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Korea Herald
a day ago
- Business
- Korea Herald
[Editorial] Corporate anxiety
DP pushing 'Yellow Envelope Law'; Corporate tax rates to be raised back Korean companies are concerned that the Lee Jae Myung administration and the ruling Democratic Party of Korea are stepping up legislation that could add to their burdens, following the revision of the Commercial Act. The revised Commercial Act proposed by the party passed the National Assembly on July 3. The revision expands the fiduciary duty of corporate board members to serve the interests not only of their companies but of shareholders as well. Business circles worry that the change could make directors avoid long-term investments because of shareholder objections. Last Friday, Democratic Party lawmakers presented a bill to revise the Labor Union Act — a proposal known as the "Yellow Envelope Law" — to the National Assembly's Environment and Labor Committee, then proceeded to forward it to the subcommittee for deliberation. The party, which has a large majority in parliament, vowed to get the bill passed in an extraordinary session of the Assembly next month. Article 2 of the Labor Union Act revision would require primary contractors to bargain collectively with the employees of subcontractors. Article 3 makes it practically impossible for companies to claim damages from workers taking industrial action. If hundreds or thousands of subcontractor employees were to demand collective bargaining, subcontractors and the large companies that outsource work to them could be mired in incessant labor disputes. The article limiting damage claims against workers could encourage more industrial action. For these reasons, former President Yoon Suk Yeol vetoed the bill twice. The deepening anxiety of companies is understandable. Koo Yun-cheol, the nominee for deputy prime minister and minister of economy and finance, mentioned the decline in corporate tax revenue during his confirmation hearing at the National Assembly last Thursday. He said he would consider restoring the higher corporate tax rates that the Yoon administration lowered. The Moon Jae-in government raised corporate tax rates to a range of 10-25 percent, then the Yoon administration eased them by 1 percentage point to 9-24 percent. Koo blamed the tax cuts for a decrease in corporate tax revenue. He argued that the tax reductions failed to have the desired effects, such as increased investment and economic growth. Corporate tax revenue decreased from 103 trillion won ($74 billion) in 2022 to 80 trillion won in 2023 and 62 trillion won in 2024. Koo is mistaken. Corporate tax revenue did not shrink by 41 trillion won in two years because of tax rate reductions. The biggest factor was the deterioration of business performance, affected by an export slowdown and a semiconductor slump. Unless the economy improves, raising corporate tax rates will not guarantee an increase in tax revenue. Rather, it could reduce tax revenue by dampening corporate investment. If corporate tax revenue diminished because of a weaker economy, common sense says to help businesses attain better results by lowering tax rates. However, Koo says he would do the opposite. The US and European countries offer tax incentives to foster their strategic industries and attract foreign investments. It is questionable whether revising the tax code to increase tax collection can enhance companies' international competitiveness. In his meeting with Korean business leaders last month, President Lee promised to fully support their business activities. Last week, he had separate dinners with Hyundai Motor Group Executive Chairman Chung Eui-sun and LG Chairman Koo Kwang-mo to discuss trade issues. Lee emphasized cooperation between the government and their businesses. But the bill to amend the Labor Union Act is far from a show of support for companies. Lee's economic policy seems to be deviating from the pragmatism that he vowed to champion. If revising the Labor Union Act is inevitable, lawmakers may as well hold further discussions about whether to make it mandatory for primary contractors to bargain collectively with subcontractor employees.
