"Who Is This Reform For?" Government Organization Overhaul Sparks Turmoil in the Public Sector

Financial Authorities Set for Dissolution and Separation Under Government Reorganization
Financial Supervisory Employees Strongly Oppose: "Financial Consumer Protection Will Be Undermined"
Concerns Grow Over Policy Confusion as Industrial and Energy

Members of the Financial Supervisory Service Labor Union and employees are condemning the government’s organizational reform plan to designate the Financial Supervisory Service as a public institution and to separate the Financial Consumer Protection Agency from the Financial Supervisory Service in the lobby of the Financial Supervisory Service in Yeouido, Yeongdeungpo-gu, Seoul on the 9th. Photo by Yonhap News Agency

The first government organization reform bill under the Lee Jaemyung administration has been made public, causing widespread repercussions throughout the public sector. At the financial supervisory authorities, which are facing organizational dissolution and separation, there is significant unrest, with employees staging large-scale protests.

In Sejong, concerns about policy confusion are already mounting on the ground as industrial and energy policies are being split. The Korean Nuclear Society issued a statement criticizing the establishment of the "Ministry of Climate, Energy and Environment," which is being promoted under the pretext of integrated management of climate crisis response and energy policy, saying, "It carries a structural contradiction that undermines the foundation of nuclear policy and seriously damages the nuclear power ecosystem."

On the morning of the 9th, about 700 employees of the Financial Supervisory Service held a rally in front of the main gate of the Financial Supervisory Service in Yeouido, Seoul, to oppose the organizational reform plan. This protest was in response to the government's announcement on the 7th of a reform plan to designate the Financial Supervisory Service as a public institution and to separate and make independent the Financial Consumer Protection Agency. Jeong Seop, acting chairman of the Financial Supervisory Service labor union, argued, "The functions of supervising the soundness of financial companies and protecting consumers must be organically connected, but separating them will not strengthen financial consumer protection, but rather weaken it," and insisted, "This organizational reform plan must be withdrawn."

There was also significant backlash against the fact that Lee Chanjin, Governor of the Financial Supervisory Service, and Lee Sehun, Senior Deputy Governor, effectively accepted the organizational reform plan through their remarks the previous day. Governor Lee said, "I regret the current organizational reform plan," but added, "We will strive to improve personnel exchanges and employee treatment between the Financial Supervisory Service and the Financial Consumer Protection Agency in the future."

The Financial Services Commission, which is being dissolved for the first time in 17 years, is also experiencing an unsettled atmosphere. The government and ruling party have decided to transfer the core domestic financial policy functions of the Financial Services Commission to the Ministry of Economy and Finance, which is being separated from the Ministry of Strategy and Finance, and to reorganize the remaining organization as the Financial Supervisory Commission. As the financial policy functions move to the Ministry of Economy and Finance, more than half of the staff may have to relocate to Sejong City. President Lee Jaemyung has recently praised the Financial Services Commission several times, saying it "does a good job," so employees had hoped the organization would be maintained, but disappointment was evident after the latest announcement. An official from the Financial Services Commission said, "As even the slightest hope has disappeared, many employees are disheartened."

Separate from employee opposition, the passage of related bills in the National Assembly is also expected to face difficulties. To reorganize the financial authorities, not only the Government Organization Act but also related laws such as the Banking Act and the Financial Supervisory Commission Establishment Act must be revised in succession. The government and ruling party plan to pass the Government Organization Act and the Financial Supervisory Commission Establishment Act together at the National Assembly plenary session on the 25th. However, the fact that Assemblyman Yoon Hanhong of the People Power Party, who is the chairman of the National Policy Committee that will handle the Banking Act and the Financial Supervisory Commission Establishment Act, is a major variable. Assemblyman Yoon publicly expressed his opposition to the reform plan, stating, "It is a hasty plan made behind closed doors, excluding the voices of the financial authorities and those on the ground, who are the subjects of the reform."

The atmosphere in Sejong City is also tense. With the government finalizing a reform plan to separate industrial and energy policies for the first time in 32 years, Korea Hydro & Nuclear Power, a state-run nuclear power company, will inevitably face a dual or even triple reporting system, having to report to at least two or three ministries simultaneously. A Korea Hydro & Nuclear Power official said, "We will have to report operational issues to the Ministry of Climate, and exports to the Ministry of Trade, Industry and Energy," adding, "Since each ministry has different requirements and perspectives, the company will inevitably bear a double burden."

Korea Hydro & Nuclear Power has already had to prepare for simultaneous National Assembly audits by the Trade, Industry, Energy, SMEs and Startups Committee and the Science, ICT, Broadcasting and Communications Committee (for nuclear power R&D and safety regulation). There are growing concerns that if the Environment and Labor Committee is added due to this reform, work could be paralyzed for several weeks just by responding to the National Assembly audits.