Business Leaders Slam Ruling Party’s Labor Reforms

Companies are growing alarmed as the Lee Jae-myung administration, despite pledging a “business-first” approach, accelerates legislation viewed as hostile to corporate interests. This includes revisions to the Trade Union Act, known as the Yellow Envelope Act, and amendments to the Commercial Act.

The shipbuilding industry fears it may be forced to negotiate separately with more than 100 contractor unions. Foreign companies have also expressed concerns, with some suggesting they might withdraw from the Korean market.

On July 29, eight major Korean business associations issued a joint statement expressing deep dismay over the National Assembly’s push for these revisions, saying it goes beyond serious concern. This rare joint emergency statement reflects growing anxiety among business circles, which had previously remained relatively silent on the government’s pro-labor agenda.

The ruling Democratic Party plans to submit revisions to the Commercial Act, mandating cumulative voting and expanding independent auditors, for a plenary vote on Aug. 4. The Yellow Envelope Act, which would significantly limit union liability for damages, is expected to follow. Critics warn these measures could shift control of publicly listed companies to third parties.

An executive in the shipbuilding industry said the new law could force companies to spend the entire year negotiating with on-site contractors. A listed company official added that while some may view such concerns as exaggerated, the risks to management control are real.

Amid rising regulation, fears are growing that Korea’s “corporate discount” may deepen. The European Chamber of Commerce in Korea criticized the Yellow Envelope Act’s definition of “employer” as vague and legally flawed. The ECCK has even warned it may withdraw investments if companies face legal penalties under the law.

A CEO of a foreign semiconductor firm echoed these concerns, saying Korea is ideal for the chip business but labor laws are holding the industry back. If the Yellow Envelope Act passes, the company may scale back operations.

The opposition People Power Party sharply condemned the ruling party’s legislative agenda. One official accused the Democrats of signaling right while making a sharp left turn, undermining their claims to support a growth-oriented market economy.


이동훈 기자 dhlee@donga.com