ED True labor-management harmony
Kim Young-hoon, minister of employment and labor, speaks during a meeting at the Korea Federation of SMEs in Yeouido, Seoul, Aug. 19. He met with Kim Ki-moon, president of the federation, and other small business owners to discuss the "yellow envelope law," an amendment to Articles 2 and 3 of the Trade Union Act. Yonhap
'Yellow envelope law' requires urgent refinement
President Lee Jae Myung recently reaffirmed a core principle in governance: Neither labor nor capital should dominate the national agenda. “We must not kill the cow to fix a crooked horn,” he said during a Cabinet meeting, urging restraint and balance as Korea’s industrial relations face a period of growing tension. The government’s recent passage of the “yellow envelope law” and a second round of amendments to the Commercial Act sparked wide-ranging debate and, more worryingly, escalating labor action.
Though intended to improve protections for vulnerable workers, the new legislation has introduced broad and, in some cases, ambiguous changes. It expands the scope of legal strike actions to include managerial decisions, previously considered off limits, and permits subcontractor unions to hold parent companies liable for collective bargaining. As a result, labor unions across major sectors have quickly moved to test these boundaries, threatening to destabilize an already fragile industrial environment.
The impact is already being felt. HD Hyundai Heavy Industries and HD Hyundai Mipo unions launched a partial strike last week in opposition to a merger tied to the Make American Shipbuilding Great Again (MASGA) initiative, a key outcome of the Korea-U.S. tariff agreement. The union demands full transparency on merger plans and assurances of job security. Previously, such mergers would not have qualified as grounds for strike action; now, they may be protected under the revised law.
Meanwhile, Hyundai Motor’s union has initiated its first strike in six years, the Korean Financial Industry Union is preparing a general strike later this month to demand a 4.5-day workweek, and irregular workers at Hyundai Steel have filed legal complaints against executives, including Hyundai Motor Group Executive Chair Chung Euisun, for alleged unfair labor practices. In parallel, the construction union has announced protests at major corporate headquarters, pressuring firms to hire additional unionized subcontractors.
These developments have understandably triggered alarm across the business community. The newly expanded definition of “employer” and broader justifications for strikes have introduced significant legal and operational uncertainty. Korean enterprises, already suffering from global economic headwinds and intensifying international competition, now face a domestic regulatory climate that risks undermining their flexibility and confidence.
Lee is right to call for balance, but his words must now be matched with policy action. The government must use the law’s six-month grace period to issue clear enforcement guidelines. Terms like “employer,” “legitimate strike” and “scope of collective bargaining” must be precisely defined. At the same time, employer rights must be respected. This includes ensuring protections against illegal workplace occupation, permitting the use of temporary replacements during strikes and reforming punitive liability provisions that hold executives criminally accountable for business decisions later deemed controversial.
Other amendments to the Commercial Act, such as the mandatory cumulative voting system and the separation of audit committee appointments, should be carefully reviewed to prevent unintentional harm to corporate governance and to guard against foreign activist investor influence. Protecting shareholders should not come at the cost of paralyzing management.
Labor, too, must show a sense of responsibility. The recent return of the Korean Confederation of Trade Unions (KCTU) to the Economic, Social and Labor Council is a welcome development. Lee’s meeting with both the KCTU and the Federation of Korean Trade Unions signaled a hopeful shift toward dialogue. But such gestures must be followed by moderation, not escalation.
Protecting labor rights does not mean disregarding the national interest. The MASGA-linked strikes, in particular, could be viewed as undermining Korea’s credibility as a global economic partner. The international implications of domestic labor disputes are real, and Korea cannot afford to send mixed signals to its allies and investors.
The “yellow envelope law” was borne from good intentions to level the playing field between large conglomerates and vulnerable workers. But if misapplied or left unchecked, it could jeopardize both labor stability and economic dynamism. Now is the time for thoughtful refinement, not to gut the law, but to guide it toward its intended purpose of building a fairer, more resilient social contract between labor and capital.
Only through balance, clarity and continued dialogue can Korea ensure that the law protects workers without harming enterprises, and that the nation moves forward together.