Yellow Envelope Act: Expanding Established Union Privileges

On Sunday, August 24, 2025, a bill commonly known as the “Yellow Envelope Act” was passed. The core of this legislation lies in expanding parent companies’ collective bargaining obligations and limiting claims for damages. Yet on the very next day, Monday, something unexpected happened: robot-related stocks surged across the Korean stock market. The law contains three fundamental paradoxes.

First, a law promoted as protecting workers will ultimately benefit technologies designed to replace them. Investors understood this immediately. Why would a law meant to protect labor end up fueling the robotics industry?

Negotiating separately with hundreds of subcontractors is practically impossible. For companies, the obvious response is automation. Simply stop using human labor. Just as kiosks spread explosively after sharp minimum-wage hikes, the Yellow Envelope Act is likely to make Korea one of the fastest adopters of robots in the world. Relocating production overseas will also become an increasingly attractive alternative.

Second, the true beneficiaries of the Yellow Envelope Act are industrial unions. When individual bargaining with hundreds of subcontractors becomes unmanageable, firms will seek a single, unified bargaining counterpart. That is precisely when industrial unions—such as the Korean Metal Workers’ Union or the Chemical, Food and Allied Workers’ Union—step in. Their influence will expand exponentially.

Notably, major enterprise-level unions have never made concessions of their own. It is difficult to find cases where they gave up retirement-age extensions or performance bonuses for the sake of subcontractor workers. What they pursue is “solidarity without sharing.” This form of solidarity only entrenches class divisions within the labor force.

Third, the first people to lose their jobs in this process will be the very subcontracted and non-regular workers the law claims to protect. Those who truly need labor-law protection are special-type workers: delivery riders, taxi drivers, insurance sales agents, and private tutors. They exist in a gray zone—neither fully workers nor independent business owners—and are not even guaranteed the minimum wage.

These are the people who genuinely need a “presumption of worker status.” Yet that provision was excluded from the Yellow Envelope Act. From the perspective of industrial unions, it is far more efficient to control already organized subcontractors than to organize dispersed special-type workers.

The truth revealed by these three paradoxes is clear. The Yellow Envelope Act is not a law for the vulnerable; it is a tool designed by entrenched unions to expand their own power. Once implemented, companies will be unable to handle bargaining demands from hundreds of subcontractors and will be forced to sit across the table from industrial unions. Regular employees at large firms will not make concessions, and companies will ultimately accelerate automation or move operations overseas.

Unorganized non-regular workers will be the first to lose their jobs. Special-type workers will remain trapped in legal blind spots, while young job seekers will suffer as firms shy away from new hiring.

The true name of the Yellow Envelope Act is the “Entrenched Interests Expansion Act.” Inside the yellow envelope that claimed to protect workers was, in reality, a blueprint for expanding the power of industrial unions. Calling for solidarity by lumping together a large-company employee earning over 100 million won a year with a special-type worker earning 50,000 won a day is sheer hypocrisy.

Hye-rim Park
Senior Research Fellow, The Center for Free Enterprise

Korean version: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=28248