AMCHAM Korea and ECCK express concerns about "Yellow Envelope Bill"
Two bills certain to dampen Korean companies’ activity are set to become law.
The more concerning of the two is the so-called "Yellow Envelope Bill," which would revise Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act.
Industrial and business circles have expressed concerns about the bill numerous times, but the government and the ruling Democratic Party of Korea have pressed ahead with the legislation.
The majority party on Monday passed the bill and a Commercial Law revision bill unilaterally through the related standing committee and subcommittee of the National Assembly, respectively. The party plans to vote them into law at the plenary Assembly session on Aug. 4.
The gist of the Yellow Envelope Bill is to classify subcontractors as employees and make it difficult for employers to claim damages for losses resulting from illegal industrial action.
Under the bill, major Korean companies such as automakers, shipbuilders and steelmakers may have to bargain with each union representing hundreds or thousands of different subcontractors. This will be physically impossible.
When it comes to claiming damages, employers must determine the scope of legal obligations for each person who acted illegally. It is practically impossible for a chief executive to individually decide who should be responsible for how much damage.
Korean unions’ strikes are already prone to turning violent. Strikes could easily get out of control if unionists seldom feel the burden of paying damages when they do so. Yet there are almost no measures for employers to defend themselves.
Moreover, the object of labor disputes will expand from decisions on working conditions to business management decisions that affect working conditions. Practically all management decisions could be the object of a legal dispute. The decision to invest overseas could be a reason for a strike.
Eventually, foreign companies in Korea expressed concerns about the bill, demanding its reconsideration.
The American Chamber of Commerce in Korea issued a statement on the Yellow Envelope Bill Wednesday. It said the bill would influence US companies’ intention to invest in Korea and that it could negatively affect the global competitiveness of Korea.
The statement came two days after the European Chamber of Commerce in Korea released a statement saying that the extended but ambiguous definition of employers in the bill makes businesspeople potential criminals and that its member companies might pull out of the Korean market.
The Lee Jae Myung administration is said to be counting on US cooperation with Korean shipbuilders in its last-ditch tariff negotiations with Washington. Shipbuilders hire a lot of subcontractors because the projects they undertake are so complex. It is also an industry that has sometimes been disrupted by illegal industrial actions, such as worksite occupations. Shipbuilding is among the industries most likely to be affected by the Yellow Envelope Bill.
It is illogical to try to convince the US of Korea’s shipbuilding competitiveness while shaking it with a pro-labor law at home.
According to the new cumulative voting method in the Commercial Law revision bill, minority shareholders will be able to have disproportionately greater influence on the selection of board members.
This could enable small shareholders to join with outside speculative capitalists to threaten managerial rights, oppose business reorganization and demand disposal of major assets, to name a few.
Korean companies are already daunted by US tariffs and the recently revised Commercial Law that holds company directors legally responsible to shareholders for their business decisions. Nonetheless, the party and the government are pushing the Yellow Envelope Bill and yet another revision of the Commercial law, this time making it even tougher against companies. They are also seeking to raise corporate tax rates.
In a joint statement on the bills on Tuesday, Korea’s eight major business lobby groups said they are more than concerned about the bill to revise the Trade Union Act, and that they feel miserable about it.
Lee promised to help companies. Is this his idea of help?
khnews@heraldcorp.com
