New Government Inauguration: Key Contents and Prospects of HR Policy

When candidate Lee Jae-myung was inaugurated as the 21st president of South Korea on June 4, the HR-related policies he proposed also drew attention. His policies can be summarized as “building fair labor relations” through major measures such as the Yellow Envelope Act, the ban on the comprehensive wage system, and the enactment of the Basic Act on the Guarantee of Workplace Rights, and as “modernizing the labor market” through the 4.5-day workweek, extending the retirement age, and the wage distribution system.

On June 4, 2025, candidate Lee Jae-myung was inaugurated as the 21st president of the Republic of Korea, marking the beginning of a “government of popular sovereignty.” The Lee Jae-myung administration is facing the major tasks of “restoring democracy,” triggered by the state of emergency on December 3 last year, and “responding to changes in the global economic environment that have intensified since Trump’s election.” Relying on the power of its massive ruling party, the new government, now in power, is in a position where it has laid the foundation for stronger leadership and more rapid policy implementation than any previous administration. Therefore, the pledges and policies put forward by the new government are highly likely to be feasible, and since these policies are expected to have a considerable impact on future corporate operations, careful review and preparation are necessary. Since the overall blueprint for the new government’s HR policies has not yet been presented in detail, this paper will examine the contents of policies that are highly likely to be pursued, focusing on those that President Lee emphasized during his candidacy or explicitly stated as campaign promises, and review what companies should prepare for going forward.The new government's HR policy can be summarized in broad terms as "building fair labor relations" and "modernizing the labor market." Given that the foundation of President Lee Jae-myung’s policy vision is closer to a “pragmatic progressive” than an “ideological progressive,” as opposed to the “86 generation,” it can be understood as an attempt to strengthen the protection of vulnerable workers on one hand, while on the other hand build a competitive labor market ecosystem. Policies corresponding to the former include the so-called Yellow Envelope Act, the prohibition of the comprehensive wage system, and the enactment of the Basic Act on the Guarantee of Workplace Rights, while policies corresponding to the latter include the 4.5-day workweek, extension of the retirement age, and the wage distribution system.

Yellow Envelope Act

The Yellow Envelope Act, referring to amendments to Articles 2 and 3 of the Trade Union Act, is one of the key campaign promises that President Lee Jae-myung repeatedly emphasized as a legislative necessity. The main contents of the bill are to expand the scope of recognition of employers, particularly the parties to collective bargaining, in collective labor-management relations, and to broaden the subject matter of labor disputes, with the primary focus on limiting the scope of liability for damages against labor unions and individual workers arising from strike actions. In particular, even if the party to the employment contract is not the contracting party, anyone who has a substantial and concrete controlling and deciding power over the employee’s working conditions is recognized as the employer, and the legislation aims to even recognize the legitimacy of strikes based on the employer’s unfair labor practices or failure to implement collective agreements.Although legislation passed in the 21st and 22nd National Assemblies was blocked by the right to request reconsideration on grounds such as encouragement of illegal strikes, suppression of business management activities, and infringement on corporate property rights, but under the Lee Jae-myung administration, legislation can now be enacted at any time. Therefore, companies with a labor-management relationship system based on the primary-subcontractor structure need to review the scope of their actual controlling power and prepare in advance for the impact of expanding the scope of labor disputes.

Comprehensive wage system: A system that, when concluding a labor contract prohibiting overtime, does not separately calculate allowances for overtime work such as extended, night, and holiday work, but instead pays a predetermined fixed amount of wages in a lump sum. This is called the comprehensive wage system. This system is not explicitly stated in law, and it has mainly been used in research and development, sales, and monitoring or intermittent work—fields where calculating working hours is not easy—and it has been widely applied in corporate practice through case law and custom. It is true that the use of the comprehensive wage system can improve the efficiency and predictability of labor cost management through an agreement between the company and individual workers, and it can also help secure flexibility in managing working hours. However, applying the proposed comprehensive wage system is not appropriate, and in production-related positions in small and medium-sized enterprises where workers have relatively weak bargaining power, it may lead to negative consequences such as suppression of wage increases and forced long working hours.In practice, the comprehensive wage system clearly has distinct advantages and disadvantages depending on the type of work or job category in corporate HR operations, and it is not necessarily disadvantageous only to employees; therefore, many arguments opposing the legal prohibition are also being raised. Therefore, rather than a blanket abolition of the comprehensive wage system, the possibility cannot be ruled out that the system may be reorganized at the level of granting or prohibiting limited application to specific industries or providing guidelines for their operation.

