[Exclusive] Public Institutions Startled by Government Pressure... 299 Organizations Introduce 'Retirement Pay Reduction Rules for Dismissed Executives'

173 Locations at the End of Last Year → 299 Locations in Q1 This Year
Over 86% of Public Institutions Have Completed Implementation
The Remaining Institutions Plan to Implement Within This Year

Among a total of 347 public institutions, 299 have introduced regulations to reduce severance pay for executives dismissed due to misconduct or other reasons. This is the result of public institutions rushing to adopt related regulations as the Yoon Suk-yeol administration, naming 'public sector innovation' as a key national agenda, launched intensive reforms.

According to the Ministry of Economy and Finance on the 18th, 126 public institutions newly introduced regulations to reduce severance pay for dismissed executives in the first quarter of this year.

By the end of last year, 173 public institutions had adopted such regulations, meaning only 49.9% of the total reduced severance pay upon executive dismissal. This year, an additional 126 institutions adopted the regulations, sharply increasing the adoption rate to 86.2%.

An official from the Ministry of Economy and Finance explained, "We had set a goal to have 278 institutions, about 80% of all public institutions, adopt the regulations within this year, but the first quarter has already exceeded that target. The perception that paying severance pay to executives dismissed for various misconducts is a moral issue has rapidly spread, and public institutions seem to have hurried to adopt the regulations, thinking 'if we're going to do it, let's do it quickly.'"

Earlier, in June last year, the Anti-Corruption and Civil Rights Commission conducted a survey on 155 public-related organizations and found that 141 institutions (91%) paid full severance pay to executives dismissed for corruption. Executives dismissed after criminal penalties such as four years imprisonment and 300 million KRW fines for hiring irregularities, and those dismissed for bribery allegations, were each paid full severance pay of 30 million KRW and 17 million KRW respectively. The Commission recommended institutional improvements, stating that "paying full severance pay to executives dismissed for corruption is inappropriate."

In response, the Ministry of Economy and Finance revised management guidelines through the 'Public Institution Management System Reform Plan' announced in August of the same year, instructing the establishment of regulations to reduce severance pay for dismissed executives. Furthermore, they continuously emphasized the necessity of revising related regulations by holding online briefings and expert meetings, and have been inspecting these quarterly since this year. Under this continuous government pressure, public institutions have ultimately surrendered.

Public institutions that have not yet introduced regulations to reduce severance pay for dismissed executives plan to adopt related regulations within this year. Thirty institutions will adopt them in the first half of the year, and 12 in the second half, coinciding with other management guideline revisions. Including six institutions that do not pay severance pay to executives, all 347 public institutions will have related regulations introduced by the end of the year. The Ministry of Economy and Finance plans to check the actual adoption quarterly.

The Yoon Suk-yeol administration's reform of public institutions is ongoing. The Ministry of Economy and Finance has sequentially announced plans for budget efficiency and welfare improvement (October 2022), asset efficiency (November 2022), and function adjustment and organizational and personnel efficiency (December 2022) through institution-specific innovation plans under the 'New Government Public Institution Innovation Guidelines.' To ensure smooth implementation of public institution innovation plans, the Ministry inspects the implementation performance of each institution's innovation plan quarterly. As a result, as of the first quarter, the workforce has been reduced by more than 10,000 people, unnecessary assets worth 1.4 trillion KRW have been sold, and 327 excessive welfare systems have been improved.

The Ministry of Economy and Finance will continue quarterly performance inspections and promote the additional discovery and supplementation of innovation tasks by sector as needed. It also plans to ensure accountability by reflecting the efforts and achievements of the relevant ministries and public institutions in management evaluations and government work evaluations.

Choo Kyung-ho, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance.