[Government Affairs in] Aftermath of Ministry Reorganization Begins... Uncertainty Over Size and Personnel Decisions

From January Next Year, Dual System of Ministry of Strategy and Finance and Ministry of Planning and Budget
Focus on Director-General Positions and Size of the New Ministry of Planning and Budget
Close Attention to the Creation and Structure of

As the government finalizes its plan to restructure ministries by splitting the Ministry of Economy and Finance into the Ministry of Finance and Economy and the Ministry of Planning and Budget, there is much speculation within the public sector about the yet-to-be-determined details. With the reorganization set to take effect as early as next year, the placement and personnel structure of the new Ministry of Planning and Budget, the restoration of the financial vice minister system in the Ministry of Finance and Economy, and the distribution of roles have emerged as the most pressing issues among civil servants. Throughout the Sejong Government Complex, officials can be seen gathering to discuss prospects for future appointments and promotion pathways.

On September 15, attention within government circles is focused on the size and location of the newly established Ministry of Planning and Budget, ahead of the organizational overhaul scheduled for January next year. The initial transfer is expected to involve around 250 personnel from the Budget Office and the Fiscal Management Bureau, making it a relatively small organization. As a result, there are predictions that the number of senior-level positions to be created will inevitably be limited. An official from the Ministry of Economy and Finance commented, “The Korea Fair Trade Commission, which has about 600 staff, has three director-general-level positions with the status of standing commissioners. In comparison, there is keen interest in how many additional senior positions might be established for the new ministry. Since it will be a small organization, there are concerns that opportunities for promotion or overseas assignments will decrease.”

The location of the new ministry is also a major concern, as it will affect commuting. Many expect that the Ministry of Planning and Budget will take over the office space left vacant by the Ministry of Oceans and Fisheries, which is set to move to Busan. However, another official from the Ministry of Economy and Finance noted, “There is still a possibility that the new ministry could be relocated to the office currently occupied by the Financial Services Commission in Seoul. This would be manageable for senior officials who already have homes in Seoul, but it would be daunting for junior officials who do not.”

Given the Budget Office’s traditional ties to political circles, employees who feel less competitive as budget officials are uneasy about the restructuring. Some staff members from the Future Strategy Bureau and the Fiscal Management Bureau, who will move together with the Budget Office, are particularly anxious. They expressed, “Since our positions within the Budget Office may become unclear, we would rather remain with the Ministry of Finance and Economy.”

Ministry of Finance and Economy to Absorb Financial Functions... All Eyes on Financial Vice Minister Appointments

With the separation of the Ministry of Planning and Budget, the domestic financial policy functions of the Financial Services Commission will be transferred to the Ministry of Finance and Economy, raising expectations among the staff who will remain. The government reportedly plans to transfer about half of the 342 employees from the Financial Services Commission to the Ministry of Finance and Economy. While some worry that the loss of budget functions will weaken the ministry’s influence over other government agencies and diminish its policy-driving power, others see the absorption of financial functions as an opportunity to enhance its status.

A senior official from the Ministry of Economy and Finance stated, “If domestic finance is integrated with taxation, treasury, international finance, and economic policy, the Ministry of Finance and Economy’s standing could be strengthened. Each bureau has its own unique function and power, making every department a desirable place to work.”

Within the Ministry of Finance and Economy, particular attention is being paid to how the Financial Policy Bureau (domestic finance) and the International Finance Bureau will be organized. There is widespread speculation that the financial vice minister system will be reinstated, as in the past. In this process, it is possible that a single vice minister could oversee both domestic and international finance, or, as before, the first vice minister could be responsible for domestic finance while the second vice minister handles international finance. From July 2005 until the merger with the Ministry of Planning and Budget in February 2008, the Ministry of Finance and Economy operated with the first vice minister overseeing economic policy, including domestic finance, and the second vice minister in charge of international finance.

Government officials expect intense competition between the Ministry of Finance and Economy and the Ministry of Planning and Budget over the next three months leading up to the reorganization. As personnel pathways, key overseas postings, and affiliated agencies are all set to change with the merger and separation of these ministries, both sides are expected to compete fiercely without compromise. One official from the Ministry of Economy and Finance remarked, “Since this is the early stage of the administration, there is already a mountain of important work, but now we have to add intense consideration and maneuvering over our own positions, which is very concerning.”