[Reporter’s Notebook] Why Chairman Sohn Kyungshik Repeated '3,500'

Concerns Over Strikes Spread Among Companies With Over 3,500 Partners
Yellow Envelope Act Raises Alarm in the Business Community

On the 31st, as the passage of the "Yellow Envelope Act" (Amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act) in the National Assembly became imminent, an emergency press conference was held. The main figure at the event was Sohn Kyungshik, chairman of the Korea Employers Federation and chairman of CJ Group. Appearing before reporters for the first time in about seven years since taking office, Chairman Sohn, with a trembling voice, said he was "extremely bewildered." He pointed out that President Lee Jaemyung, who had promoted a "pro-business" stance during the presidential campaign, is now taking the opposite approach by pushing forward the Yellow Envelope Act after taking office.

The reason Chairman Sohn described the Yellow Envelope Act as an anti-business bill to a bewildering degree can be found in the number "3,500," which he repeatedly mentioned throughout the press conference. In industries like shipbuilding, where a multi-tiered collaboration system is in place, there are companies with more than 3,500 partner firms.

If the Yellow Envelope Act is implemented, all those subcontracted workers will become parties to labor disputes. Even now, many primary contractors struggle every year with wage and collective bargaining agreements, but if the number of unions they have to negotiate with increases to 3,500, the entire year could be spent just listening to the demands of subcontracted workers. There is significant potential for wasted time and costs, and if negotiations break down with even one of those 3,500 unions, the primary contractor could face criminal charges.

The concern that global manufacturing competitiveness, built on fast and precise production to meet deadlines, could collapse in an instant is becoming a reality. For example, Hyundai Motor and Kia frequently experience production line stoppages whenever a "subsidiary of a subsidiary" goes on strike. This year as well, on July 16, when Motras, Mobient, and Unitus?subsidiaries of Hyundai Mobis?went on a general strike, it became difficult to secure parts supplies.

If the Yellow Envelope Act leads to larger and more frequent strikes, competitiveness will inevitably be undermined. The same is true for K-Shipbuilding, which has gained global competitiveness through "production stability." In the shipbuilding industry, if even one company is late in delivering parts, the ship must be disassembled and reassembled. If such situations become more frequent after the implementation of the Yellow Envelope Act, it will be impossible to meet set deadlines.

Given these circumstances, not only domestic economic organizations but also foreign companies operating in Korea are voicing concerns about the Yellow Envelope Act. The European Chamber of Commerce in Korea (ECCK) has even declared that if foreign companies face the risk of criminal prosecution due to the Yellow Envelope Act, they may withdraw from Korea. When even foreign companies are opposing the bill, it is difficult to see the continued push for the Yellow Envelope Act as a genuine commitment to "reviving the economy."

The Yellow Envelope Act will be submitted to the plenary session of the National Assembly this afternoon. Judging by the legislative determination of the government and the ruling party, it will be difficult to prevent the passage of the Yellow Envelope Act in the National Assembly. During the six-month grace period, the concerns of domestic and foreign companies must be fully reflected in the enforcement decrees.