🚨 Labor Groups Push for Policy Implementation: Demanding 4.5-Day Work Week & Yellow Envelope Law

Today Korean Economic News | 2025.06.14

📌 Korean Confederation of Trade Unions Pressures Lee Jae-myung Government for Labor Policy Promises

💬 The Korean Confederation of Trade Unions has begun actively demanding that the Lee Jae-myung government implement major labor policies promised during the presidential campaign. Key demands include introducing a 4.5-day work week, passing the Yellow Envelope Law, and strengthening protection for platform workers. The Korean Confederation of Trade Unions stated, "The presidential policy agreement is not just an election promise but a commitment to the people," and urged, "Present specific implementation plans before the new government's 100th day." This shows that labor groups have begun actively monitoring and pressuring the new government's labor policy direction. The government responded, "We recognize the need for labor policy reform, but will pursue it step by step, considering economic conditions and business circumstances comprehensively."

1️⃣ Easy to Understand

As the new government takes office, labor groups are raising their voices to demand that promises made during the election be kept. Especially the '4.5-day work week' and 'Yellow Envelope Law' have become key issues. Let's look at what changes these might bring to our work lives.

First, let's look at the '4.5-day work week.' Currently, most office workers work 5 days and 40 hours per week. The proposal is to reduce this to 4.5 days. Specifically, this could mean working half-days on Fridays or taking every other Friday off. This would mean working about 36 hours per week.

Some foreign countries are already trying this system. In Belgium and Iceland, companies that introduced a 4-day work week actually saw higher productivity. When employees had less stress and better focus, they could work more efficiently in shorter time periods.

The 'Yellow Envelope Law' is a more complex concept. The official name is 'Amendment to the Trade Union and Labor Relations Adjustment Act.' Let me explain why it's called the 'Yellow Envelope' law first. In the past in Britain, when workers went on strike, companies would send lawsuit papers demanding damage compensation in yellow envelopes. So this law protects workers from excessive damage compensation demands when they strike or engage in labor disputes.

Currently in Korea, when workers go on strike, companies often demand billions of won in damage compensation. This is an amount that individual workers cannot afford. If the Yellow Envelope Law passes, this burden could be greatly reduced, helping protect workers' rights.

'Platform worker protection' is also an important issue. Delivery drivers from Baedal Minjok, Uber drivers, and Coupang Flex delivery workers are typical platform workers. Since they work as 'freelancers' rather than regular employees, they have difficulty receiving benefits like industrial accident insurance and employment insurance.

However, there are several obstacles to actually introducing these policies. Companies worry about increased labor costs and decreased productivity, and they feel additional regulations would be burdensome during difficult economic times.

Ultimately, this issue involves a conflict between workers' demands for 'work-life balance' and companies' emphasis on 'business efficiency.' How the new government harmonizes these two aspects will be key going forward.

2️⃣ Economic Terms

📕 4.5-Day Work Week

A 4.5-day work week is a system where workers effectively work only 4.5 days by reducing half a day from the existing 5-day work week.

• Usually operated by working half-days on Fridays or taking every other Friday off.
• Has the effect of reducing weekly working hours from 40 to 36 hours.
• Overseas reports show increased productivity and employee satisfaction.

📕 Yellow Envelope Law

The Yellow Envelope Law is legislation that limits excessive damage compensation claims against workers during labor disputes.

• The official name is 'Amendment to the Trade Union and Labor Relations Adjustment Act.'
• Limits individual workers' compensation responsibility for corporate losses from strikes or labor disputes.
• Evaluated as key legislation for guaranteeing the three labor rights (right to organize, collective bargaining, collective action).

📕 Platform Workers

Platform workers are a new type of worker who receives work through digital platforms.

• Examples include delivery riders, substitute drivers, online instructors, and translators.
• Often classified as independent contractors rather than traditional employment relationships.
• In blind spots regarding social insurance and labor law application, raising the need for protection.

📕 Working Time Reduction

Working time reduction refers to policies that reduce legal or actual working hours.

