[Column] "Stop Squeezing the Dry Towel"

[Asia Economy Reporter Kwangho Lee] Although the Financial Supervisory Service (FSS) avoided being re-designated as a public institution, it clearly shows signs of embarrassment due to the government's strong demands for organizational and personnel reform. The FSS is already implementing the reserved conditions in a 'squeezing a dry towel' manner, but this year, more stringent conditions have been imposed. It was even threatened that if future performance is insufficient, active consideration of public institution designation will be made.

The reserved conditions presented by the government include additional reductions in senior positions, restructuring of overseas offices, public disclosure of management at the level of public institutions, and strict management evaluations. In particular, improvement of inefficient organizational operations was emphasized. The FSS received instructions from the Ministry of Strategy and Finance's Public Institution Management Committee (PIMC) in 2019 to reduce senior positions (grade 3 and above) to about 35% within five years.

In 2019, 21 employees of grade 3 and above were reduced, and in 2020, 20 such employees were cut. Considering that the remaining number to be reduced is 100+ and the remaining period is three years, at least 30 employees of grade 3 and above must be reduced annually.

The FSS is also concerned about the effectiveness of self-help measures such as the additional selection of specialized supervisors. Specialized supervisors are a system that allows experts to work in specific fields such as inspection, investigation, and audit until retirement age (60 years old). Although they can build expertise by designating their own specialized fields, they are excluded from rotational personnel assignments, and there is a precedent of failure when a related system was introduced in the past.

An FSS official expressed concern, saying, "The promotion bottleneck problem will become more serious." The FSS labor union worries about greater side effects. They argue that demanding collective responsibility is excessive. The union pointed out, "The FSS holds the CEO responsible for the incomplete sales of private equity funds by financial companies, but the government is holding all FSS employees responsible for the poor response to private equity fund failures."

If there was reckless management, responsibility must be clearly held and improvements made. However, this year's review of the FSS's public institution re-designation was mainly due to poor supervision of private equity funds. The reform plan demanded by the Ministry of Strategy and Finance lacks direct measures to resolve inadequate management and supervision. Will supervision be properly conducted if only the organization is reduced without any retreat? It is time to come up with efficient and effective reform measures rather than punitive actions against the institution supervising domestic financial companies.

This content was produced with the assistance of AI translation services.