'Yellow Envelope Law' faces first test as subcontractor unions target parent firms

Labor unrest is intensifying across South Korea this summer. Since the amended Trade Union and Labor Relations Adjustment Act — widely known as the "Yellow Envelope Law" — took effect, expanding prime contractors' employer liability, the first legally sanctioned strikes by subcontractor unions targeting those parent firms appear to be taking shape. Overlapping wage and bonus disputes in the automaking and information technology sectors are adding to the strain, raising the prospect of industry-wide walkouts.

According to labor circles Sunday, the National Plant Construction Workers' Union, affiliated with the KCTU's construction federation, held strike authorization votes across eight regions nationwide from June 19 to Friday. The union plans to announce the results Monday before holding a press conference Wednesday to unveil a general strike plan targeting prime contractors that have refused to come to the bargaining table.

After the Yellow Envelope Law took effect, the plant workers' union demanded negotiations with 10 companies — including project owners such as Posco, S-Oil, Korea Zinc and SK Energy, as well as general contractors including SK Ecoplant. Regional and central labor commissions have successively recognized those firms' employer status, but the union says most have been reluctant to engage in talks.

The union singled out Posco, accusing it of stalling even after the labor commission ruling. It said it would escalate pressure through a range of measures, including criminal complaints, labor commission petitions and industrial action.

At Hanwha Ocean, subcontractor unions are also moving toward a dispute. The Welliv union, representing workers at catering, commuter-bus and facility-management contractors, filed for labor dispute mediation with the South Gyeongsang Provincial Labor Commission, saying Hanwha Ocean has refused to negotiate despite a ruling recognizing its employer status. If the gap between the two sides proves too wide and mediation breaks down, the union will be entitled to launch a legal strike.

The Metal Workers' Union is pressing Hyundai Motor Group to have the parent company directly engage in negotiations over irregular subcontract workers at Hyundai Steel. The union argues that because Hyundai Motor Group holds effective decision-making authority over affiliates including Hyundai Steel, Hyundai Glovis and Hyundai Mobis, the prime contractor must bear responsibility for bargaining. The KCTU has announced a general strike for July 15.

Separate from the prime-contractor disputes, wage negotiations in the automaking and IT sectors are also heading toward strikes.

Hyundai Motor Company's union has secured the legal right to strike after mediation at the Central Labor Commission broke down. The union is demanding a base-pay raise of 149,600 won ($97), a performance bonus equivalent to 30 percent of last year's net profit, higher bonuses and an extended retirement age.

The GM Korea union has also passed a strike authorization vote over its wage and collective bargaining negotiations and is set to begin strike procedures if Central Labor Commission mediation collapses.

The Kakao union will hold a "Log-Out Day" Monday, with members using annual leave and days off in a coordinated work stoppage. The action covers five entities: Kakao, Kakao Pay, Kakao Enterprise, DK Tech In and XL Games. The union, which earlier staged the company's first-ever strike — a four-hour partial walkout — said it will continue to press management.

Labor groups expect bargaining and industrial action targeting prime contractors to grow as the amended law strengthens their negotiating obligations. Business circles, however, warn that a broader interpretation of employer status could prolong labor-management conflicts on the shop floor.