• Korea introduced a 52-hour work week system in 2018, limiting maximum weekly working hours.
• Can expect improved work-life balance and job creation effects.
• May simultaneously show opposite economic effects like increased productivity and higher labor costs.

3️⃣ Principles and Economic Outlook

✅ Economic Impact of Working Time Reduction

• Let's analyze the impact that introducing a 4.5-day work week will have on the overall economy from multiple angles.

  • First, opposite effects of increased productivity and higher costs are expected. Looking at overseas cases, working time reduction doesn't necessarily lead to decreased production. In Iceland's 4-day work week experiment, productivity actually improved. This was because employee stress decreased and concentration improved, increasing efficiency per unit time. The Belgian government also officially recognized the 4-day work week, evaluating that "better work-life balance leads to higher productivity." However, Korea has limitations for simple application due to its high manufacturing sector proportion and many processes requiring 24-hour continuous operation. Especially small and medium enterprises lacking workforce flexibility may need to hire additional personnel when working hours are reduced. This could increase labor cost burdens and strain business management.

  • Second, changes in consumption patterns and effects on the domestic economy are noteworthy. When working hours are reduced, leisure time increases, potentially creating new consumer markets. Service industry activation in tourism, leisure, and culture is expected. When France introduced a 35-hour work week, travel and restaurant industry sales increased significantly. Korea is also expected to see increased use of shopping malls, movie theaters, and cafes during weekday afternoons or Friday afternoons. This could have positive effects on service industry job creation. However, disposable income might also decrease. If working time reduction leads to salary cuts, overall consumption capacity could actually decrease. Therefore, maintaining wage levels while reducing working hours is an important challenge.

  • Third, effects on the employment market will vary by industry. Theoretically, working time reduction could contribute to increased employment rates through 'job sharing' effects. When existing employees' working hours decrease, new workforce becomes necessary. In Volkswagen's case in Germany, where weekly working hours were reduced to 35 hours, employment actually increased. However, this is only effective in industries where skilled workers can be easily found and automation potential is limited. In fields requiring expertise like manufacturing or IT, there's a higher possibility of responding by increasing existing employees' work intensity or through automation rather than simply adding personnel. Also, for small and medium enterprises, the burden of hiring additional personnel could be large, potentially leading to business downsizing instead.

• For successful working time reduction, maintaining wage levels along with technology investment for productivity improvement must be prerequisites. Also, flexible application considering industry characteristics will be necessary.

✅ Platform Economy and Worker Protection Dilemma

• Let's look at the economic changes and challenges that strengthening platform worker protection will bring.

  • First, new forms of labor are spreading with the rapid growth of the platform economy. After the COVID-19 pandemic, as non-contact services surged, the number of platform workers increased significantly. The delivery market size increased by more than 50% from 17 trillion won in 2020 to 26 trillion won in 2024. People working through platforms like Coupang, Baedal Minjok, and Kakao Taxi are estimated to exceed 1 million. They are creating new employment forms different from the existing regular-irregular worker distinction. With technological advancement, anyone can find work with just a smartphone, forming a new economic ecosystem called the 'Gig Economy.' However, they are in blind spots, not receiving protection from existing labor laws like employment insurance, industrial accident insurance, and severance pay.

  • Second, strengthening platform worker protection may involve side effects of increased costs and innovation decline. If laws are strengthened to treat platform workers the same as regular workers, platform companies' cost burden will increase significantly. This is because they must pay social insurance premiums, paid leave, and severance pay. For delivery platforms, additional costs of over 5 million won per rider annually are estimated. This could lead to delivery fee increases or service reductions. Actually, after California passed legislation (AB5) requiring platform workers to be classified as regular employees, situations arose where Uber and Lyft temporarily suspended services. Excessive regulation could also hinder the development of innovative platform services.

  • Third, new approaches are needed to find balance. The European Union (EU) created separate legislation for platform workers, introducing the concept of 'quasi-workers' as an intermediate form between existing workers and complete freelancers. This provides basic protections like minimum wage, safety guarantees, and social insurance while maintaining employment relationship flexibility. Korea also needs to explore this 'third way.' It would be desirable to create customized protection plans considering platform-specific characteristics and gradually expand the scope of application. Also, platform companies' social responsibility should be strengthened. They should be encouraged to contribute to worker protection through safety equipment support, education and training provision, and support during accidents.

