South Korean businesses anticipate unprecedented labor-management tensions in 2026. A recent survey by the Korea Enterprises Federation reveals that 72.9% of companies expect relations to worsen compared to 2025. Moreover, this marks the highest level of concern in the 2020s, driven by upcoming legislative changes and aggressive union demands.
Key Driver: The Yellow Envelope Act Takes Effect
The controversial Yellow Envelope Act amendments to the Trade Union and Labor Relations Adjustment Act comes into force in March 2026. This law expands union rights by allowing strikes against parent companies in subcontracting disputes and broadening bargaining subjects.
Companies fear major side effects. Specifically, 64.2% predict heightened site instability from increased actions against originals, while 58.3% foresee prolonged negotiations. Additionally, sectors like manufacturing and shipbuilding, reliant on outsourcing, face the biggest risks.
Union Demands Intensify
Unions push aggressively for changes. Top issues include extending mandatory retirement age (cited by 49.7% of firms), higher performance bonuses treated as wages (33.8%), and more hiring (26.5%).
Broader calls emerge for reduced working hours, such as a 4.5-day workweek, which 73.5% of companies view as the biggest burden. Statutory retirement extensions worry 70.2%. These demands clash with efforts to control costs amid global competition.
KEF officials note this pessimism as the decade’s peak, urging dialogue to stabilize relations. However, business groups like the Federation of Korean Industries warn of potential “industrial paralysis” from endless disputes.
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