[THE VIEW] Yellow Envelope Act: Striking a Balance Between Protection and Flexibility

Concerns Over Weakened Industrial Competitiveness Amid Expanded Labor Rights
Need for Policy Design to Shield Advanced and Platform Industries

Recently, the Yellow Envelope Act passed the National Assembly's Legislation and Judiciary Committee, accelerating legislative discussions. The core of the bill is that even without a direct employment contract, if a primary contractor effectively determines the working conditions of subcontracted workers, the subcontractors' union can demand collective bargaining with the primary contractor, and the primary contractor may also be held responsible for unfair labor practices.

This is considered a representative labor-friendly policy and has long been a goal of Korean labor unions. However, the automobile and shipbuilding industries, which are highly dependent on subcontracting, are concerned about direct impacts. In the automotive sector, most parts are produced through collaboration between primary and subcontractors, so if strikes and demands for agreements from subcontractors persist, production lines could be halted, directly weakening competitiveness. In the shipbuilding and marine sectors, accumulated production delays due to strikes could make it more difficult to win new orders.

The discussion around the Yellow Envelope Act is not limited to manufacturing. Advanced industries such as AI and semiconductors, as well as platform operators, could also be directly affected. In the highly competitive and low-margin platform and IT markets, companies may find it difficult to absorb increased labor costs resulting from collective bargaining. Ultimately, these costs may be passed on to consumers in the form of price hikes, slower delivery or dispatch speeds, and reduced services.

For example, if the taxi union is recognized as being under the substantial control of Kakao Mobility, it could demand a reduction in platform fees through bargaining, and any resulting decrease in revenue would inevitably be reflected in fares. Delivery platforms are no exception. If delivery times are increased for safety reasons and higher delivery fees are demanded, companies may not be able to absorb the additional costs, so consumers would have to bear delivery delays and price increases. If cost pass-through is not feasible, companies may also become more conservative in hiring new riders and investing, which could negatively affect both consumers and workers.

Software and AI companies are also unlikely to avoid the impact. In IT projects, decentralized structures and rapid team scaling are key to competitiveness. It is common practice to outsource basic work while the primary company focuses on core competencies to accelerate progress. However, if the definition of 'user' is excessively broadened, there will be growing pressure to maintain a permanent workforce. This could lead to organizational bloat and rigidity, slowing the pace of innovation.

There are also risks from the perspective of global investment and location competition. If Korea is perceived as having high regulatory and dispute risks, there are alternative locations such as Singapore, Hong Kong, and China, which increases the incentive for capital and projects to move elsewhere. In particular, in the semiconductor and AI fields, where speed and scale are critical to success, even small frictions can accumulate and cause missed opportunities. In fact, the European Chamber of Commerce in Korea recently called for a reconsideration of the bill, directly indicating the possibility of reduced foreign investment.

In conclusion, the Yellow Envelope Act clearly serves the public interest by guaranteeing the rights of workers in vulnerable employment situations and aligning responsibilities. However, the associated risks are also significant. It is necessary to refine policy design during the legislative process and differentiate by industry. Strong protections and obligations should be applied to high-risk areas, while simplified procedures should be granted to low-risk and short-term projects to preserve the pace of innovation.

For freelancers and platform workers, introducing flexible insurance systems can ensure basic protection, while platform companies and advanced technology industries should be allowed the flexibility needed for workforce mobility. Only when a sophisticated, differentiated design is implemented in line with the characteristics and pace of each industry-rather than a one-size-fits-all traditional regulation-can the Yellow Envelope Act be truly effective.

Nakyung Kyung, Professor of Computer Science, National University of Singapore