[Inside Chodong] Align Public Institution Heads' Terms with the President: Two 2.5-Year Terms for a Total of 5 Years

[Asia Economy Reporter Song Hwajeong] "Although it was a short period of 10 months, the intense time spent redefining the direction of financial supervision remains rewarding."

Jeong Eun-bo, the former Financial Supervisory Service (FSS) Governor appointed last August, expressed this in his farewell remarks as he left the FSS in less than a year. Ten months is an extremely short period to newly establish the direction of financial supervision. It is believed that former Governor Jeong also felt a great deal of regret.

Every time there is a change of administration, there are heads of institutions who leave before completing their terms. This time was no exception. Like former Governor Jeong, Go Seung-beom, who was appointed as the Financial Services Commission (FSC) Chairman last August, already announced his resignation earlier this month. Previously, Lee Dong-geol, former chairman of the Korea Development Bank, also stepped down with about a year and a half left in his term.

As the saying goes, "new wine requires new wineskins," when a new administration takes office, the immediate follow-up is to replace personnel. Filling positions with people aligned with the new administration’s policy direction aims to increase efficiency in carrying out tasks and to refresh personnel, but in the process, so-called "parachute" appointments with a patronage nature also arise. This renders legally guaranteed terms effectively meaningless.

In the case of the FSS Governor, the Financial Services Commission Establishment Act specifies a three-year term, but few governors have completed the full term. Among the 14 governors in history, only three?Yoon Jeung-hyun, Kim Jong-chang, and Yoon Seok-heon?served their full terms. Five, including former Governor Jeong, stepped down before completing one year. The main reason most governors did not complete their terms was due to changes in administration. Before former Governor Jeong’s appointment last year, the FSS governorship was vacant for over two months, as the appointment process was difficult amid perceptions that the term would only last one year due to the change in administration.

Frequent leadership changes inevitably have a negative impact on organizational task execution. Even projects that have been prioritized can be delayed, altered, or even completely scrapped during leadership transitions. Consistent policy implementation becomes difficult. In the case of the Korea Development Bank, numerous restructuring issues remain unresolved, but due to the union’s work stoppage protests over the relocation to Busan, the new chairman’s inauguration ceremony was held only two weeks after appointment, causing turmoil.

The terms of public institution heads are usually two or three years. Considering the president’s five-year term, such confusion inevitably recurs with each change of administration. The solution is simple: guarantee the term. However, this is not easy. Former Chairman Lee Dong-geol proposed a solution before his retirement: align the terms of institution heads with the presidential term. Lee said, "Having a three-year term that conflicts with the change of administration causes unnecessary disputes every five years, which is undesirable," adding, "Important policy institutions should be selected to have terms of two and a half years or five years aligned with the presidential term so that teams can be naturally reorganized during administration changes."

Although two months have almost passed since the new government took office, controversy over institution heads’ terms continues. While Han Sang-hyuk, Chairman of the Korea Communications Commission, and Jeon Hyun-hee, Chairperson of the Anti-Corruption and Civil Rights Commission, both appointed by the previous administration, have stated they will hold their positions citing their terms, voices within the ruling party are growing that they should step down now that the new government is in power. As Lee said, ongoing disputes like these are far from desirable. If terms cannot be guaranteed, aligning terms could be a solution to quell unnecessary controversy.