[Aftermath of Mergers] 83 Public Institutions in Seoul Metropolitan Area Face Workforce Restructuring Test for 30,000 Employees

Mergers and Integration Move to the Forefront of Reform
Need for Detailed Criteria in Workforce Restructuring

As the government moves to reduce the number of public institutions by 109, the restructuring of approximately 30,000 employees working at 83 institutions in the Seoul metropolitan area—including Seoul, Gyeonggi, and Incheon—has emerged as a key challenge in the reform effort. Critics point out that even if institutions are merged or relocated to other regions, it will be difficult to achieve real efficiency gains through simple consolidation alone, since a substantial number of employees are required to work on-site in the metropolitan area in roles such as airport, rail, and facility management. Consequently, there is a growing call for more nuanced criteria for personnel restructuring, tailored to each institution's characteristics—for instance, reducing redundant functions while maintaining staffing levels essential for on-site services.

According to the government's public institution functional reform plan announced on September 10, the 83 targeted institutions in the metropolitan area employ a total of 31,313 people. The top 10 institutions by workforce alone account for 25,236 employees (80.6% of the total), meaning that 8 out of every 10 employees at these institutions are concentrated in just 12% of all organizations.

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In particular, a significant number of large institutions are responsible for on-site work such as airport and rail operations, making personnel restructuring through mergers and consolidations especially challenging. For example, merging Incheon International Airport Security (3,960 staff) with Korea Airport Security (2,575 staff) would result in an organization of 6,535 people, but the essential work of these employees is airport security. Similarly, merging Incheon Airport Facility Management (4,030 staff) with Incheon Airport Operation Services (2,675 staff) would produce a merged workforce of 6,705, but due to the nature of their work—facility management and operations—it would be difficult to uniformly reduce their numbers.

Bridging the gap between ensuring employment stability and improving workforce efficiency is also a pressing task. The government has stated its commitment to guarantee employment succession even as it consolidates overlapping organizations. However, because job grade, salary, and benefits systems vary from institution to institution, standards for employee treatment must be established after integration. At the same time, it will also be necessary to determine to what extent duplicated functions should be reduced and which work should be maintained among existing responsibilities. This process may give rise to labor-management conflicts over job roles and compensation. Songwon Kim, Secretary General of the Incheon Citizens' Coalition for Economic Justice, commented, "Incheon has been targeted for public institution relocations simply because it is part of the metropolitan area, but if institutions tied to the region's future industries—such as Incheon International Airport Corp., Incheon Port Authority, Korea Environment Corporation, and the Korea Polar Research Institute—are also moved, it could undermine the foundation for local growth."

Gwangyong Go, policy chief at the Freedom Enterprise Institute, emphasized that public institution reform should not be limited to simply reducing numbers. Go stated, "The excessive size of the public sector can lead to diminished private-sector vitality, increased fiscal burdens, and delays in innovation. Reform must move beyond reducing the number of institutions to re-designing their functions and introducing competition and market discipline." The Freedom Enterprise Institute proposed differentiated approaches by function, such as mergers and consolidations, functional adjustments, opening to the market, and privatization, depending on the institution.

The 2009 merger of Korea Land Corporation and Korea National Housing Corporation into Korea Land & Housing Corporation (LH) is often cited as a key example. Although the government at the time promoted the integration to eliminate redundant functions and enhance management efficiency, LH's total debt rose from 121.5 trillion won in 2010 to 160.1 trillion won in 2024, and operational losses from the rental housing business also increased from 500 billion won to 2.8 trillion won. In this latest reform, the government has decided to split LH into a putative "Housing and Urban Development Corporation" for land development and housing construction, and a "Housing and Urban Asset Corporation" for residential welfare and asset management.

Sangin Park, professor at the Graduate School of Public Administration, Seoul National University, said, "Rather than pursuing mergers and regional relocations separately, there is a need to develop a broader strategy that includes institutions already relocated, grouping those that are functionally connected and concentrating deployments by region." A government official noted, "Given the concentration of reform-targeted institutions and personnel in the metropolitan area, we will look not only at simple institutional consolidation, but also at the actual workforce size and deployment needed to carry out essential services."

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