As the National Assembly, led by the ruling Democratic Party of Korea, pushes for the establishment of the amendment of Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, known as the 'yellow envelope law', foreign corporations are strongly opposing, even mentioning the possibility of脱 (脱) Korea. Foreign corporations point out that if this law is enacted, the legal burdens, such as the obligation to negotiate with subcontractors, will increase, and management activities will inevitably face many restrictions.
The European Chamber of Commerce in Korea (ECCK) stated in a statement released on the 28th that "the yellow envelope law could expand the scope of employers regardless of labor contracts, thereby abstractly widening the scope of legal responsibilities and potentially turning business people into criminals, which may stifle management activities." It also noted, "Foreign investment corporations are sensitive to legal risks associated with labor regulations," and warned that "if faced with criminal liability for refusing negotiations under unclear labor union circumstances, they may withdraw from the Korean market."
The European Chamber of Commerce represents more than 400 European corporations operating in Korea. It includes automotive, aviation, food and beverage, and finance companies headquartered in Europe. Major members include BMW, Mercedes-Benz, Lufthansa, the parent company of OB, AB InBev, and PricewaterhouseCoopers (PwC).
Foreign corporations, including member companies of the European Chamber of Commerce, are particularly paying attention to the amendment of Article 2 of the Labor Union Act, which expands the scope of employers among the core issues of the yellow envelope law (scope of employers, concept of industrial actions, limitation of liability for damages). There is a growing concern that expanding the scope of employers regardless of labor contracts increases legal risks.
The key point is that primary contractors will also be recognized as employers of subcontracted workers, thereby triggering obligations to negotiate. The existing Labor Union Act limited the definition of employers to those who have established a labor contract relationship and directly employed workers, but the amendment broadens the scope of employers to those who can substantively control and determine the working conditions of workers.
Manufacturers, which make up a significant portion of foreign corporations, typically have secondary and tertiary subcontractors as partners. Taking import cars as an example, dealers responsible for parts, logistics, sales, and repairs all fall under the category of partners. Many point out that if indirectly employed subcontracted workers, along with dispatched workers, non-regular workers, and special employment workers, attempt negotiations one after another, the burden on primary contractors will inevitably increase.
In the case of AB InBev, there have been conflicts with in-house subcontracted workers responsible for logistics after acquiring OB. OB has a contractual structure where it contracts with a large logistics company in the first stage, which in turn delegates tasks to small partner companies, and employees belonging to small partners have claimed that they suffer from employment instability and demand that the primary contractor take responsibility.
The European Chamber of Commerce is the fourth largest foreign economic organization in Korea, following the U.S., German, and French chambers of commerce. It is said to have issued an official statement unusually because it can represent the opinions of other European corporations, including Germany and France, and because it contains recommendations related to the amendment of Article 2 of the Labor Union Act in a white paper scheduled for publication in September.
The American Chamber of Commerce in Korea (AMCHAM), which has previously expressed concerns about the yellow envelope law, also plans to release its position as early as the 30th. AMCHAM argued last year that "the yellow envelope law could counteract the stable and predictable business environment necessary for the success of foreign corporations and long-term investment attraction, diminishing Korea's investment appeal."
Concerns are also being raised among foreign corporations that labor rigidity in Korea could deepen. An anonymous representative of an American corporation stated, "Negotiations with unions, as well as hiring, firing, and wage adjustments, may become more complicated," and noted, "This could lead to significant difficulties in operating business sites in Korea in the long run."
According to a survey conducted by the Federation of Korean Industries (FKI) on 439 foreign investment companies with 100 or more employees, 57% of respondents said that labor relations in Korea are 'confrontational.' A total of 64% evaluated that the Korean labor market has become rigid, and 13% stated that they have considered withdrawing or downsizing their operations due to the various labor regulations that have been strengthened over the past decade.
Although opposition from foreign corporations is intensifying, the Democratic Party of Korea stated it plans to process the yellow envelope law on the 4th, the last plenary session of the July extraordinary National Assembly. This law passed the National Assembly twice during the Yoon Suk-yeol administration but was ultimately discarded due to the exercise of the former president's veto right.