A government-led plan to allow small and medium-sized enterprises and small business owners to engage directly in collective bargaining with mid-sized and large companies is raising concerns about growing turmoil in industrial sites. The Fair Trade Commission (FTC) said it discussed a "system reform plan to strengthen the bargaining power of the weak" at a Cabinet meeting Tuesday, which would exclude collective bargaining by SMEs and small business owners from collusion regulations. The move appears to be accelerating as follow-up work to President Lee Jae-myung's remarks on collective bargaining and the right to organize for small business owners, made at a meeting hosted by the Korean Confederation of Trade Unions in April this year.
The FTC decided that when bargaining participants are small enterprises or small business owners, they will be collectively exempted from collusion regulations for five years without separate review, requiring only notification to the FTC. Accordingly, small enterprises and small business owners will be able to negotiate prices, transaction conditions, transaction volumes and transaction regions with franchise companies, delivery app headquarters and large companies without concerns about collusion. Mid-sized enterprises with industry-specific sales of 1.5 billion to 180 billion won will also be able to engage in collective bargaining with large companies if they meet certain requirements.
Protecting the economically weak is important. This is especially true given the reality in which small business owners and small enterprises face threats to their survival amid the unprecedented strong performance of the semiconductor industry. However, protection that goes so far as to shake the order of the market economy is problematic. The FTC's plan raises concerns about various side effects, including distortion of distribution order, infringement of consumer interests due to price increases, and amplified uncertainty in corporate management. The government says it can respond with measures such as "collective bargaining prohibition orders" and "the establishment of subordinate regulations under the law" if problems arise after implementation, but these are likely to amount to no more than belated remedies.
The government and ruling party need to be more cautious about spreading collective bargaining rights across the entire industry. Even now, industrial sites are at a dangerous level of confrontation between labor and management, and between prime contractors and subcontractors, due to the impact of the Yellow Envelope Law, which ignores reality. In this situation, a revised Franchise Business Act that recognizes the collective bargaining rights of franchise owners has already passed the National Assembly and is set to take effect at the end of the year. A proposed Online Platform Act for platform users and a revised Small and Medium Enterprise Cooperatives Act allowing SMEs price bargaining rights have also been introduced. It is by no means desirable for the expansion of collective bargaining rights for small business owners to become yet another source of conflict, following the Yellow Envelope Law.
