[Insight & Opinion] Economic Freedom of Enterprises and Individuals and the Yellow Envelope Act

Expanding the Scope of Users and Labor Disputes
Limiting Corporate Damage Claims
Conflicts with the Civil Act and Civil Execution Act

Regulation of economic activities is inevitable for the sound development of the national economy. Even so, the capitalist market economy system and democratic basic order must be respected. Our economic system is based on free economic competition among individuals and enterprises. Of course, equality acts as a foundation for limiting freedom, as it can prevent winner-takes-all scenarios or labor oppression.

Is something economically valid just because it does not contradict the constitution? It does not seem so. From the perspective of national competitiveness, countries that are good for business have a high degree of economic freedom. Economic growth is possible only when economic freedom is increased and vitality is abundant. This, in turn, expands the scope for inclusive growth that reduces disparities such as inequality.

The conservative Heritage Foundation, which advocates for a small government, publishes the level of economic freedom for businesses and individuals. In this year’s Economic Freedom Index, Korea ranked 15th out of 184 countries. The problem is that it received an inadequate score in the labor market sector. It was argued that rigid labor market regulations and strong union activities increase corporate costs.

Last month, the court put an end to the constitutional controversy over the Serious Accident Punishment Act. Nevertheless, it is necessary to examine whether the law itself is problematic. The law stipulates punishment for fatal accidents as a “mandatory minimum sentence.” This is a severe punishment applied to serious crimes, and Korea is the only country to apply a mandatory minimum sentence in relation to industrial accidents.

The 52-hour workweek system is a meaningful policy that legally addressed the issue of failing to reduce working hours. However, reasonable exceptions must be made. Expanding special extended work and reforming the weekly 52-hour regulation to a monthly basis is desirable from the perspective of corporate competitiveness. To prevent our companies from falling behind in global competitiveness, flexible working hours are inevitable within the scope that does not harm workers’ health rights.

When domestic construction companies expand overseas, it is common to hire local subcontractors and dispatch our company’s management staff. Since local workers are subject to their country’s laws, there is a difference in working hours compared to our workers who comply with the 52-hour workweek. In some sites, there have been cases where our management workers leave early, causing work to stop. Institutional improvements are needed so that our workers can align their working hours with local workers.

The Yellow Envelope Act (amendments to Articles 2 and 3 of the Labor Union and Labor Relations Adjustment Act) passed the National Assembly plenary session, deepening the conflict between labor and government. The labor sector called it the “Industrial Site Peace Act” and “Worker Protection Act,” urging immediate implementation. The government and ruling party unanimously saw significant unconstitutionality, and the president exercised a veto. The law returned to the National Assembly, was put to a vote again, but was rejected and finally discarded.

In 2014, the court ruled that striking Ssangyong Motor workers must pay 4.7 billion won in damages. Enraged citizens collected donations and delivered them in yellow envelopes, from which the Yellow Envelope Act got its name. The spirit of the citizen fundraising movement to help workers suffering from damage claims and provisional seizures must be respected. But is it always desirable to include excessive provisions in the law?

The Yellow Envelope Act aims to expand the scope of employers to protect indirectly employed workers such as subcontractors and special employment workers like delivery drivers by law. It seeks to expand the scope of labor dispute actions and limit excessive damage claims. At this point, it is necessary to recognize that the previous administration judged the law to be problematic. At that time, the damage claim limitation part included in the law was considered to potentially conflict with the Civil Act, Civil Execution Act, and Suretyship Act.

There can be no division between pro-business and pro-labor parties. Legislative acts that promote illegal strikes and labor-management conflicts are harmful acts that undermine corporate international competitiveness.

Jo Won-kyung, Professor at UNIST, Director of the Global Industry-Academia Cooperation Center

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