Frustrated Hyun orders lax institutes to shape up
Deputy Prime Minister Hyun Oh-seok yesterday summoned the heads of 25 public corporations to warn them about practices that allow large debt and excessive spending on the welfare of executives and employees.
It was the first time the finance minister met with the chiefs since he took office.
“The party is over now,” Hyun said. “It is a pity that public institutions, which played an important role in the country’s economic development by helping to establish infrastructure and provide public utilities for the past half-century, are now deserving of distrust and criticism from the public due to lax management that piled up debt and excess welfare spending.”
Hyun said the authority will conduct a closer investigation on wasteful spending, while enforcing stricter measures to curb debt at the public companies.
“The government will wield a knife at factors ranging from debt, corruption, wages, incentives, welfare and collective bargaining rights to abuse of privilege,” Hyun said.
The minister cited 12 companies with the largest amount of debt: Korea Electric Power Corporation, Korea Land and Housing Corporation, Korea National Oil Corporation, Korea Gas Corporation, Korea Coal Corporation, Korea Railway Corporation, Korea Hydro and Nuclear Power Corporation, Korea Resources Corporation, Korea Deposit Insurance Corporation, Korea Expressway Corporation and the Korea Rail Network Authority.
The Finance Ministry will keep those companies under special check.
Debt levels spiked during the last administration. The debt-to-capital ratio of some institutes reached 500 percent, the minister pointed out.
According to the ministry, debt at public entities is growing at an alarming rate and presents a major burden on the national economy.
Total debt of Korea’s 295 public institutes, corporations and quasi-governmental organizations shot up from 290 trillion won ($271.4 billion) in 2008 to 493 trillion won last year.
“I feel awful about the fact that a number of public companies are not able to pay interest with their own revenues,” Hyun said. “Against this backdrop, executives and employees of those companies are enjoying job security, high salaries and overly generous benefits.”
Hyun ordered the heads of the 12 companies to sell assets, cut costs and maximize profits.
It is widely known that Korean public companies are called “God’s workplaces” due to their welfare benefits, high salaries and workplace complacency. Young job seekers spend more than a year on average to prepare for annual examinations to enter such public companies.
The government conducts annual evaluations of all public institutions and corporations to improve their performances, but it seems there wasn’t any improvement last year.
Lax management of public corporations turned out to be an aggravating aspect in the latest evaluation, unveiled in June, in which six more companies received the lowest grade: E.
On the other hand, trade unions of public institution employees say the government should share responsibility for their finances.
“The government passed costly national projects like the four-river restoration, Bogeumjari public housing and overseas resource developments onto related public companies, while blocking them from raising public utility costs,” said the unions in a joint press conference yesterday. “We can’t take the blame from the government anymore. Every new government sets public entities as target of reform, and filled top posts with the so-called parachute appointments,”
BY SONG SU-HYUN [email@example.com]