Government: "Consolidation of Public Institutions Not Aimed at Cost Saving... Major Functional Shift for AI-Driven Environment"

Briefing Saw Shift From "Not the Goal" to "Not Completely Unrelated"

Official Documents Explicitly List "Cost Reduction" as One of Three Core Visions, Creating Confusion

Criticism Mounts Over "Rushed Announcement" and "Hastily Drafted Reform

Just one day after the government unveiled a plan for functional reform aimed at reducing the number of public institutions by 109, confusion arose as the authorities’ position on the reform’s objectives fluctuated. At a follow-up briefing, officials stated that cost reduction was not the goal of the latest reform, and that there was no calculated basis for it; but when it was pointed out that cost reduction was clearly listed as a core vision in the official press release, they reversed their statement. Critics argue that the government rushed forward with a massive overhaul—changing the names of over 100 institutions—without even establishing basic policy objectives.

"It's not about reducing costs"—then reversed after criticism: "It's not entirely unrelated"

Prime Minister Han Sung-sook is moving to a press conference related to the relocation of administrative and public institutions and the reform of public institution functions held at the Government Seoul Building in Jongno-gu, Seoul on the 3rd. Photo by Yonhap News.

At a follow-up briefing on the “Plan to Promote Public Institution Functional Reform”—held jointly by government ministries at the Government Complex Sejong on the 4th—the government stated, “Cost reduction is not the focus of this policy direction, so nothing specific has been calculated in that regard.” In response to questions about the significant costs expected for initial integration, such as information system network linkage and asset adjustment, the government drew a clear line, emphasizing, “The core is functional integration to respond to the AI transformation, not a reform aimed at cost reduction.”

However, a press release distributed jointly by the relevant government ministries the previous day explicitly included “enhancing fiscal sustainability through cost reduction, etc.” as one of the three core visions, alongside strengthening global competitiveness and consumer-centered services. Once pointed out that this differed from the official briefing, a government official then changed their stance, saying, “In the process of consolidating smaller agencies, some cost reduction measures—such as addressing duplication among agency heads and planning and coordination offices—were included. So, it does not mean that cost reduction is not a goal at all.” Although the authorities asserted that cost reduction was not the primary goal, they made it a core vision in formal documents—then appeared to back away again in response to questions, further fueling the perception of inconsistency.

Even with 100% job security and unchanged compensation... Slogan falls flat amid 'hollow diet'

The authorities’ explanation about the “Public Institution DIET 2026” slogan at the forefront of this reform also contributed to the controversy. Despite using the term “diet,” typically synonymous with cutting organizational fat and reducing debt, the government pledged to guarantee 100% of general staff positions (excluding executives) and to maintain current salary levels. Furthermore, to encourage participation in the structural overhaul, incentives such as temporary lump-sum allowances and higher flexible welfare limits were put forward—meaning welfare benefits would actually increase.

With costs not being cut and jobs guaranteed, criticism has mounted over the appropriateness of using the word “diet.” In response, the government said, “There was already considerable concern internally that the term ‘diet’ could cause misunderstandings,” and explained, “It’s just an acronym from the initial letters of Dynamic, Integrated, Efficient, and Transparent—not about reducing weight.” However, given that the general workforce and overall institution scale would remain intact, with the only reductions coming from some executive salaries, many point out that there is virtually no real effect on cost-cutting.

Announced without fiscal calculations... Patchwork plan risks long-term stagnation

A bigger problem is that the government proposed an organizational overhaul affecting 109 agencies without even drawing up a basic profit and loss statement. The government admitted, “Among the 183 non-designated agencies included in the review, there is no public disclosure obligation, so information on personnel costs or welfare benefits was not known in advance,” adding, “We have now started to investigate related costs through the responsible ministries.” This leaves the impression that the announcement was pushed forward without thoroughly examining the policy’s costs and benefits. In addition, more than 80% of all targeted agencies will require legislative amendments, but the government has yet to present a concrete legislative road map. Meanwhile, labor circles have criticized the reform as behind-closed-doors policymaking with no prior coordination, signaling a rough road ahead as disputes are expected in the implementation process. 

This content was produced with the assistance of AI translation services.