Yellow Envelope Act Expands Power of Vested-Interest Unions

On Sunday, August 24, 2025, the bill commonly known as the Yellow Envelope Act (Revised Labor Commission Act) was passed. The core of this law lies in expanding the bargaining obligations of prime contractors and limiting claims for damages. But immediately after the bill passed, on Monday, something unexpected happened. Robot-related stocks in the domestic stock market surged across the board. This law contains three fundamental paradoxes.

First, a law promoted as protecting workers will ultimately end up directly benefiting technologies that replace people. Investors already knew this. Why does a law meant to protect workers end up enriching the robotics industry?

It is practically impossible for companies to bargain individually with hundreds of subcontractors. The obvious choice for businesses is automation. They can simply stop hiring people altogether. Just as kiosks spread explosively when the minimum wage rose sharply, the Yellow Envelope Act (Revised Labor Commission Act) will make Korea the fastest adopter of robots in the world. Relocating overseas is also an attractive alternative.

Second, the real beneficiaries of the Yellow Envelope Act (Revised Labor Commission Act) are industrial unions. Once it becomes impossible to bargain individually with hundreds of subcontractors, companies will look for a unified channel, and that is precisely when unions such as the Korean Metal Workers’ Union and the Chemical Textile Food Workers’ Union step in. Their influence will expand exponentially.

In fact, large-company unions have never made concessions. It is hard to find cases where they gave up their own retirement-age extensions or performance bonuses for the sake of subcontractors. What they pursue is “solidarity without sharing.” This kind of “solidarity” instead further entrenches class disparities within labor itself.

Third, in this process, the first people to lose their jobs will be the subcontracted and non-regular workers this law was supposedly designed to protect. The people who truly need protection under labor law are specially employed workers: delivery riders, taxi drivers, insurance salespeople, and home-study tutors. They remain in an ambiguous position, neither workers nor business operators, and are not even guaranteed the minimum wage.

These are the very people who need a genuine “presumption of worker status” clause. But that clause was omitted from the Yellow Envelope Act (Revised Labor Commission Act). From the standpoint of industrial unions, it is far more efficient to control systematically organized subcontractors than to organize dispersed specially employed workers.

The truth revealed by these three paradoxes is clear. The Yellow Envelope Act (Revised Labor Commission Act) is not a law for the weak, but a tool created by entrenched unions to expand their own influence. Once this law takes effect, companies will be unable to handle bargaining demands from hundreds of subcontractors and will end up sitting down at the negotiating table with industrial unions. Regular workers at large corporations will not make concessions, and companies will ultimately accelerate automation or choose to relocate overseas.

Unorganized non-regular workers will be the first to lose their jobs. Specially employed workers will continue to be left in a legal blind spot, and young job seekers will suffer as companies become increasingly reluctant to make new hires.

The Yellow Envelope Act’s real name is the “Entrenched Interests Expansion Act.” Inside the yellow envelope that supposedly protects workers was, in fact, a blueprint for expanding the power of industrial unions. It is hypocrisy to lump together a large-company employee earning 100 million won a year and a specially employed worker earning 50,000 won a day as the same “workers” and then call for solidarity.

Hea-lim Park, Senior Research Fellow, Center for Free Enterprise (CFE)

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Original title: 노란봉투법 기득권 노조 영향력 확대 위한 '기득권 확장법'

Author: Hea-lim Park

Date: 2025-11-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28248