The amendment to Articles 2 and 3 of the trade union law, known as the "yellow envelope law," passed through the National Assembly on the 24th. This law allows subcontracted workers to negotiate with primary contractors and expands the scope of the strike target. The requirements for employers to file damage claims for illegal strikes will also become stricter.
The industrial sector expects that the implementation of the yellow envelope law will significantly shake the competitiveness of Korea's manufacturing industry and accelerate the exit of foreign capital that has entered the country. Already, some subcontractor unions in the semiconductor, steel, shipbuilding, and information technology sectors are demanding negotiations with major corporations that are their primary contractors, and some foreign companies have warned about the possibility of withdrawing from Korea.
◇ Criteria for user judgment, scope of negotiation agenda, and unification of negotiation channels
The yellow envelope law is set to be implemented after a six-month grace period following its announcement. This is because detailed implementation guidelines for key issues have not yet been established, and if the law takes effect immediately, there could be severe confusion throughout the industrial sector. The Ministry of Employment and Labor plans to form a task force to gather opinions from labor and management during the grace period and prepare specific guidelines.
One of the key issues is the criteria for user judgment. The existing trade union law defined the scope of employers as parties to the employment contract, but the yellow envelope law has expanded this to include those in a position to substantively and specifically control or determine working conditions, even if they are not parties to the employment contract. The industrial sector has expressed concerns about how far the definition of employers extends and what the criteria for subcontractors that can negotiate with primary contractors are.
A business sector representative said, "In the case of Hyundai Motor, there are more than 350 first-tier suppliers, and if you include second and third tiers, there are thousands. If all related suppliers are recognized, we will be faced with negotiations and disputes all year round, making normal production activities impossible."
Many argue that the scope of negotiable subjects must also be clarified. The yellow envelope law has changed the target of disputes from "determining working conditions" to "decisions on working conditions and management decisions impacting working conditions."
Until now, if unions could only strike regarding wages, bonuses, and working hours, in the future, they will also be able to engage in disputes over restructuring, transfer of production facilities overseas, and overseas investments. The business sector expresses concerns that if the scope of negotiation topics becomes excessively broad, the intervention of unions in management will become a reality.
The unification of negotiation channels is also considered a key issue. Article 29, Paragraph 2 of the current trade union law states that if multiple unions exist at a single business site, the employer must negotiate with the representative of the unified unions. With the implementation of the yellow envelope law, it is unclear whether the scope of unification will be limited to primary contractors or expand to include subcontractors.
The yellow envelope law also stipulates that in order for users to hold liability for damages due to illegal strikes, they must define the individual responsibility limits of each liable party. Employers affected by illegal strikes will need to prove what illegal actions each worker took.
The Ministry of Employment and Labor maintains that it has addressed the excessive damage liability practices, but many interpret it as effectively nullifying the cards that employers could use to respond to excessive disputes from unions.
◇ Subcontractor unions of Samsung Electronics, Naver, and Hanwha Ocean demand negotiations with headquarters
Even now, subcontractor unions demanding negotiations with primary contractors have been emerging from various industrial sites in anticipation of the passage of the yellow envelope law.
The union of E&S, a subcontractor of Samsung Electronics, held a press conference with the Democratic Party of Korea in the National Assembly in June, a period of conflict with management over the payment of regular wages, and stated, "Samsung Electronics must take direct action to resolve the issue." Recently, they have also demanded that Samsung address wage arrears.
The Hyundai Steel Non-Regular Workers' Union, composed of subcontracted workers from Hyundai Steel, also held a struggle declaration press conference in front of the National Assembly that day, urging, "The real boss, Hyundai Steel, must negotiate with non-regular workers." The union plans to hold a public demonstration in front of the Supreme Public Prosecutors' Office in Seocho-gu on the 27th and to file a complaint, claiming that Hyundai Steel has engaged in unfair labor practices.
The unions of six subsidiary companies under Naver (NAVER) plan to hold a rally demanding direct negotiations with Naver, the primary contractor, on the 27th. Previously, last month, a coalition of unions from major shipbuilding business sites in Korea also demanded joint negotiations with HD Hyundai and Hanwha Ocean, among others.
Voices of concern are growing within the construction industry that the implementation of the yellow envelope law will delay project timelines and increase expenses. There are numerous subcontractors such as ready-mix concrete and excavator operators on construction sites, and if they demand negotiations with primary contractors, it is pointed out that it will frequently result in surpassing planned completion dates.
A representative from the construction industry stated, "Typically, the construction industry often enters into contracts with liability guarantees to complete projects within set periods. If subcontractor unions demand negotiations from primary contractors or go on strike, the primary contractor construction companies will have to bear all responsibility if project timelines extend."
Concerns are also growing regarding the possibility of foreign corporations withdrawing from Korea. Hector Bizarreale, the representative of General Motors (GM) in Korea, reportedly attended a closed meeting held by the Ministry of Employment and Labor ahead of the processing of the yellow envelope law and strongly requested reconsideration of the law, stating, "The headquarters may reassess the Korean business sites."