Receiving Salary During Suspension, Violating Rules with Interest-Free Loans... Public Institutions Falling into 'Moral Hazard'

Rural Development Administration paid 965 million KRW in salaries to 14 disciplined employees from 2016 to 2020
Health Insurance Review & Assessment Service offers interest-free living stabilization loans... Discrimination between regular and irregular workers

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that moral hazard in public institutions is not easily subsiding. Despite violating related regulations, employees were lent money at low interest rates, and it was also frequent that employees who received severe disciplinary actions such as suspension were paid wages during the suspension period.

According to the '2020 Fiscal Year Public Institution Settlement Data' released by the National Assembly Budget Office on the 13th, a significant number of public institutions provide living stabilization fund loans to employees at interest rates far below market rates. Earlier this month, the Ministry of Economy and Finance announced improvement measures, stating that public institutions excessively support employees with housing loans at low interest rates, and the issue of living stabilization fund support is similarly problematic.

The Health Insurance Review and Assessment Service provides interest-free loans for living stabilization funds to employees assigned to non-native areas, supporting a total of 3.485 billion KRW to 52 people last year. Korea Power Exchange and Korea Midland Power applied interest rates of 0.45%, and KEPCO KPS applied 0.5%, lending 478 million KRW, 3.93 billion KRW, and 13.65 billion KRW to employees respectively. Korea Hydro & Nuclear Power supported 31.4 billion KRW to 1,180 employees last year at an interest rate of 1.15%.

This is much lower than the general credit loan interest rate (3.5%) as of December last year. The Budget Office pointed out that this violates guidelines on public institution innovation. According to related regulations, public institutions can support living stabilization funds through in-house employee welfare funds, but the loan interest rate must be determined considering market interest rates. Interest-free loans are completely prohibited.

Several cases were also uncovered where employees received salaries during suspension periods after being disciplined with suspension. According to the National Public Service Act and others, payment of wages or monthly base salary during suspension is prohibited. Suspension is a disciplinary action imposed especially for serious violations of official duties such as embezzlement or misappropriation of public funds, breach of trust in work, and sexual violence against minors, highlighting serious moral hazard.

Korea Rural Community Corporation, through internal regulations, allows payment of 50% of the monthly salary during suspension periods and paid 965 million KRW in wages to 14 suspended employees from 2016 to 2020. Korea Maritime Transportation Safety Authority paid 71 million KRW to 14 suspended employees during the same period, Korea National Railway Corporation paid 65 million KRW to 7 employees, and Korea Expressway Corporation paid 57 million KRW to 11 employees.

Discrimination between regular and non-regular employees was also noticeable. In the case of the Asia Culture Center, regular employees were given a basic selective welfare allowance of 1.2 million KRW, but fixed-term contract employees received only 400,000 KRW. The Korea Post Logistics Support Group paid 700,000 KRW to regular employees and 400,000 KRW to fixed-term contract employees, and the Korea Occupational Safety and Health Agency also differentiated support funds between regular employees and fixed-term contract employees at 630,000 KRW and 400,000 KRW respectively.

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