Amcham head says pro-labor Yellow Envelope Act could 'undermine Korea'

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Amcham head says pro-labor Yellow Envelope Act could 'undermine Korea'

Published: 30 Jul. 2025, 18:49

Audio report: written by reporters, read by AI

James Kim, chairman of the American Chamber of Commerce in Korea (Amcham), speaks at an Amcham forum at the Grand Hyatt Seoul in central Seoul on May 22. [YONHAP]

The American Chamber of Commerce in Korea (Amcham) and major Korean industry associations are urging lawmakers to reconsider a proposed amendment to the “Yellow Envelope Act,” which would limit companies’ ability to seek damages from workers or unions over strike-related losses, ahead of its expected passage in the National Assembly.

Amcham, which represents some 800 U.S. companies, voiced strong opposition on Wednesday, citing “risks to Korea’s global competitiveness.”

Korea’s export-driven industries, including automakers and shipbuilders, have also spoken out, intensifying backlash in both domestic and international circles.

“A flexible labor environment is essential to strengthening Korea’s competitiveness as a business hub in the Asia-Pacific region,” said James Kim, chairman and CEO of Amcham. “If enacted in its current form, this legislation could influence future investment decisions by American companies considering Korea.

“Regulatory unpredictability remains one of the top challenges for foreign-invested companies in Korea. This legislation may add to that uncertainty and, in turn, undermine Korea’s global competitiveness.”

Kim also highlighted the international context of the legislation, noting that Korea is set to host the 2025 APEC Summit in October.

“The 2025 APEC summit presents a valuable opportunity for Korea to demonstrate leadership in innovation and economic policy,” he said. “At this critical juncture, it is important to consider the broader message this legislation may send to the global business community.”

This marks the second time this year that a foreign business organization has issued a public warning about the Yellow Envelope Act.

In an earlier statement, the European Chamber of Commerce in Korea (ECCK) said the legislation could “treat business operators as potential criminals” and speculated that some European companies could consider pulling out of the Korean market if it were to pass.

Lee Dong-geun, vice chairman of the Korea Enterprises Federation, answers questions from reporters after delivering a joint statement with industry associations calling for a halt to the revision of the "Yellow Envelope Bill," at the federation’s headquarters in Mapo District, western Seoul, on July 30. [NEWS1]

Thirteen major Korean industry associations — including representatives from the automobile, shipbuilding, semiconductor, battery and steel sectors — also held an emergency news conference Wednesday and issued a joint statement calling for the bill to be scrapped.

Among them were the Korea Enterprises Federation (KEF), Korea Federation of Textile Industries, Construction Association of Korea, Korea Automobile & Mobility Association, Korea Petroleum Association, Korea Electronics Association, Korea Association of Machinery Industry, Korea Offshore & Shipbuilding Association, Korea Display Industry Association, Korea Iron & Steel Organization, Korea Semiconductor Industry Association, Korea Chemical Industry Association and Korea Battery Industry Association.

They argued that the bill would expand the legal definition of “employer,” potentially “destabilizing the subcontractor ecosystem that underpins Korea’s manufacturing sector.”

This amendment would “force primary contractors to engage in collective bargaining with countless subcontractor unions, leading to confusion and undermining industrial competitiveness,” they said.

The revised Article 2, Clause 2 of the bill — which expands the scope of who qualifies as an employer in collective bargaining — remains the most contentious issue.

Industry groups warned that the bill’s expansion of the legal definition of “employer” could plunge Korea’s manufacturing sector into chaos by forcing primary contractors to negotiate with hundreds of subcontractor unions.

They argued that complex supply chains in industries like shipbuilding and automotive manufacturing would make it “nearly impossible” for employers to determine whether they are legally obligated to engage in collective bargaining.

Minister of Employment and Labor Kim Young-hoon delivers a briefing on the proposed amendment to the "Yellow Envelope Act" at the government complex in central Seoul on July 29. [NEWS1]

Concerns were particularly acute among automakers and shipbuilders, which have also emerged as key players in Korea’s ongoing tariff negotiations with the United States. In the vehicle industry alone, there are 3,000 to 4,000 first- and second-tier suppliers. If subcontractor unions are included in the scope of bargaining, automakers could end up in negotiations year-round.

“Even under current rules, it usually takes five to six months to complete wage and collective bargaining negotiations,” said Kim Joo-hong, executive director of the Korea Automobile & Mobility Association. “With the new bill, we might spend the entire year doing nothing but negotiating.”

Shipbuilders emphasized that delays in production would directly impact international trust.

“Last year, China captured about 70 percent of global shipbuilding orders, while Korea maintained a 15 percent share thanks to its technology and delivery reliability,” said Jung Seok-ju, executive managing director of the Korea Offshore & Shipbuilding Association. “If the amendment leads to further confusion on the ground, that trust toward our shipbuilding industry could erode.”

Business leaders also raised concerns about criminal liability for refusing to negotiate with subcontractor unions.

Under the proposed amendment, refusal to engage in collective bargaining without “just cause” would constitute an unfair labor practice under Articles 81 and 90 of the current law, which carry penalties of up to two years in prison or fines of up to 20 million won ($14,500).
“If the definition of ‘employer’ is expanded, simply declining to negotiate could become a punishable offense,” said Lee Dong-geun, vice chairman of the KEF. “Criminal penalties should require a clear sense of agency, intent and causality. But this bill sets those standards far too broadly, which runs counter to the principle of legality in criminal law. ”

The industry associations plan to formally deliver concerns to the National Assembly’s Legislation and Judiciary Committee on Thursday.

Minister of Employment and Labor Kim Young-hoon delivers remarks on July 28 after the National Assembly’s Environment and Labor Committee in western Seoul passes the "Yellow Envelope Act." [YONHAP]

Another major point of contention is the proposed revision to Article 2, Clause 5, which expands the legal definition of “labor dispute.”

“If this bill passes, decisions such as corporate restructuring, relocating production sites or pursuing overseas investments could all become grounds for a strike,” Lee said. “It could lead to a culture of strike absolutism across the industrial sector.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM SU-MIN [[email protected]]