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Conflicts bewteen labor circles and the government fueled by the inspection of trade unions' accounting and the Yellow Envelop Bill; Direct referral of the Yellow Envelop Bill to the Plenary Session expected to escalated sharp confrontation between ruling and opposition parties
The amendment bill of the Trade Union and Labor Relations Adjustment Act, also known as the “Yellow Envelope Bill,” was passed by the Environment and Labor Committee (“Committee”) of the National Assembly on February 21. The bill aims to restrict management from filing compensation suits on damages caused by strikes and provisional attachments against trade unions.
The Democratic Party of Korea and the Justice Party railroaded the bill through the Committee by a show of hands, with nine in favor and zero against. Lawmakers from the People Power Party walked out of the session in protest against the opposition parties’ unilateral handling of the matter.
Following the passage of the amendment bill, the ruling party members of the Committee held a press conference, denouncing the bill as an “unjust law that fuels conflicts between labor and management at industrial sites and encourages illegal strikes, taking away jobs from workers and future generations.” They also castigated that the Democratic Party of Korea unconstitutionally forced to handle the bill. The People Power Party will discuss the bill further at the Legislation and Judiciary Committee meeting.
The business circles also promptly expressed opposition to the proposed bill. Six major business organizations, the Korean Enterprises Federation, Korea Chamber of Commerce and Industry, Federation of Korean Industries, Korea International Trade Association, KBIZ Korea Federation of SMEs, and Federation of Middle Market Enterprises of Korea, released a joint statement claiming that “The bill will excessively expand the concept of the employer and industrial disputes, potentially bringing in corporations that are not parties to the labor contracts to industrial disputes, which can seriously harm the competitiveness of the country and corporations.”
In response, the opposition party is expected to refer the amendment bill directly to the plenary session if the processing of the bill is delayed, pending in the Legislation and Judiciary Committee for more than 60 days. If the Legislation and Judiciary Committee fails to complete the examination of a specific legislative bill within 60 days, the bill can be directly referred to the plenary session with the affirmative votes of at least 3/5 of all incumbent National Assembly members of the competent committee responsible for the agenda.
President Yoon is expected to veto the amendment bill if it passes the plenary session. A high-ranking officer concerned with the Office of the President stated in a news media call that “for now, it is likely that the President will use the veto after the deliberation of the State Council meeting.” People Power Party floor leader Ho-young Joo also stated that the party will strongly recommend the President to veto the proposed bill. He said that the bill should be called "unconstitutional envelope bill." He further criticized that the bill will encourage workers to turn to striking for every problem.
In the meantime, conflicts between trade unions and the government have intensified as the government has accelerated its attempt to “increase the accounting transparency of trade unions.” In a recent inspection of trade union accounts that ended on February 15, the government required 327 target trade unions to report on their “fulfillment of the obligation to keep and preserve documents related to financial affairs,” but only 120 unions, which is 36.7% of the total, submitted proper reports. The main reason for the low response rate was the two major trade unions’ systematic rejection of submitting the required documents. Specifically, 85% of trade unions under the Federation of Korean Trade Unions and 87% of trade unions under the Korean Confederation of Trade Unions did not properly respond to the government’s request.
The government responded promptly and took decisive action, giving a 14-day rectification period to the trade unions that did not submit the documents properly. The government also presented various measures, such as imposing administrative fines, excluding them from supporting funds, retrieving benefit frauds, and not giving tax credits to trade union members. The government also warned of strict response to what they labeled “violation at construction sites” of labor unions and decided to promote an amendment to suspend or cancel the licenses of tower crane operators who demand extra monthly pay other than their regular salary.
The political tension has intensified as the ruling and opposition parties, as well as management and labor, have become sharply divided on the issues of “labor reform” and the “Yellow Envelope Bill,” putting pressure on the National Assembly. If the opposition party, which holds a majority of seats, continues to push for the amendment bill and President Yoon uses his veto power on the bill, a political deadlock may be unavoidable.
As the first-ever Korean law firm to issue specialized legislative journals, DR & AJU LLC has been publishing the monthly Policy & Business Report since August 2019. The February 2023 issue of the P&B Report conducted a full inspection of legislation proposed to the National Assembly Subcommittee, Standing Committee, and Plenary Session from January 15, 2022, to February 14, 2023, and selected and analyzed legislation with a significant impact on corporate activities. In the case of major legislation, key mentions of legislators, members of the Standing Committee, and government officials are included.
*DR & AJU Legislation & Government Relations Consulting Center provides P&B Report subscription service. Please contact us at Ic@draju.comfor further inquiries.