Basic Act on the Guarantee of Workplace Rights: The new government has stated that it will enact a basic law to guarantee the “right to the workplace” of all workers (employed persons), including self-employed individuals, special employment workers, and platform workers, regardless of the title or form of the contract. The Basic Act on the Guarantee of Workplace Rights shall, among other major contents, include the state's obligation to guarantee the following rights for all workers: ▲ The right to not be subjected to discrimination or harassment during the course of work; ▲ The right to have their private life and personal information protected; ▲ The right to work in a safe and healthy environment; ▲ The right to receive fair compensation for the labor performed; ▲ The right to receive protection and support for work-life balance, including pregnancy and childbirth; ▲ The right to receive social security benefits such as employment insurance, industrial accident insurance, health insurance, and national pension; ▲ The right to receive support for lifelong education and vocational development; and the state's obligation to guarantee the protection of these rights through individual legislation, among other key contents. However, if the scope of the application of the Labor Relations Act is expanded by introducing the concept of “presumption of employment” when the existence of an employment relationship is unclear, issues such as consistency with the current Labor Standards Act system and the transfer of the burden of proof must remain to be carefully examined during the legislative process, so it is necessary to watch the trend of future legal amendments.

The 4.5-day workweek and reduced working hours: President Lee Jae-myung’s pledge for a 4.5-day workweek aims to achieve a substantial reduction in working hours, improve work-life balance, and prevent death from overwork. Since it has declared that Korea’s annual working hours will be reduced to below the OECD average of 1,742 hours by 2030, the focus is on reducing actual working hours. Also, since a drop in wages due to reduced working hours can offset the meaning of such reductions, the new government appears determined to pursue “reduced working hours without wage loss.”In this regard, Gyeonggi Province is conducting a pilot project for a 4.5-day workweek through the Job Foundation and other organizations, and is providing wage compensation of 260,000 won per month per worker to companies that adopt the system.

However, for this system to succeed, it must be premised on improved corporate productivity in order to achieve its intended goals, so attention is focused on whether consideration can accompany the business community’s concerns about difficulties in finding workers for small and medium-sized enterprises and support for improving productivity.

Extending the retirement age is an unavoidable situation to respond to changes in the social structure, such as the aging population resulting from the extension of the legal retirement age and the depletion of the national pension fund, including raising the pensionable age. This is not a problem unique to our country, and a considerable number of OECD countries are improving policies related to retirement age. In Japan, the legal retirement age is 60, but it is stipulated that employment must be guaranteed until 65 if the worker wishes to do so, while in France, alongside pension reform, it is currently preparing a system to extend the retirement age from the current 62 to 64 by 2030. Germany is also working to raise the current retirement age of 66 to 67 by 2029, and countries such as the United States, the United Kingdom, Australia, Canada, and New Zealand have abolished the retirement system altogether. The way OECD countries are responding appears to be intended to delay the timing of workers leaving the labor market, thereby maintaining the size of the economically active population and extending the contribution period to public pensions. However, extending the retirement age may negatively affect jobs for young people, and the need for senior workers may vary by industry. Therefore, social discussion and consensus-building processes to reconcile the sharply divided interests among different generations and industries are extremely important, and it is judged that considerable time and effort will be required to improve the related systems.

