Subcontracts Demand Bonuses from Main Contractors
where subcontracting levels can exceed 60%—labour groups have already begun pressing similar claims.
Rising tensions between subcontract workers and major industrial companies in South Korea are highlighting growing concerns over the potential impact of the country’s newly implemented “Yellow Envelope Act.” Labour groups are increasingly demanding collective bargaining with main contractors, raising fears among industry leaders that the legislation could disrupt long-established subcontracting systems.
At Hanwha Ocean’s shipyard in Geoje, South Gyeongsang Province, members of the Korean Confederation of Trade Unions’ Metal Workers’ Union recently staged a protest near the facility’s west gate. Around 20 union members gathered early in the morning, calling for performance bonuses to be extended not only to direct employees but also to workers employed by subcontract firms, including food service provider Welliv. The group has been holding a sit-in at the site since late last month, arguing that the shipbuilder should provide bonuses to all subcontracted workers.
The protests come as the Yellow Envelope Act takes effect, expanding labour protections and allowing subcontract workers greater scope to seek negotiations with primary contractors. While the Ministry of Employment and Labor traditionally regards wage demands as outside the scope of collective bargaining between subcontractors and main contractors, unions are increasingly pushing for pay increases and performance bonuses.
Industry representatives say such demands could significantly increase costs if companies are required to extend benefits negotiated with direct employees to subcontract workers across multiple tiers of the supply chain. In sectors such as shipbuilding, construction and automotive manufacturing—where subcontracting levels can exceed 60%—labour groups have already begun pressing similar claims.
Some labour organisations have also signalled plans to pursue negotiations with large construction firms and other industrial clients. The National Construction Workers’ Union, for example, has announced plans to request talks with around 100 major contractors, arguing that primary companies should take greater responsibility for subcontract workers’ safety, pay and working conditions.
Business groups are particularly concerned that similar disputes could affect strategically important industries such as semiconductors. Labour representatives have indicated they may seek negotiations with companies involved in projects like the Yongin Semiconductor Cluster, where contractors are building facilities for SK hynix. Industry sources warn that construction delays caused by labour disputes could weaken South Korea’s competitiveness in global semiconductor manufacturing.
Economists and legal experts say the uncertainty surrounding the new legislation may also affect hiring and investment decisions. Some suggest companies may accelerate automation or advanced technologies to reduce exposure to labour disputes.
Observers note that South Korea’s subcontracting model—based on specialised suppliers and contractors—has long supported the global competitiveness of its industrial sectors. They warn that significant changes to the balance of responsibilities between contractors and subcontractors could have far-reaching implications for the country’s manufacturing ecosystem.
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