[Gwanga in] Rising Reemployment Barriers... "Law Firms Are No Good Either," Some Detour to Research Institutes

Stricter Employment Restrictions for Retired Public Officials
Increasing Number of Retirees Failing Employment Screening
Auditing Firms and Law Firms Also Challenged, Detours Through Research Institutes Increasing

Mr. A, a former Financial Supervisory Service (FSS) employee who decided to move to an insurance company, recently failed to pass the employment review by the Public Officials Ethics Committee. Although he expected a smooth approval since he had not been part of any insurance-related department for five years, his reemployment plan was disrupted because he was assigned insurance-related duties early in his FSS career as a former Insurance Supervisory Service employee.

Cases of former public officials or supervisory agency personnel failing to pass reemployment reviews after retirement are increasingly common. Some high-ranking officials, who previously found it easy to move to private sector auditor positions or law firms, now find it difficult even to join law firms and instead continue their careers by reemploying at research institutes or spending the three-year employment ban period as part-time advisors at small startups or businesses. Some observers say that the system restricting reemployment of public officials after retirement is becoming increasingly stringent.

Increasing Trend of Restrictions and Disapprovals in Public Officials’ Reemployment Reviews

On the 1st, Asia Economy conducted a full survey of the Public Officials Ethics Committee (POEC) employment review results for retired public officials over the past four years. It found that up to September this year, 60 retirees had received restrictions or disapprovals. The number of such cases is on the rise. In 2021 and 2022, 82 and 91 retirees respectively were notified of restrictions or disapprovals, and last year, a total of 109 failed to pass the employment review.

According to the Public Officials Ethics Act, public officials cannot be employed by private companies for three years after retirement. However, if the POEC confirms that there is no close relation between the department or agency the official belonged to in the five years prior to retirement and the prospective employer, reemployment is permitted.

The POEC employment review aims to eradicate issues such as collusion by judging the relevance of past public duties, and it enjoys strong public consensus. In April, the Constitutional Court also ruled that applying the Public Officials Ethics Act to general public officials is constitutional.

Under the Yoon Seok-yeol administration, the perceived hurdle for retired public officials to find reemployment has been rising. Recently, the POEC restricted the reemployment of a mid-level official, Mr. A, from moving to a law firm because his department had exchanged official documents with that law firm. Although Mr. A had never seen the problematic documents, he was included in the recipient list during communication among junior staff.

Mr. B, a staff member at the Fair Trade Commission (FTC), also recently failed to reemploy at a law firm. His participation in an investigation team from another department during his FTC tenure became an issue. He joined the investigation at the request of a neighboring department short on personnel, but the law firm subject to the employment review was representing the same case. Although Mr. B only participated in the investigation and the case was handled by the responsible department afterward, he could not pass the employment review.

A former senior official at the FTC said, “It was already difficult for former senior FTC officials to move to law firms. But recently, it seems the POEC is exercising discretionary judgment or broad interpretation even for non-senior officials.”

Detouring Through Research Institutes and Universities

Financial bureaucrats sometimes detour to financial research institutes if the relevance of their work immediately after retirement is ambiguous. They reemploy at public or private research institutes such as the Korea Institute of Finance, Korea Insurance Research Institute, Capital Market Institute, and Samsung Global Research.

A representative example is Choi Hoon, former standing commissioner of the Financial Services Commission (FSC), who recently started working as a visiting research fellow at the Accounting Policy Research Institute under the Korean Institute of Certified Public Accountants. A financial sector insider said, “The Accounting Policy Research Institute was established last year and is not considered a powerful institution. It is presumed that former Commissioner Choi chose this institute because he had no suitable place to go after serving as ambassador to Singapore.”

Former FSC Chairman Ko Seung-beom also moved to the Capital Market Institute as an invited research fellow in October 2022, just three months after his retirement. He was later appointed chairman of the Youth Financial Education Council in October last year.

Some utilize the “Specialized Career Personnel Invitation Support Project,” a program under the National Research Foundation of Korea, affiliated with the Ministry of Science and ICT. This project supports high-ranking public officials during their three-year employment restriction period to share their experience and intellectual property at regional universities or public research institutes. A former first-grade official who participated said, “After teaching local students for three years, I recently succeeded in reemployment at a law firm. It’s been a month since I started. Because local work is mandatory, competition is fierce in areas adjacent to the metropolitan area such as Cheonan in Chungnam, Jochiwon in Sejong, and Wonju in Gangwon.”

On the 9th, officials were busy moving in the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where the financial authorities decided to include mortgage loans (Judaemae) in the 'debt refinancing' infrastructure scheduled to be launched in May by the end of the year. The financial authorities explained that they aim to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Dongju Yoon doso7@

"Reasons for Restrictions and Disapprovals Are Unclear" vs. "Clear Standards Exist"

The sharp increase in perceived difficulty of reemployment is said to have started after the appointment of Kim Seung-ho, the first head of the Ministry of Personnel Management under the Yoon administration. A former senior financial regulator said, “Since the previous head of the Ministry of Personnel Management, the POEC has been issuing restriction and disapproval notices based on discretionary judgments beyond legal grounds, so we often hear complaints about difficulties. The reasons for restrictions and disapprovals do not seem clear or objective. Applicants apply for employment review only after retirement, so they apply when they are confident they will get approval.”

Mr. Kim, who passed the 28th Administrative Examination at age 21 as a ‘young prodigy,’ is well-versed in personnel affairs, having served as Director of Human Resources Development at the Ministry of the Interior and Safety, Personnel Innovation Secretary at the Presidential Office, and Chairman of the Appeals Committee. He is known as a leader who carefully checks the progress of tasks according to instructions and has developed strong command over his work. Mr. Kim completed his two years and three months term in July, which began in May 2022.

Some argue that detailed improvements are needed in the reemployment restriction system for retired public officials. A former senior government official said, “Few countries have both pre- and post-regulations on reemployment like Korea. It would be better to relax pre-regulations and apply stronger post-regulations, and if problems arise, strictly punish them criminally.”

However, the Ministry of Personnel Management maintains that “employment review standards are clear.” A ministry official stated, “The Public Officials Ethics Act specifies the duties related to the employment review subjects. Conclusions may vary depending on the applicant’s rank before retirement, the department they worked in, and the relationship with the private company they wish to join.”