YONHAP NEWS

(LEAD) Lee to cut third of public sector employees: source

   By Yoo Cheong-mo
SEOUL, May 23 (Yonhap) -- President Lee Myung-bak's administration is pushing to cut nearly a third of the country's public sector employees, as part of its drive to overhaul the bloated management structure of state-run enterprises and other public entities, a source close to the president said Friday.

   "The government is now mulling a plan to reduce the number of employees at 305 public entities from 258,000 as of the end of last year to around 180,000. But those laid off would be allowed to retain their employment status for a considerable period of time to undergo reemployment training," said the source.

   "The sweeping reform plan will be formally announced early next month after being authorized by President Lee, who will return from his state visit to China on May 30," he said.

   However, Finance Minister Kang Man-soo told reporters at the presidential office Friday that the proposed public sector streamlining will mostly involve employees at soon-to-be-privatized public enterprises.

   "Layoff of public sector employees has never been on the drawing board of government reformers from the beginning. The government is just focusing on improving the efficiency of public company management," said Kang, adding a comprehensive roadmap will be unveiled next month.

   Lee Han-koo, the chief policymaker of the ruling Grand National Party, also denied any government move to outrightly dismiss public sector employees.

   "The basic plan is to ensure employment succession for public sector employees who will be affected by privatization," said Lee. Kang and Lee visited the presidential office to attend a national competitiveness meeting presided over by the president.

   Korea's state-run corporations, semi-governmental institutions and other public entities have been accused of being run loosely and inefficiently and spending taxpayers' money opaquely.

   Indeed, the Board of Audit and Inspection (BAI) said in a report Thursday that KEPCO and 30 other public enterprises are accused of having paid about 1 trillion won (US$962 million) worth of "unjustifiable" welfare allowances to their employees in recent years.

   Following the BAI report, the prosecution immediately announced its plan to investigate public enterprise employees suspected of being involved in the reckless use of public money.

   Since his inauguration in late February, Lee has vowed to implement sweeping privatization of public corporations to boost public sector efficiency and competitiveness.

   But local labor umbrella groups representing public sector employees are vowing to stubbornly resist the Lee government's public sector restructuring scheme, heralding a fierce labor struggle in the upcoming summer months.

   Another ranking source at the presidential office said Thursday the government will replace about 80 percent of public sector CEOs by the end of next month to lay the groundwork for the privatization of large numbers of state-run companies.

   According to government officials, about 50 public enterprises, including the Korea Development Bank, Incheon International Airport Authority and Korea Power Engineering, will be privatized, while another group of 50 public firms will be streamlined into a dozen entities.

   The government will also raise about 63 trillion won by selling its controlling stake in a number of state-controlled companies, such as Hyundai Engineering & Construction and Daewoo International, they said.

   ycm@yna.co.kr
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