No 'bargaining tsunami' under revised labor law, ministry says

100 days after revised union law took effect, 1,161 subcontractor unions have sought talks with 439 prime contractors; Hanwha Ocean case raises questions about cafeteria and support workers

Members of the Korean Confederation of Trade Unions' metal workers union rally near Hyundai Motor Group's headquarters in Seocho-gu, Seoul, on April 15, calling for prime contractors to bargain with subcontractor unions. [Newsis]

The Ministry of Employment and Labor said Monday that the feared "bargaining tsunami" and indiscriminate fragmentation of collective bargaining have not materialized in the 100 days since the revised Trade Union Act — commonly known as the "yellow envelope law" — took effect.

The ministry also reaffirmed its position that prime contractors can be recognized as employers even in support-service areas such as cafeterias, if they exercise substantive control over workers' conditions — a stance prompted by a recent controversy surrounding a Hanwha Ocean subcontractor case.

According to the ministry's "100-Day Status Report and Future Plans" released Monday, 1,161 subcontractor unions representing approximately 164,000 members demanded collective bargaining with 439 prime contractor workplaces between March 10 and June 19.

100 days of prime-subcontractor bargaining: 'No tsunami'

[Provided by the Ministry of Employment and Labor]

Bargaining demands were heavily concentrated in March, when 363 prime contractors received requests, before slowing sharply to 42 in April and 23 in May, suggesting the situation is stabilizing. The average number of bargaining demands per prime contractor stood at 2.6. The ministry said this data showed that the "bargaining tsunami" warned of by business groups before the law took effect had not come to pass.

Among prime contractors that received bargaining demands, 249 (56.7 percent) were in the private sector and 190 (43.3 percent) in the public sector. By union affiliation, 47.0 percent of the unions that filed demands belonged to the Korean Confederation of Trade Unions, 43.6 percent to the Federation of Korean Trade Unions, and 9.4 percent were unaffiliated.

The ministry said bargaining procedures are also advancing steadily. Of the 439 prime contractors that received demands, 42 voluntarily posted public notices without seeking a ruling from the Labor Relations Commission, while 141 went through the commission's adjudication process. Of those, 103 prime contractors were recognized as employers, and 54 of the 71 that had received rulings are now proceeding with the bargaining-channel unification process.

A total of 96 prime contractors have so far entered the bargaining-channel unification process. Of these, 51 are in discussions over bargaining agendas and schedules, while 10 — including Incheon Metropolitan Medical Center — have already moved into full bargaining, including initial meetings. The ministry said that, given the early stage of implementation, prime-subcontractor bargaining is proceeding in line with the procedures set out in the law.

The ministry also said the separation of bargaining units had not expanded to the degree that had been feared. Of 29 prime contractors whose cases were reviewed by the Labor Relations Commission, only 12 were granted unit separation. Separation by business division accounted for the majority at nine cases, while separation by umbrella union federation applied in two cases and separation by individual union in one. The average number of bargaining units at workplaces granted separation was 2.2, and the ministry said no excessive fragmentation of bargaining units had been observed.

Cafeterias as bargaining targets? Ministry says real control is the test

Concerns have grown that the ministry's interpretation could extend prime contractors' bargaining obligations to support-service operations. In response, the ministry said the Hanwha Ocean ruling is consistent with its interpretive guidelines.

The National Labor Relations Commission had earlier recognized Hanwha Ocean as an employer — on issues of industrial safety and working environment — in a case involving a subcontractor union whose members operated the company's cafeteria, laundry room and commuter bus services. The Korea Employers Federation pushed back, arguing that the ministry's interpretive guidelines had cited factory cafeterias as a representative example of operations that do not constitute structural control over subcontractor unions. The federation warned that extending bargaining obligations beyond direct production relationships to support functions would cause widespread disruption across industries.

At Hyundai Motor, the controversy has deepened as unions representing not only in-house subcontract workers but also cafeteria staff, security personnel and sales-affiliate workers have filed bargaining demands against the prime contractor.

A ministry official said Monday, however, that employer status can be recognized when a company holds a position that allows it to substantively and specifically control or determine workers' conditions. The official also said the ministry's interpretive guidelines contain no language stating that factory cafeterias fall outside the scope of structural control over subcontractor unions.

The official said the Labor Relations Commission's ruling took into account that authority over improving aging facilities, installing safety equipment and enhancing the working environment was concentrated in the prime contractor — not merely routine operational instructions. "The cafeteria example in the interpretive guidelines concerns general directives such as requiring meals to be prepared and served at set times," the official said. "That is fundamentally different from recognizing substantive control over industrial safety and working-environment improvements."

Employment and Labor Minister Kim Young-hoon said the bargaining tsunami and indiscriminate fragmentation that some had feared since the revised law took effect have not materialized, and that labor and management on both sides of the prime-subcontractor relationship are calmly preparing for negotiations in accordance with legally prescribed procedures, including Labor Relations Commission rulings and bargaining-channel unification. "We hope that management will engage actively in direct bargaining once the Labor Relations Commission has issued its ruling, rather than waiting for a court decision," Kim said.

fact0514@heraldcorp.com