The Industrial Sector Struggles Under Triple Risks: Yellow Envelope Act, Oil Prices, and Tariff Pressure

Emergency Management in the Industrial Sector Amid Iran Crisis
Internal Conflict Adds Fuel to the Fire
On the Brink of a General Strike Amid Bonus Disputes

The industrial sector is currently facing a "triple crisis" of labor-management conflict, rising international oil prices, and tariff pressure from the United States. As oil prices surge due to instability in the Middle East, major companies are contending not only with wage negotiations but also a worsening trade environment, causing management burdens to escalate rapidly.

According to the industry on March 9, companies, especially those that import crude oil or are export-oriented, have activated emergency management systems across the board and are stepping up monitoring of international oil prices and exchange rates as part of their response measures. South Korean companies such as Samsung Electronics, SK, Hyundai Motor Group, and LG Electronics are currently operating 140 overseas subsidiaries in more than 10 Middle Eastern countries, and these companies are closely monitoring the situation to prepare for the possibility of the conflict escalating or potential disruptions to logistics.

Meanwhile, many domestic companies are also grappling with internal conflicts. The Joint Struggle Headquarters, composed of Samsung Electronics' union, the Samsung Electronics Branch of the Super Enterprise Union, the National Samsung Electronics Labor Union, and the Samsung Electronics Union Donghaeng, will hold a strike approval vote among all union members for ten days, from today through the 18th. If the union secures majority approval in this vote and obtains the right to strike, it plans to carry out a general strike in May.

In July 2024, members of the National Samsung Electronics Labor Union held a rally for victory in the general strike at the Semicon Sporex on Samsung Electronics Giheung Campus in Yongin, Gyeonggi Province. Photo by Yonhap News Agency

Labor and management are at odds over the calculation criteria for the performance bonus system, known as the Over-Profit Incentive (OPI), and the abolition of the payment cap. The union is demanding that the current Economic Value Added (EVA) calculation be changed to focus on operating profit, and that the payment cap—currently set at a maximum of 50% of annual salary—be abolished, while management insists on maintaining the cap. Tensions have risen further as multiple rounds of negotiations have ended in deadlock. The union has even announced through a YouTube broadcast that it will manage a list of those who do not participate in the strike, and that employees who do not cooperate with the strike may be subject to forced transfer or dismissal.

If the general strike proceeds, it will be the company’s second strike since its founding and could impact semiconductor production. An industry official commented, "In a situation where global competition for semiconductor leadership is intensifying, Samsung Electronics is maintaining its technological edge by enduring losses in the foundry division while relying on memory profits. It is concerning that the union has chosen a brinkmanship strategy that is closer to mutual destruction rather than coexistence in such a grave and complex crisis."

Members of the Kia Motors Branch of the Korean Metal Workers' Union held a press conference on August 20, 2020, in front of the Supreme Court in Seocho-gu, Seoul, regarding the Supreme Court ruling on the ordinary wage lawsuit. On that day, the Supreme Court upheld the lower court's partial ruling in favor of the plaintiffs in the wage claim lawsuit filed by Kia Motors workers against Kia Motors. Photo by Hyunmin Kim

Hyundai Motor is also embroiled in legal disputes with its labor union. At the end of last year, 26,189 members of the Hyundai Motor Branch filed a lawsuit demanding an expanded scope for ordinary wage calculations, initiating full-scale legal action. The union is demanding: ▲ inclusion of weekly holiday allowances and paid holidays in ordinary wages, and ▲ full inclusion of the regular bonus, amounting to 750%, in the calculation. Despite the fact that labor and management already expanded the scope of ordinary wages through an agreement last year, the union’s demands appear to be intensifying, especially with the implementation of the Yellow Envelope Act (Articles 2 and 3 of the Trade Union Act) coming into effect on the 10th.

The problem is that, due to the implementation of the Yellow Envelope Act, issues that previously had to await court decisions as "rights disputes" are now entering the realm of labor-management negotiations and strikes. Some in the industry say that the union's lawsuits constitute excessive demands. A business representative stated, "Hyundai Motor is already fully paying the ordinary wages it is required to pay, so these demands seem somewhat excessive. Such demands could provoke labor-management conflict and increase companies' cost burdens."

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