LH President and Executives' Salaries Frozen for 3 Years... Retirement Bonuses to Be Reclaimed Through Lawsuits if Necessary

Reduction in Number and Duration of Wage Peak System... This Year's Operating and Business Promotion Expenses Also Cut
Significant Reduction in Welfare Support and Shift from Seniority-Based to Job-Centered Compensation System

On the 31st, a press conference urging the dismantling of LH was held in front of the main gate of the Korea Land and Housing Corporation (LH) Seoul Regional Headquarters in Gangnam-gu, Seoul, hosted by the Citizens' Action for Eradicating Real Estate Corruption. / Photo by Moon Honam munonam@

[Sejong=Asia Economy Reporter Kim Hyunjung] The government has decided to hold the salaries of the Korea Land and Housing Corporation (LH) president, executives, and senior officials steady for three years and cut this year's operating and business promotion expenses to hold them accountable for the real estate speculation scandal involving LH employees. It also plans to revise the existing management evaluation results to recover performance bonuses paid to both current and former employees through lawsuits and other means.

On the 7th, the Ministry of Land, Infrastructure and Transport and the Ministry of Economy and Finance, along with related agencies, held a public briefing at the Gwanghwamun Government Seoul Office and announced the "LH Innovation Plan to Restore Public Trust." The innovation plan includes punitive and preventive measures such as a comprehensive overhaul of management evaluation, personnel, and compensation systems to strengthen the organization's public nature and resolve issues of reckless management.

◆ Salary freeze and operating expense cuts... Recovery of retirees' performance bonuses = First, considering LH's misconduct, the government plans to give LH the lowest grade in related management indicators such as ethical management in the 2020 management evaluation and further lower the overall grade by considering factors like severity and institutional responsibility.

Strict recovery of performance bonuses is the principle. Misconduct that occurred before the controversy will also be reflected in the 2020 evaluation results with the lowest grade, and performance bonuses will be reclaimed from the heads and executives regardless of the evaluation results. Retirees are also expected to voluntarily return bonuses, and if they refuse, the institution will pursue recovery through lawsuits claiming unjust enrichment.

The existing evaluation system will also be revamped. The score allocation for LH's housing welfare business indicators will be significantly increased from the current 12 points, and the score for the ethical management indicator, currently 3 points, will also be raised. For violations or serious misconduct, the ethical management indicator will be scored zero.

Measures will also be taken to address the criticized reckless budget management of LH. First, the salaries of the heads, executives, and senior staff (levels 1-2) will be frozen for three years until 2023 by requiring them to return any salary increases, and reductions in travel expenses will be implemented along with a 10% cut in operating expenses and a 15% cut in business promotion expenses in 2021.

Additionally, the government will review the management performance of existing investee companies, liquidate shares in insolvent companies, and, in principle, prohibit new contributions or investments outside of core functions. It will also promote the sale of idle assets to fund core projects such as housing supply, drastically reduce welfare support expenses, and restrict contributions to the in-house labor welfare fund to rationalize expenditures.

◆ Compensation based on workload and difficulty instead of seniority = Personnel and compensation systems will also undergo a comprehensive overhaul. A compensation system will be established based on workload, responsibility scope, and difficulty rather than seniority based on tenure or age, and open positions will be increased in departments where transparency is emphasized (departments at risk of speculation).

The number and duration of the wage peak system, currently considered excessively expanded, will be reduced to the average level of public institutions. Accordingly, the number of related personnel, which was about 10% (960 people) of the current staff, is expected to be reduced to about 7% (approximately 700 people) of the staff.

Furthermore, attendance management, job and performance evaluations for wage peak personnel will be strengthened, and differentiated performance bonuses will be paid individually. A joint inspection and personnel audit by related ministries will also be conducted for all target personnel.

Along with this, the government will add individual evaluations to the current department-level evaluations and work to improve productivity by identifying individual efforts and achievements. To prevent performance bonuses from going to those involved in misconduct, a lowest performance grade (grade 6) will be newly established, and the differential payment rate, which was about 1.2 times between performance grades, will be expanded up to twice.