Companies Frustrated Over Push for 'Noran Bongtu Law' to Encourage Strong Union Struggles

If the Law Passes, It Means Granting a 'Get-Out-of-Jail-Free Card' to Unions
"A Law Rarely Seen Anywhere in the World" Criticized

[Asia Economy Reporter Sung Ki-ho] The so-called “Yellow Envelope Act” (Amendment to the Labor Union and Labor Relations Adjustment Act), which has resurfaced due to strikes by subcontractor labor unions at Daewoo Shipbuilding & Marine Engineering and the HiteJinro union, essentially prohibits companies from claiming damages even if they suffer losses due to illegal strikes by unions. Until now, companies have used damage claims to block illegal union struggles and occupations. However, if legal immunity is granted for this, companies will lose appropriate means to counteract. This raises concerns that serious damages such as illegal occupations or facility destruction, as seen at Daewoo Shipbuilding & Marine Engineering and HiteJinro, could recur. Amid a global economic downturn and tense international situation, where business conditions are becoming increasingly difficult, adding union risks could significantly deteriorate competitiveness.

According to political and business circles on the 14th, the Democratic Party of Korea has included the Yellow Envelope Act among its “22nd National Assembly’s 22 Livelihood Legislative Tasks” and is preparing to push it through the regular September session. It was selected as the sixth priority among the 22 tasks, and the Justice Party also supports the Democratic Party’s stance.

The Yellow Envelope Act is named after the yellow envelopes used to deliver donations to support union members who were ordered to pay 4.7 billion won in damages during the 2014 Ssangyong Motor strike. The issue has reignited recently due to the strike by Daewoo Shipbuilding & Marine Engineering’s subcontractor branch and the occupation of HiteJinro’s headquarters by its union. The bill was also proposed in the 19th and 20th National Assemblies but was discarded due to the expiration of the legislative term.

Daewoo Shipbuilding & Marine Engineering experienced a 51-day strike starting June 22, during which the union occupied the first dock at the Okpo shipyard, halting production processes for over a month. The company estimates losses during this period at 808.5 billion won. The company has filed a damage claim lawsuit for 47 billion won, excluding unconfirmed losses.

HiteJinro’s subsidiary, Suyang Logistics, saw its truck drivers demand a 30% increase in freight charges and staged sit-in occupations at factories in Gangwon, Icheon, Cheongju, and the headquarters. This caused disruptions in product production and shipment, resulting in damages amounting to 10 billion won. The company filed a damage claim lawsuit for 2.77 billion won but withdrew the lawsuit on the 9th through an agreement, effectively surrendering to the union’s intense strike.

Business circles explain that damage claims are intended more to prevent future illegal occupation incidents than merely to compensate for company losses. Therefore, if the Yellow Envelope Act passes and grants immunity, there are concerns that unions at Daewoo Shipbuilding & Marine Engineering and HiteJinro could engage in even more aggressive struggles. Although the situations at both companies have been temporarily resolved, there remains the possibility of friction with unions during the implementation of the agreements.

In particular, the current composition of the National Assembly makes it likely that the bill will pass relatively easily through the relevant standing committee, the Environment and Labor Committee, further darkening the outlook for companies. Currently, 10 of the 16 committee members belong to the Democratic Party and the Justice Party, and the committee chair is also from the Democratic Party. The Employment and Labor Law Review Subcommittee, a preliminary stage before standing committee approval, is chaired by a Democratic Party member, with five members from the Democratic and Justice Parties participating, compared to only three from the People Power Party.

There are also criticisms that this bill is unprecedented globally. France legislated a similar law in 1982, but the Constitutional Council ruled it unconstitutional. The UK raised the cap on damages for illegal union disputes from ?250,000 to ?1 million in July this year, a fourfold increase, and also recognized claims for damages against individual union members. An executive from a major corporation criticized, “If the bill passes, more militant struggles that disregard the company’s situation to enforce their opinions could occur,” calling it “a law difficult to find a precedent for anywhere in the world.”

This content was produced with the assistance of AI translation services.