Barely four months into its implementation, South Korea’s new labour-friendly law is coming under growing scrutiny as workers’ demands for bonuses tied to a fixed percentage of corporate profits spread across the country.
If left unchecked, critics warn, the revised Trade Union and Labour Relations Adjustment Act – commonly known as the Yellow Envelope Act – could fuel labour disputes, create uncertainty for businesses and threaten an economy that is only beginning to recover.
At the heart of the controversy is whether calls for bonus adjustments and other such demands fall under the new act, which has expanded the scope of labour disputes beyond traditional issues such as wages, working hours, welfare and dismissals to include “business management decisions affecting working conditions”.
That broader definition has emboldened some unions to make demands that would previously have been considered beyond their collective bargaining remit.
Samsung Electronics’ labour union, for example, has argued that the company’s planned 800 trillion won (US$545 billion) investment in a new semiconductor manufacturing complex in the southwestern city of Gwangju should require union approval because it could affect employees’ working conditions through relocation and reassignment.
The controversy over profit-linked bonuses began at SK Hynix, which agreed last year to remove its previous cap and allocate 10 per cent of annual operating profit to an employee bonus pool for the next decade.