Korea Herald
16-07-2025
- Politics
- Korea Herald
Umbrella labor group set to begin large-scale strike
The Korean Confederation of Trade Unions, one of the nation's largest umbrella labor groups, was set to launch a large-scale strike to demand the government adopt a pro-labor act. As part of the two-day strike, scheduled for Wednesday and Saturday, the 1.2 million-strong KCTU will hold a rally at 3 p.m. in Yeouido, western Seoul, and simultaneously stage rallies in 12 other regions. The KCTU estimated that around 10,000 members will take part in Seoul, with a total of 30,000 expected nationwide. Another large-scale rally and march is planned for Saturday in central Seoul. "This is our determined action to guarantee fundamental labor rights for all workers and resolve social inequality," the KCTU said, urging the Lee Jae Myung government to withdraw what it described as anti-labor policies of the previous Yoon Suk Yeol administration. The union is demanding revisions to Articles 2 and 3 of the Labor Union Act, also known as the "yellow envelope law," aimed at limiting companies from making claims for damages against legitimate labor union disputes. The legislation passed the National Assembly twice but was vetoed by Yoon amid opposition from business lobbies and the People Power Party. They argued that the bill would make it difficult for employers to file complaints against illegal strikes by their workers and exempt laborers from liability for participating in them. The KCTU also called for substantial labor reforms to protect the labor rights of platform and special-contract workers and to address deepening inequality. (Yonhap)
Korea Herald
02-07-2025
- Business
- Korea Herald
Labor group to stage large-scale strike this month
One of the nation's largest umbrella labor groups, the Korean Confederation of Trade Unions, said Wednesday it will stage a two-day, large-scale strike later this month to demand the government again push for a pro-labor act. Yang Kyung-soo, chairman of the 1.2 million-strong KCTU, also called on the government to immediately scrap "anti-labor" policies by the previous Yoon Suk Yeol government. The KCTU said it will stage strike rallies nationwide on July 16, including in central Seoul, followed by another rally and march on July 19. The union also renewed its calls for revisions to Articles 2 and 3 of the Labor Union Act, also known as the "yellow envelope law," aimed at limiting companies from making claims for damages against legitimate labor union disputes. The legislation passed the National Assembly twice but was vetoed by Yoon amid opposition from business lobbies and the People Power Party. (Yonhap)
Korea Herald
25-06-2025
- Business
- Korea Herald
Labor minister nominee says Korea should reduce work hours
Kim reaffirms support for Yellow Envelope Law, calls it 'non-negotiable' Kim Young-hoon, President Lee Jae Myung's nominee for minister of employment and labor, pledged to push forward key labor reforms, including the 4.5-day workweek, an extension of the retirement age, and revisions to Articles 2 and 3 of the Labor Union Act, a proposal known as the Yellow Envelope Law. 'These are the paths we must take,' Kim told reporters outside the Labor Ministry's Seoul regional office, where he began preparations for his National Assembly confirmation hearing. 'Reducing working hours through a 4.5-day workweek or extending the retirement age are the only tools that can overcome crises such as the digital transition, population decline, aging society and labor shortages.' While emphasizing the need for reform, Kim clarified that 'no policy will be enforced simply based on ideology or justification,' promising to consider challenges businesses may face and to pursue change through labor-management-government dialogue. He identified the fragmentation of the labor market as the most urgent challenge. 'Whereas the focus used to be on permanent versus temporary employment, now it's about an increasingly segmented workforce,' Kim said. 'Unifying this fragmented landscape aligns with the Lee administration's vision of growth and inclusion.' Highlighting the need for broader labor protections, Kim stressed support for precarious workers who fall outside legal coverage. 'Safeguarding the right to work for our ordinary neighbors unprotected by the law is a top priority,' he said. On Wednesday, Kim reiterated his strong commitment to revising Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, stating it is 'not a matter of choice, but the path we must take.' Kim emphasized the need to institutionalize bargaining structures for fragmented labor sectors. 'If the government fails to support negotiations across diverse labor groups, it is abandoning its responsibility,' he said. 'The law mandates that the government assist and facilitate such negotiations — this amendment is one method of doing that.' The Yellow Envelope Law, long championed by labor groups, seeks to expand the definition of an employer to include parent companies, allowing subcontractor unions to negotiate directly with principal firms. It also aims to restrict excessive damage claims filed against striking workers. Business circles have pushed back, arguing it could encourage illegal strikes. The controversy dates back to May 2009, when unionized workers of SsangYong Motor Co. staged a strike to oppose layoffs. Five years later, the Supreme Court declared the strike illegal and ordered the workers to pay 4.7 billion won ($3.6 million) in compensation to the company and the state. Civic activists then delivered yellow envelopes with donations to support the SsangYong workers, raising the need to amend the trade union law in favor of striking workers. The revision has since been called the Yellow Envelope Law. Asked if he plans to engage further with business leaders on the issue, Kim said he has not formed any specific plans or positions. On social dialogue, Kim said it remains a crucial tool for resolving conflict-ridden issues across Korean society. 'Negotiation is harder than striking, but there's no alternative to negotiation,' he added. A veteran labor leader and until this week a Korea Railroad Corporation train engineer, Kim has held key posts including head of the railway union and chair of the KCTU. He supported Lee's labor pledges during both the 2022 and 2025 presidential campaigns and officially submitted his retirement notice to Korail on Monday.
