Opposition to 'Yellow Envelope Act' and uncertainty over details

Earlier this week the president signed a series of revisions to the country's labor law that has lawmakers across the aisle embroiled in conflict.

Our Kim Do-yeon tells us why.

Businesses are still voicing their opposition over the "Yellow Envelope Act."

Although the revisions to the labor law have already been completely passed, key details surrounding its implementation remain a source of fierce contention with six months to go before the grace period is over.

One of the most heated provisions is the expansion of the legal definition of an "employer" to include principal contractors.

This means outsourced employees can now demand direct negotiations with the parent companies that hire their immediate employers.

During a meeting with the ruling Democratic Party's leadership on Thursday, the head of an organization representing small and medium-sized enterprises shared his worries.

He said, "Even before the Yellow Envelope Act is implemented, we are seeing incidents where militant unions are bypassing the presidents of SMEs and demanding that the 'real boss' at the large corporation comes out to negotiate."

However, some experts argue this legal change was an inevitable reflection of the existing economic structure.

Contracting has become prevalent in the last couple of decades, and courts have already set precedents for this law.

According to the Korea Institute for Industrial Economics and Trade, in South Korea's manufacturing sector alone, 50.6 percent of small and medium-sized enterprises operate as subcontractors.

"Subcontracting firms are often very small, and their employees' wages are inevitably determined by the contract value set by the principal contractor. That is why subcontracted workers have consistently wanted to negotiate directly with the principal contractor. In that sense, this was an unavoidable legal measure."

The "Yellow Envelope Act" also limits a company's ability to file for damages against union members for losses incurred due to strikes.

Experts note this is particularly significant in the South Korean context.

"The scope of what constitutes an 'illegal strike' in South Korea is very broad compared to Western countries. It's very easy for a strike to be deemed illegal here."

Experts say more specific wording needs to be added through additional legal measures to make details of the law clearer.

"Many people are concerned about this. So, if the law cannot be abolished, then the enforcement decree must be drafted with great detail and care."

Those details will shape the law's real-world impact on businesses and employees in South Korea's complex industrial landscape.

Kim Do-yeon, Arirang News.