Seoul: The Ministry of Employment and Labor unveiled an amendment to the enforcement ordinances of the “Yellow Envelope” law, addressing revised Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act. The amended ordinances are available for public review until January 5, with the law set to take effect in March next year.
According to Yonhap News Agency, the Yellow Envelope bill, despite facing strong opposition from businesses, was pushed through by the pro-labor ruling party in August. The law allows trade unions belonging to subcontractors to demand direct bargaining with their contractors, creating a unique scenario not seen elsewhere in the world. This has led to significant concern among businesses, as the decrees accompanying the law have generated the kind of problems many companies feared.
A central issue within the decrees is the unification of multiple unions of subcontractors into a single bargaining channel. For companies working with numerous subcontractors, this leads to complex negotiations with various trade unions. The existing law mandates that when two or more trade unions exist within a business, they should unify their negotiation processes. However, the Yellow Envelope law could fragment negotiations due to the sheer number of subcontractors involved.
The government’s revised ordinances allow for the selection of a representative by subcontractor unions to negotiate with contractors, though this is not mandatory. This flexibility, alongside eased conditions for separate negotiations, potentially undermines the principle of unified negotiation channels. Contractors recognized by the National Labor Relations Commission as employers in collective bargaining must comply with subcontractor unions’ demands for direct negotiations. Non-compliance could result in charges of unfair labor practices.
Industries heavily reliant on subcontractors, such as automotive, shipbuilding, and construction, are expected to face prolonged negotiations. Hyundai Motor Co. alone works with over 8,500 subcontractors, illustrating the potential scale of negotiations. Even minor subcontractor strikes can disrupt entire production lines, especially if smaller unions align with larger groups like the Federation of Korean Trade Unions, leading to industrywide collective action.
The looming increase in negotiations extends beyond subcontractors, potentially affecting trade unions within main contracting companies. Some subcontractor unions are already pushing for direct negotiations with their main contractors ahead of the law’s implementation.
Another contentious aspect of the Yellow Envelope law is the limitation it places on employers’ rights to seek compensation for damages from illegal strikes, potentially encouraging more aggressive actions by subcontractor trade unions. While scrapping the law may be ideal, the ruling Democratic Party of Korea is unlikely to do so. Therefore, the government must find effective methods to ensure the substantial unification of unions’ bargaining channels to prevent industrial disarray.