Ruling party's 'pro-labor' push draws concerns amid tariff uncertainties

Main opposition People Power Party members of the National Assembly's Environment and Labor Committee leave a meeting room protesting the tabling of the "yellow envelope bill," Monday. Yonhap

By Lee Kyung-min

• Published Jul 29, 2025 4:55 PM KST

The ruling bloc has been pushing what business groups describe as “pro-labor” bills with an aim to better protect workers and enhance minority shareholders’ rights.

While the government and the ruling Democratic Party of Korea (DPK) say these measures are necessary to improve working conditions and corporate governance, the management sector claims they will undermine their business activities.

A DPK-led revision bill to Articles 2 and 3 of the Labor Union Act, also known as the “yellow envelope bill,” was passed at a subcommittee of the National Assembly’s Environment and Labor Committee, Monday.

The revision is aimed at expanding the definition of the employer to extend to subcontracted laborers at a work site and limiting companies’ claims for damages against losses caused by legitimate labor disputes.

The DPK is moving to pass the revision during the extraordinary National Assembly session this month.

In addition, the DPK passed the revised Commercial Act, an effort to protect minority shareholders, during the Assembly’s Legislation and Judiciary Committee meeting. The revision bolsters minority shareholders’ influence in corporate governance through “concentrated voting,” applicable to large listed companies with assets over 2 trillion won ($1.4 billion).

It was the second revision to the act following the first one passed in July, which expanded the scope of fiduciary duty for corporate directors from serving only the company to serving both the company and its shareholders.

In response to these revisions, eight business lobby groups issued a statement on Tuesday raising concerns that the yellow envelope bill revision could encourage strikes and destabilize management-labor relations. They also said the Commercial Act revision could result in excessive shareholder intervention in business activities such as the sale of key assets or restructuring.

Economists and market watchers also expressed concerns, saying these changes contrast with President Lee Jae Myung’s proclaimed drive to facilitate business activities and revitalize the sagging economy.

They warn that the yellow envelope bill could enable irresponsible collective action by the country’s umbrella labor unions, even as long-standing labor issues have been cited by foreign investors as a primary deterrent against making long-term investments in Korea.

Former Seoul National University economics professor Lee In-ho said the bill is a wildly misplaced priority, given current trade uncertainties and their potential fallout for Korean businesses.

“This is a critical juncture for many large Korean exporters and their smaller business partners. Few would understand how the ruling party is pushing the bill that will compound uncertainties for businesses in the form of illegal strikes. The competitiveness of Korean businesses, and by extension Korean economic growth, will be vastly undermined,” he said.

According to Lee Sang-ho, a researcher at the Korea Economic Research Institute, which is affiliated with the Federation of Korean Industries, the country’s largest business lobby, the recent moves will lead to drawn-out unproductive talks between management and labor.

“Businesses will be mired in unresolved labor disputes, dragged out by unionized workers,” he said. “Large firms will have to sit in the meetings at the cost of profit-oriented business activities. More strikes are inevitable.”

On Tuesday the ruling party and the government also agreed to raise the maximum corporate tax from the current 24 percent to 25 percent.

The main opposition People Power Party (PPP) strongly opposed both the legislative pushes and corporate tax increases.

“The Lee administration claims to be pro-business, but the recent developments suggest that it is anything but. The unilateral railroading will hurt businesses and undermine healthy market functioning,” the PPP said.

Labor Minister Kim Young-hoon said the government will collect opinions from management and labor before outlining enforcement guidelines.

Regarding the yellow envelope bill, he said in a press briefing, “The government will seek to implement the bill upholding the legislative purpose, helping it function as the foundation for a cooperative management-labor relationship.”