Public Institutions Selling Golf Memberships... Assets and Expenses Decrease by 1.5 Trillion Each

Public institutions are tightening their belts in accordance with the government's public institution innovation plan. By the first quarter of this year, they sold off unnecessary assets worth 1.4 trillion won and also disposed of golf and resort memberships. Additionally, through functional adjustments and organizational and workforce efficiency improvements, they reduced their workforce by more than 10,000 employees.

The Ministry of Economy and Finance announced the results of the "2023 First Quarter Major Sectoral Inspection" containing these details on the 20th.

Previously, the Ministry of Economy and Finance sequentially finalized and announced budget efficiency and welfare improvement plans (October 2022), asset efficiency plans (November 2022), and functional adjustment and organizational and workforce efficiency plans (December 2022) through the Public Institution Management Committee’s approval, based on the "New Government Public Institution Innovation Guidelines" and individual institution innovation plans.

Starting this year, to ensure the smooth implementation of public institution innovation plans, the ministry plans to inspect the implementation performance of each institution’s innovation plan quarterly. The relevant ministries will collect and preliminarily review the implementation results by institution, and then the Ministry of Economy and Finance will conduct its inspection before announcing the data.

First, regarding asset efficiency, as of the end of last month, 20.6% (1.4 trillion won) of the 6.8 trillion won asset efficiency plan for 2022-23, covering 208 cases, was completed.

Real estate assets worth 1.1518 trillion won were sold, including KEPCO Technology’s old Yongin office building (98.7 billion won), KEPCO KPS (21.2 billion won), and Korail’s Gwangwoon University, Seoul Station North, and Gupo Port stations (490.1 billion won).

Additionally, KDB Industrial Bank disposed of golf memberships (800 million won), Korea Agro-Fisheries & Food Trade Corporation (aT) sold condo and resort memberships (30 million won), and Korea Water Resources Corporation disposed of port facility management rights (74.3 billion won).

Public institutions reduced their office spaces and leased these spaces to the private sector to generate revenue or downsized their leased public office buildings to reduce rental costs. Among 109 office efficiency plans this year, 46 offices were reorganized, resulting in annual cost savings of 4.7 billion won, including rental income (1.1 billion won) and rental cost reductions (3.6 billion won).

By the first quarter of this year, 291 public institutions completed organizational restructuring related to functional adjustments and workforce efficiency to improve productivity, with board approval. As a result, 10,721 positions were cut, achieving 96.8% of this year’s planned reduction.

Among 188 public institutions, 327 out of 636 excessive welfare system improvement cases (51.4%) were addressed by the first quarter of 2023.

By sector, cultural and leisure expense improvements, such as abolishing condo accommodation subsidies, had the highest improvement rate at 78.6%. The adjustment of founding anniversary days, which involved converting paid holidays to unpaid holidays, had a relatively low improvement rate of 23.4% due to the need for labor-management agreements.

Furthermore, 59 institutions planned to improve in-house loan systems by this year. Among them, 26 institutions reached labor-management agreements by the first quarter and improved loan systems by reducing loan limits (70 million won for housing, 20 million won for living stabilization), applying market variable interest rates (Bank of Korea household loan rates), and loan-to-value (LTV) ratios for mortgage loans.

In 2022, 346 public institutions reduced general expenses by 1.5439 trillion won (excluding business expenses) and business promotion expenses by 17.2 billion won, achieving 216% of the planned reduction (714.2 billion won). The Ministry of Economy and Finance finalized the "2023 Budget Operation Guidelines for Public Enterprises and Quasi-Governmental Institutions" last December, mandating a 3% cut in general expenses and a 10% cut in business promotion expenses compared to the previous year.

Kim Eon-seong, Director of the Public Policy Bureau at the Ministry of Economy and Finance, said, "In July, when the second quarter inspection results are released, we will report the semiannual implementation performance to the Public Institution Management Committee and, if necessary, promote the additional discovery and supplementation of sectoral innovation tasks. We will reflect the efforts and achievements of the relevant ministries and public institutions in innovation plan implementation in management evaluations and government performance evaluations to ensure accountability."

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