Unwarranted bonus parties
State-owned companies are often called “divine workplaces,” as they offer job security and handsome pay. They usually top the list of the most coveted jobs among college graduates. But lax management, caused mostly by a monopolized market and the nepotistic appointment of executives, tells why it is imperative to reform these companies.
Since the Moon Jae-in administration took office in May 2017, taxpayers have felt an additional surge of resentment because of these state enterprises. According to Rep. Choo Kyeong-ho of the opposition Liberty Korea Party, the aggregate debt of the 35 largest public corporations swelled by more than 9 trillion won ($7.67 billion), and their combined net profits shrank by more than 3 trillion won last year. Nonetheless, the government paid 7.8 billion won in bonuses to the state firms’ executives.
KEPCO and the National Health Insurance Service, for instance, saw their debt surge by between 3 trillion won and 5 trillion won and losses jump by several trillion won in 2018. Their executives, however, received 300 million won or more in performance-related pay. This is because the Moon administration shifted the key assessment criteria of stateowned companies from financial performance to social responsibility. Consequently, the government provided nearly 2 trillion won in financial support for state enterprises, which increased the hiring of full-time employees by 50 percent last year.
A more fundamental problem lies with the incumbent administration, which uses state enterprises to promote its policy of shared prosperity and inclusive growth. The government appointed more than 500 aides of the President and other influential politicians as executives of state-run enterprises. These nepotism appointments have made the situation even worse.
The bonus parties at the debt-stricken public corporations are acts that bleed taxpayers dry. Government auditors and prosecutors should hold these managers accountable for their abuses of authority and breaches of trust.