Lee Dong-geun, Vice Chairman of the Korea Employers Federation, "Will Request Veto if the Yellow Envelope Act Passes the National Assembly" (Comprehensive)

Strengthening Strikes Takes Flight
Contradicting Civil and Constitutional Property Rights Protection
Focus Should Be on Expanding Domestic Investment

[Asia Economy Reporter Kiho Sung] "The Yellow Envelope Act is a law that shakes the foundation of the nation’s capitalist system and constitution. If this law passes in the National Assembly, where the opposition holds an absolute majority, the Korea Employers Federation will recommend that the president exercise the veto power."

Lee Dong-geun, Vice Chairman of the Korea Employers Federation, voiced strong opposition to the ‘Amendment to the Trade Union and Labor Relations Adjustment Act (Yellow Envelope Act),’ which prevents claims for damages even if labor unions engage in illegal strikes.

In an interview with Asia Economy on the 18th at the Korea Employers Federation building in Yeouido, Seoul, Lee said, "Following the previous administration’s labor-friendly policy stance, the balance of power between labor and management has been broken. If the Yellow Envelope Act passes, it will further encourage militant strikes, and in such cases, not only union members but also non-union workers will suffer."

The Yellow Envelope Act essentially prohibits claims for damages caused by illegal strikes by labor unions. The opposition parties, the Democratic Party of Korea and the Justice Party, have adopted the passage of the Yellow Envelope Act as their party line in this regular session of the National Assembly and are accelerating legislation.

Lee conveyed that concerns from the business community and companies regarding the Yellow Envelope Act are serious. He said, "While the Serious Accident Punishment Act is unreasonable in its provision to punish business owners or management officials in the event of fatal accidents, the legislative intent to ‘reduce accidents’ was somewhat understandable. However, the Yellow Envelope Act is a law that cannot be understood from the perspectives of companies, workers, or the nation," he argued.

Lee criticized the Yellow Envelope Act for strongly infringing on property rights guaranteed by the constitution. He claimed it directly contradicts Article 23 of the Constitution, which guarantees the property rights of all citizens, and Article 750 of the Civil Act, which stipulates that those who cause damage to others through illegal acts are liable for compensation. He said, "The Yellow Envelope Act goes beyond labor issues; it violates the constitution and the rule of law and is a bill that denies capitalism."

He also expressed concern that the passage of the bill would harm socially vulnerable groups. Lee said, "If the bill passes, unions will take more militant actions because they will not suffer any losses from strikes. Non-striking union members or workers not affiliated with unions will inevitably be forced to suffer damages along with the company due to union strikes."

He also revealed plans to recommend that President Yoon Seok-yeol exercise veto power if the bill passes. The ruling party shares a similar stance. Kwon Seong-dong, floor leader of the People Power Party, stated at a floor strategy meeting, "Currently, the Democratic Party, relying on its majority seats, is running various standing committees arbitrarily and pushing through bills without cooperation or coexistence between the ruling and opposition parties. We will recommend that the president exercise veto power."

Regarding the recent controversy over employment issues between shipbuilding contractors and subcontractors, he pointed out that the government must respond with clear principles. Lee said, "I believe that the failure to establish the rule of law in industrial sites is due to a combination of militant labor movements that seek to achieve their goals even through illegal means and the government’s lukewarm response to illegal acts. To establish the rule of law in industrial sites, the government’s principled response, such as immediate public authority intervention upon the occurrence of illegal acts, must become a customary practice to resolve illegal situations," he emphasized.

Ultimately, he advised that institutional improvements and enhanced industrial competitiveness are necessary to solve the problem. Lee said, "Legal and institutional improvements, such as a complete ban on workplace occupation during strikes in line with global standards, must be made promptly. Additionally, the government should actively strengthen shipbuilding competitiveness by supporting the training of skilled workers and resolving manpower shortages through the establishment of a shipbuilding skilled workforce training center and producing new skilled workers who will determine order-winning competitiveness," he stressed.

"Global economy is not easy... Deregulation and tax support must be implemented"

Lee analyzed that global factors are the main cause of the current economic crisis. Therefore, he pointed out the urgent need for active economic revitalization policies as well as domestic incentives for attracting companies and investments.

Lee commented on the recent economic situation in Korea, saying, "Exports are slowing down, and trade deficits continue due to global supply chain instability and high exchange rates. Consumption and investment are also not showing clear recovery trends, and the national burden due to high inflation is increasing."

The cause is the global economic recession. If external factors do not improve, it is unlikely that the economy will recover easily. He said, "Going forward, our economy is expected to see a weakened growth trend due to the prolonged Ukraine crisis and global economic slowdown caused by interest rate hikes in major countries, which will dampen export growth."

Lee cited the recently passed Inflation Reduction Act (IRA) in the United States as an example and emphasized the urgent need for active deregulation and tax support measures to overcome the current situation.

He said, "It is necessary to actively engage in negotiations through political and diplomatic channels to prevent damage to companies entering the U.S. market. In particular, support measures such as deregulation and tax support must be prepared so that our key industries like semiconductors and automobiles do not fall behind in global competition," he said.

Lee advised that raising the competitiveness of the Korean economy is the top priority amid U.S.-China conflicts and changes in the global supply chain. He said, "For our companies to overcome the complex economic crisis and improve competitiveness, productivity improvement through innovation is most important. Along with short-term risk management, mid- to long-term strategies such as expanding investment in technology development and securing key talents must also be prepared," he pointed out.

He expressed the view that active support for the domestic entry of competitive companies is necessary. He analyzed, "The sluggish entry of foreign companies into Korea is mainly due to a business environment more difficult than competing countries, including excessive market regulations, rigid labor policies, confrontational labor-management relations, and high corporate and inheritance tax burdens, in addition to a relatively small domestic market compared to competitors. Excessive labor market and industrial safety regulations make it difficult to operate wages and working hours flexibly, and the risk of criminal punishment for CEOs increases as more personnel are hired. Also, high tax burdens undermine corporate profitability and sustainability."

He added, "To expand domestic investment, it is urgent to create a business-friendly environment better than competing countries through regulatory reform, strengthening tax competitiveness, labor market flexibility, and labor-management relations stability. The new government’s active efforts in regulatory innovation, such as establishing a regulatory innovation control tower, positively contribute to improving investment conditions. However, since most major legislative regulations or core regulations that hinder investment require legal amendments, I hope the government and political circles actively cooperate to legislate for improving the investment environment," he concluded.

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