Reforms in public sector necessaryThe government declared its initiative to reform public institutions. The package of government measures to “normalize” public institutions underscores the depth of irregularities in state entities and the will of the government to fix them. The government has repeatedly warned companies of their corruption, mismanagement and lax regulations. Every new government has pledged reform, but actions stopped in gesture. Politicians and governments gave up in the face of deep-rooted bureaucracy at public institutions.
But wrongdoings and irregularities have exploded in the current government. The state-run nuclear power industry has been tainted with corruption, which has raised public safety concerns. Heavily debt-ridden public companies handed out fat payouts to executives and employees while running on tax funds. The debt in public entities reached 493 trillion won ($469 billion), exceeding government’s debt of 443 trillion won. No public projects could win credibility if mismanagement in the public sector goes unattended.
The measures were focused on fixing slack management in the public sector and reducing its colossal debt. Public companies were required to release their exact debt levels and welfare spending, and to come up with their own actions on restructuring their debt and organizations. The government will evaluate their action plans and the progress. Those failing to meet obligations will face cuts in payroll. Chief executives would also be sacked before their terms end.
But still the government omitted two essential areas in reforming the public sector. It failed to address the fundamental problem of revolving-door and parachute-appointment practices. The chief executive posts at public entities had been customarily reserved for acquaintances loyal to the president. The seats were rewarded to those who contributed to an election victory regardless of their qualifications. No chief executive was able to fix the exorbitant and generous welfare benefits for public-sector employees in fear of labor unions because they came from the outside. Despite her promise, President Park Geun-hye repeated the legacy. Reforms cannot be carried out by executives from questionable backgrounds.
The government also failed to articulate plans for privatization. The measures left out sensitive areas like layoffs and privatizations that would invoke resistance from employees and labor unions. But the poor financial state and mismanagement in the public sector cannot be fixed through self-reform actions. Public companies would not have been so poorly managed if they had been under a fierce competitive system like the private sector’s. Privatization of the public sector had been tabooed for a decade. Without fundamental changes, however, the public sector can’t be reformed.