Next Year, Public Institutions to Reduce Staff... Function Downsizing, Asset Sales, and Restrictions on Employee Workspace

Ministry of Economy and Finance Announces 'New Government Public Institution Innovation Guidelines'
Choo Kyung-ho: "No More Tolerance for Inefficiency and Reckless Management in Public Institutions"... Reflected in Next Year's Performance Evaluation

[Asia Economy Sejong=Reporter Kwon Haeyoung] The government has decided to reduce overlapping or non-core functions with the private sector and cut next year's personnel as a principle to reform public institutions. Unnecessary or poor-quality assets will be sold, and regular expenses and business promotion expenses will be cut by more than 10%. However, it drew a line by stating that artificial workforce restructuring or privatization will not be pursued.

Reduction of overlapping and non-core functions with the private sector... Reduction of next year's personnel and efficiency improvement of labor costs

On the 29th, the Ministry of Economy and Finance submitted and approved the "New Government Public Institution Innovation Guidelines" at the 9th Public Institution Management Committee chaired by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho.

The guidelines, targeting all 350 public institutions, include plans to focus on improving productivity and efficiency in five major areas: functions, organization and personnel, budget, assets, and welfare.

First, functions that compete with the private sector or are better performed by local governments, non-core functions, functions with declining demand, and similar or overlapping functions between institutions will be abolished or reduced. Organizational and personnel adjustments due to these functional changes will be completed by the end of the year. Excess personnel will be gradually reduced over a certain period through natural attrition. However, a certain proportion of the naturally reduced personnel will be newly hired to minimize the reduction in hiring scale. Artificial restructuring and privatization will not be pursued.

Next year's public institution personnel will be reduced in principle. Excessive proportions of executive positions will be cut, and positions performing similar tasks will be consolidated. Small units with few members will be merged into larger departments, and efficiency improvements will be pursued for local and overseas organizations, as well as adjustments to support and dispatched personnel. If the situation of having more personnel than the authorized number continues for a certain period, the excess personnel will be reduced.

Labor cost expenditures for executives and employees will also be optimized. In October, executive compensation will be adjusted considering the economic situation and financial performance, and in December, employee compensation will be adjusted based on each institution's wage level and civil servant salaries. Efforts will be made to improve labor cost efficiency by adjusting overtime hours and consolidating similar allowances. A job-based pay system linking job difficulty and compensation will be introduced, and institutions that have already adopted it will continue to improve the system.

In the second half of this year, regular expenses and business promotion expenses will be cut by more than 10% of the budget. Next year, regular expenses will be reduced by 3% compared to the previous year, and business promotion expenses will be cut by more than 10%.

Sale of unnecessary assets and shares of poorly performing investee companies... Reduction of welfare and limitation of office space for executives and employees

Unnecessary or poor-quality assets will also be sold immediately where possible. Land and buildings with low relevance to the institution's core functions, assets for excessive welfare purposes such as condos and golf memberships, and idle assets unused for more than two years will be sold.

Assets with significant investment losses are also included in the sale targets. Shares of companies that are fully capital impaired or have investment losses exceeding 50%, and have recorded net losses for the past three years, must be restructured. Investee companies and subsidiaries designated as public institutions are excluded.

The office space per executive and employee within public institution buildings is also limited. The office space per person must be 56.53㎡ or less, the head of the institution must have 99㎡ or less (equivalent to vice minister level), and executives such as standing auditors and standing directors must have 50㎡ or less (equivalent to grade 1 national civil servants). For buildings with high asset value, multi-faceted utilization plans including sales will be prepared through consultations with related ministries.

Additionally, excessive welfare benefits compared to public expectations, such as in-house loans, selective welfare expenses excluding medical support, education expenses due to free high school education, overseas dispatched children’s tuition, company housing management fees, and congratulatory and condolence expenses, will be inspected and reorganized. If public institutions prepare self-inspection checklists, external inspections will be conducted, and the results will be disclosed and reflected in management evaluations.

Each public institution must establish an innovation plan according to the guidelines and submit it to the Ministry of Economy and Finance by the end of August. The Ministry will review and adjust each institution's innovation plan through the Public Institution Innovation Task Force (TF) by October and sequentially finalize the innovation plans through the Public Institution Management Committee by December. The government plans to review incentives such as management evaluations by November and check progress quarterly next year.

Deputy Prime Minister Choo said, "The new government will no longer tolerate inefficiency and reckless management in public institutions," adding, "In a situation where the difficulties of the people's economy are increasing, the public sector including public institutions must take the lead in tightening belts and pushing for strong innovation that cuts to the bone." He continued, "Efforts and achievements for public institution innovation will be reflected in public institution management evaluations and government work evaluations to ensure accountability of institutions and ministries," emphasizing, "Innovation plans of each institution will be reflected in the institution head's management contract, and management evaluations will be conducted based on this."

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