Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Pro-labor bill draws concerns among foreign investors
American Chamber of Commerce in Korea (AMCHAM) Chairman James Kim, left, and Prime Minister Kim Min-seok attend the AMCHAM Insights seminar at Conrad Seoul, July 22. Yonhap
By Park Jae-hyuk
AMCHAM, ECCK warn Korea against pushing for 'yellow envelope bill'
Foreign investors have joined Korean business leaders in opposing the proposed revision of the Trade Union and Labor Relations Adjustment Act.
Expressing concern over the new law’s potential impact on Korea’s business environment and investment appeal, the American Chamber of Commerce in Korea (AMCHAM) said Wednesday that it strongly supports the joint statement issued by Korea’s eight leading business organizations regarding the legislation.
Better known as the “yellow envelope bill,” the proposed revision aims to empower subcontracted workers by allowing them to negotiate directly with their employers’ clients, while prohibiting management from seeking compensation for damages incurred during illegal strikes.
The bill earned its nickname after citizens delivered yellow envelopes containing money in 2014 to support unionized workers at SsangYong Motor, now KG Mobility. The workers had been ordered by a court to pay a total of 4.7 billion won ($3.4 million) in compensation to the automaker for their 2009 strike.
As the ruling Democratic Party of Korea’s latest proposal also seeks to broaden legal liability for company executives who refuse to participate in collective bargaining, AMCHAM warned that the law could significantly increase legal and operational burdens for global companies, including U.S. firms operating in Korea.
“A flexible labor environment is essential to strengthening Korea’s competitiveness as a business hub in the Asia-Pacific region,” AMCHAM Chairman James Kim said. “If enacted in its current form, this legislation could influence future investment decisions by American companies considering Korea.”
The largest foreign chamber of commerce in Korea also said it is important for policymakers to consider the broader message this legislation may send to the global business community, especially ahead of the APEC Summit in Gyeongju, North Gyeongsang Province, later this year.
“According to AMCHAM’s 2024 Business Environment Survey, regulatory unpredictability remains one of the top challenges for foreign-invested companies in Korea. This legislation may add to that uncertainty and, in turn, undermine Korea’s global competitiveness,” Kim added.
Korea Enterprises Federation Vice Chairman Lee Dong-geun, fourth from left, reads a joint statement urging lawmakers to stop the revision to the Trade Union and Labor Relations Adjustment Act at the federation's headquarters in Seoul, Wednesday. Yonhap
Earlier this week, the European Chamber of Commerce in Korea (ECCK) also cautioned that the proposed bill may prompt foreign companies to withdraw from the Korean market.
“The impact is particularly severe for foreign-invested companies, which are highly sensitive to legal risks stemming from labor regulations,” the chamber representing about 400 European firms in Korea said Monday. “It may pose serious threats to the employment of both current workers and future generations.”
The Korean-German Chamber of Commerce and Industry said that the second-largest foreign chamber of commerce in Korea is closely monitoring the legal developments and their implications for German businesses in Korea.
The pro-labor bill did not pass under the previous Yoon Suk Yeol administration, as the former president vetoed it twice. It was also blocked under the liberal Moon Jae-in government due to strong opposition from Korean and foreign business leaders.
However, the proposed revision has gained momentum since President Lee Jae Myung took office, with the ruling party holding a majority of National Assembly seats.
Labor Minister Kim Young-hoon has also maintained a firm stance on the matter, despite acknowledging concerns among foreign investors.
“I would like to meet them as soon as possible and listen to their concerns,” he said Tuesday.