South Korea Says Public-Institution Restructuring Is Not Primarily About Cutting Costs

South Korea’s government says its plan to reduce or consolidate 109 public institutions is aimed less at saving money than at preparing for rapid industrial change and continuing complex crises.

A Finance and Economy Ministry official said the plan, announced the previous day, takes a different approach from earlier reforms that focused on reducing inefficiency and excessive management. The government now emphasizes an “integrated and proactive reform” to respond to the artificial intelligence transformation and other continuing challenges.

The official contrasted the plan with the phrase “the party is over,” which represented public-sector reforms under the Park Geun-hye and Yoon Suk Yeol administrations. Cost savings may result when small institutions with overlapping executive or planning functions merge, the official said, but savings are not the central objective.

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An integrated and proactive reform is needed to respond to the artificial intelligence transformation and continuing complex crises.

The government also rejected concerns that consolidation would reduce entry-level recruitment. Existing overlapping staff will be reassigned, while new hiring will not be cut, the official said. If a merged institution has a single headquarters, regional talent recruitment will still be possible through recruitment by individual divisions.

The 109 institutions employ about 120,000 people, including regular general employees and workers on indefinite contracts. The government says it will prevent deterioration in pay and is considering differentiated salary increases to narrow gaps between institutions. A task force will review pay structures that differ by institution and job category. Consolidations requiring no legal amendments will proceed immediately, while others will be discussed with the National Assembly. More than 80% of the institutions are expected to require legislative changes.

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The party is over.