Robot stocks rally as 'Yellow Envelope Bill' fuels automation fears

The passage of the "Yellow Envelope Bill" in the National Assembly has sparked a surge in robot-related stocks, reflecting investor expectations that companies may accelerate automation to offset rising labor risks.

President Lee Jae Myung, left, speaks during a Cabinet meeting at the presidential office in central Seoul on Sept. 2, in which approved a revision to the Commercial Act enhancing the rights of minority shareholders and a labor bill expanding the bargaining rights of subcontract workers. [JOINT PRESS CORPS]

The passage of the "Yellow Envelope Bill" in the National Assembly has sparked a surge in robot-related stocks, reflecting investor expectations that companies may accelerate automation to offset rising labor risks.

On Aug. 25, a day after the bill, or an amendment to the Trade Union and Labor Relations Adjustment Act, passed the National Assembly, shares in Konic Automation jumped 29.99 percent, HiZen RMN rose 21.71 percent, Samhyun gained 15.75 percent, Wonik Holdings climbed 13.51 percent and KNR Systems added 13.24 percent. Out of 51 listed companies tied to the robot theme, 48 closed higher. The trend has continued into September.

“Following the passage of the 'Yellow Envelope Bill' and a revision of the Commercial Act, robot stocks are showing strength,” said Kim Ji-won, an analyst at KB Securities.

The "Yellow Envelope Bill," approved by President Lee Jae Myung’s Cabinet earlier this month and set to take effect in March next year, strengthens the bargaining power of unions.

The revised law allows subcontracted workers to negotiate directly with parent companies if their working conditions are affected, even without a direct employment relationship. At the same time, it restricts companies from seeking damage claims against unions and union members.

Business groups warn the law could worsen management conditions by opening the door to excessive demands or collective lawsuits from subcontracted workers.

According to Statistics Korea, there were 131 labor disputes in 2024, resulting in 457,000 lost labor days. Korea’s labor productivity remains about 70 percent of the OECD average as of the previous year, raising further concerns.

Market watchers say the rally in robot shares reflects expectations that firms will increasingly turn to automation.

“The strength of robot stocks shows that investors see companies responding to higher labor risks with more automation, which will likely accelerate job losses,” said an industry official.

The trend mirrors what happened after steep minimum wage hikes under the Moon Jae-in administration beginning in 2017.

At the time, kiosk-related stocks spiked amid predictions that restaurant owners would replace staff with machines.

A survey by the Korea Employment Information Service later confirmed that after kiosks were installed, sales and serving staff at Seoul restaurants fell by 11.5 percent, with jobs for workers in their 20s and younger dropping 23.1 percent.

Analysts warn that if kiosks displaced workers in food service, industrial robots could have a much larger impact on manufacturing jobs.

“The 'Yellow Envelope Bill' will likely boost demand for industrial robots and investment in physical AI research and development,” said Jang Young-jae, a professor of Industrial and Systems Engineering at KAIST, citing Hyundai Motor Group’s push to introduce humanoid robots on production lines.

Experts are urging the government to prepare follow-up measures to protect jobs. Job growth is already slowing, with new hires falling from 816,000 in 2022 to 159,000 last year.

“Excessive wage increases led by powerful unions have worsened labor shortages for small and mid-sized firms and intensified youth unemployment,” said Park Young-bum, professor emeritus of Economics at Hansung University. “A law like the 'Yellow Envelope Bill,' which protects only certain union interests, will ultimately reduce quality jobs.”

Jang added that the government should expand vocational training to help low-skilled workers transition into higher value-added roles.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY LEE CHANG-GYUN [seo.jieun1@joongang.co.kr]