SEJONG, Jan. 18 (Korea Bizwire) – South Korea’s finance ministry said Sunday it will streamline the country’s public sector by eliminating overlapping operations and expand merit-based payment to encourage healthy competition.
The measures are part of the Park Geun-hye administration’s second-phase normalization plan for the public sector. Policymakers take credit for reducing debts by 24.4 trillion won (US$22.7 billion) for state-managed corporations and agencies by having them boost efficiency, control spending and sell non-core assets. The reduced debt is 4.3 trillion won more than the initial target, according to the ministry.
Cho Bong-hwan, director general of the ministry’s public institutions innovation office, said the next phase of reform will go into effect in 2016 after the government sets detailed plans and specific targets by the end of this year.
The government will inspect some 85 public corporations and institutions that have been cited for maintaining redundant operations, unduly competing with private businesses. Such institutions are in the social overhead capital, culture and arts, and agricultural and fisheries sectors, the ministry said.
The government will also promote merit-based wages for most employees of public corporations, Cho said.
“The goal is to introduce a ‘two-strike regime’ that will allow the CEO or top management to fire employees who have performed below standard for two consecutive evaluation sessions,” said Cho. He claimed that by introducing such a system, the public sector can help push forward country-wide job market reforms.
The government has been trying to make the local job market more flexible, making it easier to hire and fire workers.
All public institutions will have a wage peak system in place by next year, the ministry said.
In addition, the government will revise how bonuses are given to CEOs of public institutions.