Next Year Public Institutions' Personnel Expenses to Increase by 1.7%... Business Promotion Expenses Cut by 10%

Announcement of the '2023 Budget Operation Guidelines for Public Enterprises and Quasi-Governmental Institutions'

An employee entering the lobby of the Korea Electric Power Corporation headquarters in Bitgaram Innovation City, Naju-si, Jeollanam-do. [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] The public institution wage increase rate for next year has been confirmed at 1.7%. In accordance with the government's 'public institution slimming' policy, next year's business promotion expenses have been cut by 10% compared to this year.

The Ministry of Economy and Finance announced on the morning of the 19th at the 17th Public Institution Management Committee that it finalized the "2023 Budget Operation Guidelines for Public Enterprises and Quasi-Governmental Institutions," which includes these details. According to these guidelines, the total labor cost for public institutions next year will increase by 1.7% compared to the previous year, which is the same level as the civil servant wage increase rate.

However, the labor cost for the top 1 rank among public institution employees has been frozen. This is intended to participate in the government's public institution innovation policy through efficient labor cost expenditure.

Additionally, the government decided to differentiate the labor cost increase rates for low-wage and high-wage institutions to resolve wage gaps between institutions. Accordingly, if an institution's wage level is below 90% of the industry average and below 60% of the public institution average, the labor cost increase rate will rise by 1 percentage point from 1.7% to 2.7%. Institutions with wage levels below 90% of the industry average and below 70% of the public institution average will receive an additional 0.5 percentage point increase.

Treatment improvements for low-wage indefinite-term contract workers will also be strengthened. If an institution's overall wage level is high but the wages for indefinite-term contract workers are low, the additional increase rate has been expanded from the existing 0.5 percentage points to 1 percentage point. A differential increase rate of 1 percentage point applies if wages are below 75% of the public institution indefinite-term average.

However, the government has increased the autonomy of labor cost management for government-funded research institutes and public medical institutions, considering the nature and characteristics of each institution's work. First, for the 47 government-funded research institutes, each research foundation can differentially adjust the labor cost increase rates among affiliated institutions within the total labor cost limit, taking into account each institution's wage level, work characteristics, and performance. Also, allowances such as overtime and dispatch pay incurred by public medical institutions in response to crises or disasters like infectious diseases are recognized as exceptions to the total labor cost.

The number of institutions adopting job-based pay will also expand. This is because the government has established a regulatory basis allowing additional total labor cost payments to excellent institutions based on job-based pay evaluation results. The specific incentive level will be decided after the management evaluation of this year's public institution performance. The government aims to enhance the productivity and fairness of public institutions through a job- and performance-centered compensation system reform.

Next year's public institution operating expenses and business promotion expenses have been cut by 3% and 10%, respectively, compared to the previous year. This is a follow-up measure according to the 'Public Institution Innovation Guidelines' announced by the government at the end of July. The government stated in the innovation guidelines that it would pursue workforce reduction, budget savings, and asset sales to improve public institution management efficiency.

Meanwhile, public institutions will finalize their budget plans for next year based on the budget operation guidelines announced today. A government official said, "These guidelines ensure continuous efforts for public institution innovation, such as wage increase rates equivalent to civil servants and freezing wages for top ranks," adding, "We also listened to the institutions' suggestions, such as strengthening treatment improvements for low-wage indefinite-term workers and enhancing autonomy in total labor cost management reflecting each institution's characteristics, and tried to improve them rationally."

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