• The platform economy is an unavoidable future trend. Creating a new institutional framework that can protect workers without hindering innovation is the key challenge.

✅ Government Policy and New Paradigm of Labor-Management Relations

• Let's forecast the impact that the Lee Jae-myung government's labor policies will have on future labor-management relations and the economy.

  • First, pro-labor policy direction is expected to create a new turning point in labor-management relations. The Lee Jae-myung government presented 'labor-respecting society' as a campaign promise. This means departing from previous focus on economic growth and business-friendly policies to place greater emphasis on protecting worker rights. This is interpreted as policy will to strengthen workers' voice in Korea where labor union organization rate remains at 12%. However, if such changes are pursued unilaterally, companies' opposition could be strong. Especially small and medium enterprises struggling with COVID-19 and economic recession worry about additional regulatory burdens. The government faces the difficult task of finding balance between worker protection and maintaining corporate competitiveness.

  • Second, whether core legislation like the Yellow Envelope Law passes will determine future labor-management relations. The Yellow Envelope Law is a core issue that labor groups have demanded for over 10 years. If this law passes, workers will be able to engage more actively in labor disputes, changing the balance of power between labor and management. Supporters argue that "Korea's damage compensation level is excessively high compared to other developed countries" and "this is a factor that neutralizes the three labor rights." Actually, Germany and France don't demand damage compensation from simple participants. However, management circles worry that "it could encourage reckless labor disputes" and "ultimately lead to weakened corporate competitiveness." Extreme confrontation between labor and management is expected during this bill's processing, making the government's mediating role important.

  • Third, economic conditions and policy implementation speed control will be key variables. Currently, Korea's economy faces difficult conditions with export decline, domestic demand stagnation, and high interest rates. Hastily pursuing policies that increase labor costs during such times could burden economic recovery. While the government emphasizes "step-by-step and gradual implementation," labor groups pressure with "urgency of promise implementation." Ultimately, sophisticated policy design comprehensively considering economic indicators and corporate situations is needed. Also, flexibility to immediately supplement when side effects appear through careful monitoring of policy effects is important. Developing a 'Korean model' reflecting Korea's special circumstances while referencing overseas cases is key.

• The new government's labor policy will be an important experiment that will determine Korea's social future. If successful, it can present a sustainable growth model, but if it fails, it could cause economic confusion.

4️⃣ In Conclusion

The Korean Confederation of Trade Unions' demand for policy implementation shows that Korean society stands at an important crossroads transitioning to a new labor paradigm. The 4.5-day work week, Yellow Envelope Law, and platform worker protection are fundamental questions about values and directions our society should pursue, beyond simple policy issues.

Such changes are unavoidable historical trends. Globally, work-life balance, worker rights protection, and responses to new employment forms have become major topics. Korea also needs to modernize its labor system to match these global trends.

However, hasty implementation could create side effects. Imposing excessive burdens on companies during difficult economic times could lead to employment reduction or investment contraction. The difficulties of small and medium enterprises and self-employed people must be fully considered.

What's important is that worker protection and maintaining corporate competitiveness are not opposing relationships. Appropriate workplace environment improvements can help the entire economy through productivity enhancement and innovation. As overseas cases show, working time reduction or strengthening worker rights don't necessarily lead to economic losses.

The government should faithfully play a mediating role, leading dialogue and compromise among stakeholders. It should create balanced policies that accept labor groups' demands while also considering management's concerns. Flexibility to quickly supplement problems that appear during policy implementation is also important.

Above all, it's important to communicate so that people can fully understand and empathize with the necessity and direction of such changes. Labor policy is not just an issue for some groups but directly affects all citizens' lives.

Ultimately, this policy discussion is an important moment of choice about what kind of future our society wants and how to balance growth and distribution. It's time for all social members to gather wisdom and create sustainable and inclusive development models.