"Yellow Envelope Law Guidelines May Worsen Working Conditions... Petrochemical Restructuring Could Be Delayed"

81st Industrial Federation Forum
Subcontractor Welfare at Risk Due to Diluted Control
Industry-Specific Manuals Needed Urgently

The industrial sector has projected that the government's Yellow Envelope Law (amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act) guidelines could lead to blind spots in safety management or trigger side effects such as a shift toward overseas investment. In particular, within the petrochemical industry, which is currently undergoing industrial restructuring, concerns have been raised that the new guidelines could delay the recovery of business conditions.

Professor Joonmo Cho of the Department of Economics at Sungkyunkwan University stated at the "81st Industrial Federation Forum: Issues and Improvement Tasks in Industrial Sites Due to Changes in Labor Policy," held on December 29 at the Automobile Hall in Seocho-gu, Seoul, "Policies that are intended to benefit workers may, in fact, undermine the competitiveness of the industry and worsen working conditions."

Professor Cho commented on the "Interpretation Guidelines (Draft) for the Revised Trade Union Act" recently pre-announced by the Ministry of Employment and Labor, specifically regarding the criterion of "structural control over working conditions" used to determine employer status. He explained, "If the parent company monetizes or outsources its facilities, shifting costs onto subcontractors, the parent company's control is diluted, which could lead to a decline in the welfare of subcontracted workers."

Regarding the stipulation that the parent company's comprehensive control over safety may be recognized as effective control, he warned, "There is a possibility that blind spots in safety management could emerge." He added, "While subcontractors may be required to comply with safety management, the parent company could respond passively to actual safety investments."

He also expressed concern about a surge in demands for collective bargaining over decisions such as mergers and splits. Under the revised Trade Union Act, business management decisions aimed at organizational changes-such as mergers, splits, transfers, or sales-are not subject to collective bargaining. However, the new guidelines explain that if layoffs or reassignment of duties can be "objectively anticipated" as a result of such decisions, demands for collective bargaining regarding employment security may be made.

Professor Cho stated, "Since layoffs and similar matters could become subjects of labor disputes, restructuring will become more difficult," adding, "Preemptive measures such as terminating contracts with subcontractors may be taken."

Professor Joonmo Cho of Sungkyunkwan University’s Department of Economics is speaking at the 81st Industrial Federation Forum held on the 29th at the Automobile Hall in Seocho-gu, Seoul. Photo by Youngju Jeon

At the forum, several participants pointed out that the Ministry of Labor's guidelines are broad and ambiguous. Kim Joohong, Executive Director of the Korea Automobile Mobility Industry Association, said, "The structural control mentioned in the guidelines is just as unclear as the previous phrase 'substantial and specific control.' If the finished vehicle industry has to negotiate individually with hundreds or thousands of partner companies under such vague guidelines, and the costs become enormous, companies may choose to abandon partners or focus on overseas investments."

Kim Euicheol, Director of the Korea Cement Association, also emphasized, "It is urgent to establish clear implementation standards and guidelines." He added, "The laws, enforcement ordinances, and administrative interpretations must become more precise," and "Detailed manuals reflecting the characteristics of each industry should be prepared as soon as possible."

The petrochemical industry, which is undergoing restructuring, predicted that the new guidelines could delay business reorganization. Park Janghyuk, Director General of the Korea Chemical Industry Association, said, "As the downturn in business conditions continues, we are reducing production capacity, but if layoffs or reassignment of subcontracted workers become subjects of labor disputes, it will hinder the recovery of market conditions." He stressed, "Managerial decisions such as personnel management should be separated from the scope of labor disputes."