[Aftermath of Restructuring] Obstacles to Public Institution Reform Arise Across Gas, Ports, and Finance

"Concerns Over Financial Burden and Weakened Functions"
"Need to Consider Functions and Regional Characteristics"

The government’s push for restructuring and relocating public institutions as part of the second phase of decentralization policies has encountered backlash across various sectors. Objections have been raised against the policy, citing increased financial burdens from consolidation, potential weakening of organizational functions, and concerns over contractions in local economies.

The labor union of Korea Gas Corporation argues that merging with Korea National Oil Corporation, which is in a state of complete capital erosion, could significantly increase the financial burden. In fact, if the debts of both companies are combined, they would exceed 60 trillion won. The union is concerned that if increased debt reduces their capacity for resource development investments, it could ultimately undermine their negotiating power at the international level.

In an official statement, the Korea Gas Corporation labor union said, “An M&A with Korea National Oil Corporation, which is completely capital-impaired, is unthinkable,” adding, “Such abnormal action would not lead to integration for energy security but, contrary to the government’s intentions, would result in a catastrophic policy failure that threatens energy security.” Likewise, the Korea National Oil Corporation labor union stated, “We cannot dispel our concerns and suspicions over why the government made such a surprise announcement on this vital energy security issue,” and added, “We are resolutely opposed to this integration plan, as it not only lacks procedural legitimacy but also represents the worst possible self-defeating move that would destroy the national energy ecosystem.”

On the 18th, members of the Korean Financial Industry Labor Union shouted slogans during a press conference denouncing the hasty attempt to relocate the national policy banks to local areas held in front of the Cheongwadae Sarangchae in Seoul. Photo by Yonhap News Agency

Strong backlash has also erupted over the proposed integration of the four port authorities. The National Maritime and Fisheries Labor Union criticized the plan to merge Incheon, Busan, Ulsan, and Yeosu-Gwangyang Port Authorities into a single Korea Port Authority, saying it disregards the unique industrial structures and types of cargo handled by each region's port. The union further argued that transferring key functions to the integrated headquarters would reduce the roles of regional offices, while retaining existing local functions would merely add a new headquarters on top of them, creating an inefficient ‘redundant hierarchy’ structure. As an alternative, the union proposed linking overseas offices, marketing operations, and information systems, rather than pursuing physical integration.

Within the financial sector, there is growing opposition to the relocations themselves. As discussions intensify about the potential relocation of national policy banks such as the Korea Development Bank, Industrial Bank of Korea, and Export-Import Bank of Korea, the National Financial Industry Labor Union argued that the competitiveness of Seoul’s financial cluster—which consists of financial institutions, corporations, and key policy and supervisory agencies—could be undermined. The union also expressed concern that greater physical distance from related agencies such as the Financial Services Commission and Financial Supervisory Service could disrupt efficient consultation for policy finance and regulatory work.

While the government maintains that both restructuring and relocation are needed to promote balanced regional development and greater efficiency in the public sector, those on the ground point out a lack of thorough review regarding the unique circumstances of each institution and the actual effectiveness of relocation. If organizational restructuring is immediately followed by relocation, both employees and institutions may face substantial burdens as they would have to repeatedly change their workplace and work systems.

Chairmen of the labor unions of Busan Port Authority, Incheon Port Authority, Ulsan Port Authority, and Yeosu Gwangyang Port Authority held a press conference on the 8th in front of the Ministry of Economy and Finance at the Government Complex Sejong in Sejong City, opposing the government's plan to integrate the four port authorities. Photo by Yonhap News Agency

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