"‘Poor Public Institution Management Act’ Proposed by Ruling Party Amid ‘5 Years of Financial Deterioration in Public Institutions’ Under Moon"

Song Eon-seok "Deterioration of Fiscal Soundness During Moon Administration"
Proposes Act on Management of Insolvent Public Institutions

Song Eon-seok, the Senior Deputy Floor Leader of the People Power Party, is delivering opening remarks at the floor strategy meeting held at the National Assembly on the 14th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Koo Chae-eun] As the Yoon Suk-yeol administration has declared that "the era of public institution parties is over" and launched high-intensity reforms, the ruling party has recently proposed a bill that focuses on managing financially weak public institutions to ensure financial soundness.

According to political circles on the 10th, Song Eon-seok, the senior deputy floor leader of the People Power Party, recently introduced the "Partial Amendment to the Act on the Operation of Public Institutions," which requires the Minister of Strategy and Finance to establish financial soundness standards for public institutions. The bill also mandates the government to intensively manage debt control and repayment for vulnerable institutions that fail to meet these standards.

This is also included in the Yoon Suk-yeol administration’s national agenda, and it is known that the government was consulted during the bill’s drafting process.

According to Representative Song, as of the first quarter of this year, South Korea has 350 public institutions with a workforce of 448,276. During the five-year term of the Moon Jae-in administration, the number of public institution employees increased by 114,000, representing about a 35% growth rate. Additionally, 27 new public institutions were established. Comparing by administration, the number of public institution employees increased by 14,431 during the Lee Myung-bak administration (2008?2012), by 64,685 during the Park Geun-hye administration (2013?2016), and by 114,298 during the Moon Jae-in administration (2017?2021).

Representative Song pointed out that "the financial condition of public institutions deteriorated continuously during the five years of the Moon Jae-in administration." Looking at the debt scale of all public institutions over the past 10 years, the debt decreased steadily from 520 trillion won in 2013 to 499 trillion won in 2016 but then reversed to an upward trend, swelling by about 84 trillion won to 583 trillion won in 2021.

He said, "As of last year, the total debt of all public institutions is equivalent to South Korea’s annual budget," adding, "This is the result of indiscriminately increasing the quantitative scale without qualitative growth, such as the regularization of non-regular workers in public institutions." Representative Song emphasized, "The deterioration of financial soundness in public institutions ultimately harms the public, so reform and intensive government management of public institutions are necessary." He pledged, "Through legal amendments, we will support the Yoon Suk-yeol administration’s reform will and do our best to reform public institutions to overcome the economic crisis."

President Yoon Suk-yeol recently pointed out at a Cabinet meeting that "public enterprises are being operated wastefully" and ordered "painful reforms" of public institutions. In the "New Government Economic Policy Direction" announced last month, he stated that a "High Financial Risk Institution Intensive Management System" will be established to closely manage investments, personnel, and financial conditions.

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