The introduction of the wage distribution system: The wage distribution system of the Lee Jae-myung administration is intended to eliminate unreasonable wage disparities that arise across various dimensions, such as company size, region, gender, and employment type, and its philosophical foundation can be seen in the principle of equal value labor and equal pay. In particular, the excessive wage gap among workers engaged in similar jobs within the primary-subcontractor structure entrenches the dual structure of the labor market, restricts normal labor mobility, and acts as a cause of distortion in the rational determination of wages. To address these issues, previous governments have continuously promoted discussions on a job-based pay system in the public sector and have implemented various policy and institutional support measures to expand job-based pay. Nevertheless, amid the absence of standard wage values based on job-specific market data, the introduction and spread of job-based pay in private companies were limited.To address this, the new government should transparently disclose information about wages by length of service, job, and rank to resolve information asymmetry in the labor market and to establish democratization of the wage-setting structure. In this case, not only will the standards for wage negotiations become clearly established, but the reality of the wage discrimination structure will also be exposed, potentially prompting efforts to address the imbalance through negotiations between employers and subcontractors. However, wages are, by their very nature, a form of corporate secrecy, and due to the contractual structure based on a principal-subcontractor relationship, fair competition itself is impossible. In the current situation, where the immediate economic crisis must be overcome first, the introduction of this system appears to require considerable deliberation and preparation.

To establish a labor environment, it proposes implementing a “gender labor disclosure system” throughout the entire process, from hiring to retirement. In addition, various policies are being proposed to amend the Fixed-Term Employment Act to specify remedies for protecting the rights of young part-time workers, and to strengthen labor rights protection for vulnerable groups by providing prompt, free legal services when human rights violations occur in youth labor. Meanwhile, the plan also reflects provisions for introducing flexible and reasonable work systems, such as the annual savings account system for working hours, which allows accumulated overtime to be used for long-term leave, and grants the right to apply for converting full-time work into part-time while retaining a regular position, thereby supporting work-life balance. It also includes policies to expand time-selective regular employment and telecommuting during childcare periods.

The Lee Jae-myung administration, which calls itself a centrist conservative and sought to expand toward the centrist electorate, shows a characteristic of wanting to pursue both the principles of labor-friendly policies that the existing Democratic Party has promoted while simultaneously pursuing reasonable systems and policies to ensure labor market flexibility and corporate competitiveness. Therefore, HR personnel in companies should, rather than making assumptions about the direction and vision of the new government’s labor policies from a uniform standpoint, examine the specific details of the HR policies that have actually been legislated and are being implemented, and prepare a calm response based on an understanding of the purpose and intent of each policy.

In addition to other anticipated policies, the new government has proposed enacting the “Fair Hiring Act” to eradicate hiring corruption, expanding and reforming the system so that not only the hiring procedures but also the fairness of the content can be guaranteed, and implementing the “Gender Labor Disclosure System” throughout the entire process from hiring to retirement to establish a fair labor environment. In addition, various policies are being proposed to amend the Fixed-Term Employment Act to specify remedies for protecting the rights of young part-time workers, and to strengthen labor rights protection for vulnerable groups by providing prompt, free legal services when young workers’ labor rights are violated. Meanwhile, policies are also reflecting the introduction of a long-term work hour savings account system, allowing workers to use their remaining days off for long-term leave after accumulated overtime, and granting them the right to apply for a shift change from full-time to part-time while retaining their regular employment, thereby supporting work-life balance. At the same time, policies are also reflecting the implementation of flexible and reasonable work systems, such as time-selective regular employment and expanded telecommuting during childcare periods.

The Lee Jae-myung administration, which calls itself a centrist conservative and sought to expand toward the centrist voter base, shows a characteristic of wanting to pursue both the principles of labor-friendly policies that the existing Democratic Party has promoted while simultaneously pursuing reasonable systems and policies to ensure labor market flexibility and corporate competitiveness. Therefore, rather than uniformly assuming the direction and vision of the new government’s labor policy from a single standpoint, HR professionals in companies need to calmly prepare for responses by examining the specific details of the HR policies that have actually been legislated and are being implemented, and by understanding the purpose and intent of each policy.

출처: HR Insight 2025년 7월호 https://www.hrinsight.co.kr/view/view.asp?in_cate=109&bi_pidx=38068