the amendment movement headquarters for Articles 2 and 3 of the Labor Union Act are holding a press conference to celebrate the legislation of the amendment to Articles 2 and 3 of the Labor Union Act while shouting slogans in front of the main building of the National Assembly in Yeouido, Seoul, on the 24th. /Courtesy of News1

The yellow envelope law expands the concept of the employer and includes management decisions, such as restructuring, as subjects of disputes. It also limits corporations' claims for damages against striking workers.

JPMorgan anticipates that in the automotive sector, the broader concept of the employer could lead to increased disputes among primary contractors, subcontractors, and parts suppliers. They also mentioned that in the shipbuilding industry, wage and collective bargaining could prolong starting in 2026.

JPMorgan further noted that the technology sector has experienced fewer disruptions caused by major strikes; therefore, it is expected to be fundamentally stable. However, corporations with a large proportion of domestic production may see increased outsourcing and labor costs.

JPMorgan explained that the energy and chemical sectors, which are relatively automated, would see limited effects from strikes, but logistics pose the greatest risk factor.

As sectors expected to be less affected by the yellow envelope law, JPMorgan listed banks, healthcare, defense, cosmetics, and power equipment. These are sectors where responses are possible through automation and labor relations are relatively amicable. JPMorgan advised that it would be necessary to consider increasing the weight of these defensive sectors.

JPMorgan indicated that attention should be paid to the draft of future government guidelines related to the yellow envelope law, and continuous observation of labor negotiations in each sector is necessary. They also noted that the domestic production ratios, outsourcing costs, and logistics cost structures of individual corporations should be examined.

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