President Lee Jae-myung's discussion of "small business solidarity rights" during his meeting with the Korean Confederation of Trade Unions (KCTU) is interpreted as officially calling for revision of the current Fair Trade Act, which prohibits such actions. While he previously pledged to guarantee solidarity rights for small and medium enterprises during the 20th and 21st presidential elections, the initiative was not properly pursued. With the ruling party now holding a majority of seats, observers expect the revision of current law to accelerate. The Fair Trade Commission (FTC) is preparing to draft an amendment to the Fair Trade Act by the first half of this year.
"Small business owners should also be allowed collective bargaining, and at minimum, solidarity rights should be granted," President Lee said at a meeting with KCTU at Cheong Wa Dae on Saturday. Specifically, he added, "We should give them opportunities to negotiate collectively—suppliers with suppliers, franchise stores with franchise stores, or branches with branches—depending on the issue."
Under the current Fair Trade Act, collective action by small-scale businesses against large corporations is classified as "collusion." During the last presidential election, President Lee pledged to grant solidarity rights to SMEs supplying to large corporations so they could have bargaining power. The Democratic Party of Korea had also made this pledge during the 2022 presidential election, but it was not seriously pursued after the party lost that race.
However, with the ruling Democratic Party now holding a majority in the National Assembly, the Fair Trade Act amendment is expected to gain momentum. The FTC is also pursuing measures to exempt certain joint actions among small business operators that have been classified as "collusion." The intent is to view actions such as small business owners or franchisees forming groups to negotiate prices, fees, and trade terms with headquarters as "bargaining power supplements" rather than competition restrictions or collusion.
The commission is also reviewing ways to institutionalize the right to form associations and bargaining rights for franchisee councils and dealer associations. "We are looking at ways to exclude economically weaker parties from the scope of Fair Trade Act application," an FTC official said. "The purpose is to guarantee small-scale business operators their fair share."
If solidarity and bargaining rights are granted to small business owners who have responded individually until now, their negotiating power is expected to strengthen significantly. "Please understand this as meaning that representation of vulnerable groups' interests should be strengthened," Presidential Spokesperson Jeon Eun-su said. "We are reviewing ways for franchise store owners and suppliers to negotiate on equal footing with franchise headquarters." Some have raised concerns that the burden on industries and corporations could increase.
President Lee also reiterated the issue of labor market dualism. Citing the side effects of the current Fixed-Term Employment Act, he pointed out, "Because of the legal provision requiring conversion to permanent employment after two years, companies cut contracts at exactly one year and eleven months and absolutely refuse to extend them beyond two years, which actually forces unemployment." He added, "What was meant to protect workers has essentially become a 'forced abandonment law.'" He said, "I hope we can think about how to solve this problem pragmatically."
He also requested that KCTU take a more active role in social dialogue to address these issues. "If possible, don't act separately—please move together with FKTU and KCTU," he urged, calling for cooperation between the two major labor federations. KCTU Chairman Yang Kyung-soo also responded positively to participating in social dialogue to secure quality jobs for young people and prepare for a super-aged society. "It is necessary to establish collective labor-management relations and discussion structures," Yang said. "I want to emphasize that cross-enterprise bargaining is absolutely necessary to develop practical alternatives."
Additionally, Chairman Yang requested significant increases in the minimum wage, recognition of worker status for special employment and platform workers, and the public sector's role as a model employer.
President Lee's meeting with KCTU came 17 days after his meeting with the Federation of Korean Trade Unions (FKTU) on April 24. At that time, President Lee emphasized, "I believe it is important that the three basic labor rights—the right to organize, collective bargaining, and collective action—are properly guaranteed for workers."
