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A third of foreign companies considering closing shop after 'Yellow Envelope Bill'

Published: 27 Aug. 2025, 18:54 Updated: 27 Aug. 2025, 18:58

Members of the Korean Confederation of Trade Unions’ public transport workers’ and metal workers’ unions, including indirectly employed and subcontracted workers, chant slogans in front of the Seoul Regional Employment and Labor Office in central Seoul on May 14. The union members called for the passage of the “Yellow Envelope Bill” that revises Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act and for negotiations with parent companies. [YONHAP]

A third of foreign companies with investments in Korea are considering scaling back or withdrawing their Korean operations following the passage of the pro-labor "Yellow Envelope Bill." The law, which expands the scope of employers and limits damages claims against unions, passed the National Assembly on Sunday under the initiative of the liberal Democratic Party.

On Wednesday, the Korea Foreign Enterprises Association (KOFA) released the results of a survey conducted on 100 representatives and human resources managers at foreign companies operating in Korea.

A total of 35.6 percent said they were considering reducing investment or shutting down their Korean operations while 64.4 percent said the law would not affect their plans.

The survey showed strong skepticism toward the amendment to Article 3 of the Trade Union and Labor Relations Adjustment Act, which limits the scope of damages claims. Only 7 percent responded positively while 47 percent opposed the change. Another 46 percent took a neutral stance.

When asked about the clause limiting civil liability for illegal strikes, 50 percent expressed opposition compared to 30 percent who supported it.

On the provision expanding protections for strike participants, opinion was more evenly split: 40 percent responded positively and 44 percent negatively.

Founded in September 1999, KOFA is a nonprofit organization that serves as a bridge between foreign companies in Korea and the government. It represents about 600 firms. Of the companies that took part in the survey, 53.5 percent were European, 22.8 percent North American and 21.8 percent Asian.

Business groups have voiced similar concerns. The American Chamber of Commerce (Amcham) in Korea said the new law could undermine the country’s role as a regional hub. James Kim, chairman and CEO of Amcham, said the passage of the law could negatively affect Korea’s standing as a hub in Asia.

The European Chamber of Commerce in Korea (ECCK) also issued a statement highlighting legal uncertainty in July.

"The impact is particularly severe for foreign-invested companies, which are highly sensitive to legal risks stemming from labor regulations," the ECCK said.

"For example, if a company faces the risk of criminal penalties for refusing to engage in collective bargaining — especially in situations where it is unclear which union to negotiate with — it may ultimately choose to withdraw from the Korean market," the statement read.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NA SANG-HYEON [[email protected]]