The Yellow Envelope Act (Revised Labor Commission Act) Institutionalizes Conflict

The National Assembly recently passed the Yellow Envelope Act (Revised Labor Commission Act) in a plenary session. Although it is presented as a law to expand workers’ rights, its result is expected to be negative in that it will intensify social conflict.

When legislation tilts excessively in favor of labor unions, the health and balance of workplaces are easily undermined. As in this case, the justification of “helping unions” could end up institutionalizing conflict and, ironically, harming workers instead.

If excessive responsibility is imposed on employers in labor-management disputes, businesses cannot help but become discouraged. As managerial uncertainty grows, companies reduce investment and delay new hiring. When management becomes defensive in this way, innovation and growth come to a halt, and the vitality of industry as a whole ultimately declines.

The problem is that the damage does not remain confined within companies. Partner firms and subcontractors will see their sales decline in succession. Employment opportunities for young people will narrow even further. Job shortages will in turn lead to greater social dissatisfaction, and the burden will ultimately have to be borne by the public as a whole. It is a structure in which society at large shoulders the costs while trying to protect the interests of a particular group, namely labor unions.

The crisis is by no means limited to large corporations. Small and medium-sized enterprises, with weaker bargaining power, inevitably face even greater risks. If SMEs, already lacking manpower and capital, become embroiled in disputes, their very survival may be threatened. As a result, the original justification of “expanding workers’ rights” will fade, and it is obvious that only instability in the SME sector will grow.

Even in advanced countries, there are mechanisms related to subcontracted workers’ bargaining rights or limits on liability for damages. But there are very few cases, like this legislation, where immunity is extended even to illegal industrial action. The international standard is very clear: “Protect what is legal, but sanction what is illegal.”

The Yellow Envelope Act (Revised Labor Commission Act), which provokes conflict under the banner of expanding workers’ rights, is socially very dangerous. If only Korea pushes ahead with such a law, the business environment will inevitably become distorted.

Korea is already a country where labor-management conflict occurs very frequently. In such a situation, what would happen if sanctions against illegal industrial action were weakened? The confidence of foreign investors would be shaken, and domestic and foreign capital alike would avoid Korea. This could lead to reduced investment and weakness in the stock market.

This Yellow Envelope Act (Revised Labor Commission Act) could also send a negative signal to the rule of law that we must uphold. The moment institutional protection is allowed even for illegal acts, the mistaken perception that “it is okay not to obey the law” may spread.

Naturally, exceptional situations in the application of the law would arise, and this would result in undermining social order. This goes beyond labor-management relations and shakes society-wide respect for norms, increasing the social risk that the costs of conflict become normalized.

The “institutionalization of conflict” ultimately erodes social trust as well. When legal standards are shaken, the logic of force comes to the forefront, and law and principle lose their place. In this process, even well-intentioned workers become victims. Once conflict becomes entrenched in institutions, both workers and businesses lose.

The path Korean society must take is abundantly clear. Rather than entrenching conflict in “law” as in this case, it should strengthen a system of voluntary negotiation. The National Assembly must seek institutional arrangements that consider the interests of society as a whole, beyond union demands.

Above all, it must establish at least a minimally fair framework so that both labor and management can negotiate freely and responsibly. That is true reform. And it is the path by which the democratic order of our country can continue to develop.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: ‘노란봉투법’은 갈등을 제도화한다

Author: Sung-no Choi

Date: 2025-08-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28020