S. Korea seeks to overhaul public firms to prevent lax management

SEOUL, July 29 (Yonhap) — South Korea on Friday unveiled guidelines to overhaul operations of public firms in a bid to improve their productivity and prevent lax management amid a sharp rise in personnel and debt.

The guidelines called for a total of 350 public firms to reduce their non-core business and lower the maximum number of employees for 2023, according to the finance ministry.

Public firms should also sell non-essential assets and cut business costs by more than 10 percent in the second half. Large welfare benefits will be reduced to meet the public’s standards.

“The government will no longer tolerate public firms’ inefficiency and lax management,” Finance Minister Choo Kyung-ho said at a meeting of the committee on public firm operations.

Calls for reforming public firms have mounted as they have been under fire for lax management and inefficient operations.

The number of personnel at public firms reached 449,000 as of May, up 115,000 from the previous year, according to the ministry.

Their debt also expanded 83.6 trillion won (US$64.4 billion) on-year to 583 trillion won last year.

To streamline public firms’ functions and personnel, the government plans to require them to reduce the maximum number of employees for next year.

To this end, state-run companies are expected to minimize new hires while not actively filling vacant posts caused by retirements or people leaving the companies.

The ministry said the plan does not mean that the government will carry out an immediate restructuring, such as sacking of existing employees, or seek privatization.

Source: Yonhap News Agency

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