Members from the Korean Confederation of Trade Unions stage a rally near Gwanghwamun Square in central Seoul, Monday, urging President Yoon Suk Yeol not to exercise a veto to a pro-labor bill revision. Yonhap
A controversial pro-labor bill is feared to possibly expedite the outflow of foreign capital as foreign firms here face a heightened risk of strikes and other possible legal issues caused by unionized workers, according to industry officials, Tuesday.
The revision to the Labor Union Act is centered on protecting the rights of labor unions by restricting companies from lodging compensation claims, even if the unions engage in illegal strikes.
Businesses are urging President Yoon Suk Yeol to veto the revision, as the act would weaken local and foreign investor sentiment, they said.
Labor experts argued that foreign companies operating businesses here will fall prey to the revised act if it comes into effect.
“Most overseas firms here take the issue very seriously, as they will face more lawsuits not just from their unionized workers, but from subcontractors,” Hwang Yong-yeon, head of the labor policy division at the Korea Enterprises Federation, said. “This is because the act enables workers from a wider range of subcontractors to demand wage negotiations and go on more frequent strikes.”
Manufacturing sectors particularly in automobiles, steel and shipbuilding, will be hit hardest, as they have more complex subcontracting systems than other industrial players, according to him.
Korea Automobile Manufacturers Association President and CEO Kang Nam-hoon, center, announces a proposal for President Yoon Suk Yeol to veto the legislation concerning a controversial revision to the Labor Union Act, during a press conference in Seoul, Monday. Yonhap
For instance, automakers are involved in complex partnerships directly and indirectly with thousands of subcontractors. The revised act would allow subcontractors to directly demand wage talks with an automaker. If the carmaker refuses the demand, it may be subject to criminal liability.
Earlier this month, the main opposition Democratic Party of Korea-dominated National Assembly passed the revision bill, and it was transferred to the government on Nov. 17. Yoon should decide whether to exercise his veto or promulgate the bill 15 days after the day that it was officially handed to the government. He is widely expected to use the presidential veto amid the fierce political contest between the ruling party and the opposition.
Other labor specialists also took issue with the ambiguity of the act, arguing that companies will end up mired in more lawsuits.
“Under the worst-case scenario, the act may spark an exodus of foreign companies, and other overseas firms will retract their earlier investment plans in Korea,” Yoo Il-ho, head of the employment and labor policy team at the Korea Chamber of Commerce and Industry, said.
“The range of a certain firm’s subcontractors is still unclear, and the act does not specify such details,” he said. “A court will interpret such legal grey areas, but it takes an enormous amount of time of around four to five years until the nation’s judicial authority issues a final ruling on crucial labor agendas. This is a waste of social costs, and does no good in enhancing the overall morale of the business town here."
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