Business leaders urge revision of disputed labor bill

Business leaders who had once called for the complete repeal of the so-called Yellow Envelope Act have now shifted to proposing an alternative. They agreed to accept legislation that limits union members’ liability for damages, one of the bill’s core provisions, but asked that certain clauses be removed, including those granting subcontracted workers the right to negotiate directly with parent companies, which they argue would cause major disruptions in the workplace. With the Democratic Party of Korea intent on pushing the bill through the National Assembly this week, the appeal amounts to the business community’s final plea to avert the worst outcome.

On Aug. 18, six major business groups, including the Korea Employers Federation, issued a joint statement at the National Assembly. They urged lawmakers not to add provisions requiring parent companies that exercise effective control to respond to bargaining demands from subcontracted workers and instead to maintain the current law. They also called for removing the expanded strike targets that extend beyond “determination of working conditions” to include “management decisions affecting working conditions,” asking that “management decisions” be excluded. In addition, they requested a minimum one-year grace period for companies to prepare.

The business community’s request to maintain the current law on the scope of employers stems from concern that the vague term “effective control” would cause serious confusion in the workplace. If the bill passes, disputes are expected to grow between subcontracted workers who demand negotiations “first and see what happens” and parent companies uncertain whether they must comply until courts decide what constitutes an “effective control relationship.” Executives who refuse negotiations but are later ruled by courts to be legitimate bargaining counterparts could face criminal penalties for unfair labor practices. Large corporations with hundreds or even thousands of subcontractors may find themselves in negotiations year-round. In public institutions where the government determines wages, bargaining counterparts could even extend to the finance minister or the president.

If the phrase “management decisions” remains within the scope of strike targets, companies would effectively need union consent in advance for business judgments such as building factories overseas or expanding investment. This means even decisions involving urgent projects like the “Masga project,” which requires massive U.S.-bound investments to support the revival of American shipbuilding, or the restructuring of the petrochemical industry, could become subjects of strikes.

The business sector, which had strongly opposed limits on union members’ liability for damages, has now accepted them. In effect, it is giving up what was virtually its only defense against illegal strikes. The concession reflects a desperate resolve to prevent the collapse of the industrial ecosystem, even at the cost of making sacrifices. The Democratic Party should now heed this urgent appeal from the business community and reconsider the bill from the ground up.