SMEs Meet with Labor Minister to Oppose Yellow Envelope Act... Sharp Division in Positions

Meeting Held Between SME Leaders and Labor Minister on Labor Union Act Amendment
SMEs Voice Field-Level Concerns
Management and Labor Remain Deeply Divided

The small and medium-sized business community met with Minister of Employment and Labor Younghoon Kim to convey industry concerns regarding the Yellow Envelope Act (the amendment to Articles 2 and 3 of the Labor Union Act) and called for labor-management agreements. While SME representatives expressed worries that the Yellow Envelope Act would worsen business conditions, labor groups countered by calling it "legislation for genuine growth," highlighting a sharp divide in positions.

Minister of Employment and Labor Younghoon Kim is speaking at a meeting with small and medium-sized enterprise owners regarding the amendment of the Labor Union Act held at the Korea Federation of SMEs in Yeouido, Seoul, on the 19th. On this day, Minister Kim visited the Korea Federation of SMEs as his first schedule visiting economic organizations since his inauguration. August 19, 2025 Photo by Yongjun Cho

On the morning of August 19, the Korea Federation of SMEs held a "Meeting between the Minister of Employment and Labor and Small Business Owners Regarding the Amendment of the Labor Union Act" at its building in Yeongdeungpo-gu, Seoul, where industry concerns were delivered. The event was attended by Ki-moon Kim, Chairman of the Korea Federation of SMEs; Minister Younghoon Kim; Yujin Kim, Director-General of Labor Policy at the Ministry of Employment and Labor; Cho Chunghyun, Director-General of Labor-Management Cooperation Policy at the Ministry of Employment and Labor; Haksoo Yoon, Chairman of the Korea Specialty Contractors Association; Pyungjae Park, Chairman of the Korea Surface Finishing Industry Cooperative; Jaekwang Lee, Chairman of the Korea Electric Energy Industry Cooperative; Kyujin Jang, Chairman of the Korea Association of Machinery Industry Cooperatives; Taekseong Lee, Chairman of the Korea Automobile Industry Cooperative; and Geumsik Choi, Chairman of the Busan Marine Equipment Industry Cooperative, as well as other representatives from both management and labor.

SME representatives unanimously voiced their concerns about the Yellow Envelope Act at the field level. First, Chairman Jaekwang Lee stated, "Some say companies are excessively worried, but there are no explicit alternatives to sufficiently address these concerns," adding, "The government needs to actively consider solutions and persuade labor groups to alleviate these worries." Chairman Pyungjae Park said, "Many secondary and tertiary subcontractors and workers are worried that they could become victims due to the amendment of the Labor Union Act," and added, "When strikes occur at the primary contractor, factory operation rates drop, affecting the sales of partner companies and the incomes of their workers. I hope you will also consider the impact on secondary and tertiary subcontractors, not just the direct parties involved."

There were also subtle differences by industry. In particular, the construction sector is expected to be significantly affected, as multiple subcontractors work at a single site. Representing the small construction business sector, Chairman Haksoo Yoon emphasized, "We hope that policies in the construction industry will harmonize the intent of the system with field realities, and that they will enhance the balance between labor and management and the sustainability of the industry."

Chairman Kyujin Jang said, "Among our member companies, there are those who have suffered delivery delays and lost client trust due to prolonged strikes during collective bargaining negotiations, resulting in years of unrecovered sales losses. Strikes are not constant, but when they do occur, the damage is severe. Now, with more parties potentially subject to strikes, it is difficult not to worry. If there are areas that need protection, it would be better to limit those areas and enact laws within a predictable scope."

Minister of Employment and Labor Younghoon Kim is speaking at a meeting with small business owners regarding the amendment of the Labor Union Act held at the Korea Federation of SMEs in Yeouido, Seoul on the 19th. On this day, Minister Kim visited the Korea Federation of SMEs as his first schedule visiting economic organizations since taking office. August 19, 2025 Photo by Yongjun Cho

There were also many concerns that the amendment of the Labor Union Act could weaken global competitiveness. Chairman Geumsik Choi said, "Even in the high-value-added shipbuilding sector, where Korea has strengths, China is rapidly catching up, leveraging its abundant workforce and labor hour flexibility. Even now, shipbuilders are engaged in months-long battles with unions during collective bargaining. If the Labor Union Act is amended and subcontractors are also involved in negotiations, it will be virtually impossible for Korea's shipbuilding industry to maintain global competitiveness." He added, "If the amendment is inevitable, I recommend granting a grace period of at least one year to minimize confusion in the industrial field and allow a smooth transition to the new system."

Nevertheless, the gap between labor and management remained wide. Minister Younghoon Kim stated, "The Yellow Envelope Act is not a law that strengthens regulation on companies or unilaterally shifts responsibility to employers. Rather, it aims to align the rights and responsibilities as stipulated by our Constitution," adding, "The Yellow Envelope Act will help resolve the recurring conflicts in industrial sites and provide both labor and management with stability and accountability." He continued, "We can resolve the biggest obstacle to economic growth, which is the gap between companies, and transform traditional labor-management relations into a new paradigm of participation and cooperation."

In response, Chairman Ki-moon Kim of the Korea Federation of SMEs emphasized, "With sluggish domestic demand and rising tariffs in the United States, companies are already in a difficult situation and urgently need support. The implementation of the Labor Union Act is adding to SME concerns. If unions at partner companies can demand negotiations and go on strike against primary contractors, and with 50% of small manufacturing companies being suppliers, it is impossible not to worry about transaction disruptions and the resulting damages. At the very least, we need to take at least a year to fully gather opinions from both labor and management and come up with measures to minimize confusion in the industrial field."