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Public entities not to take responsibility for losses from debt-reduction efforts

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(Globalpost/GlobalPost)

SEJONG, Dec. 31 (Yonhap) -- Public organizations and their heads will not be held responsible for inevitable financial losses or labor strifes resulting from efforts to reform and solve debt problems, the government said Tuesday.

In guidelines sent to public entities that were ordered to reduce their debts, the Ministry of Strategy and Finance said the government will exempt them from the responsibility for losses incurred in the process of selling assets to ease their debts.

The heads of the organizations will not be held accountable for labor strikes during their aggressive push to tackle what is viewed as lax management practices, the ministry said.

The government on Dec. 11 announced the public-sector "normalization" plan, ordering 41 public organizations to reduce their debt ratio to 200 percent by 2017 from 220 percent at the end of 2012. These organizations came under fire for handing out excessive bonuses, benefits and perks to their employees despite their fast-growing debts and deteriorating business conditions.

Some organizations were even accused of "job inheritance" practices in employing children of workers who died of causes unrelated to their daily duty.

As of the end of 2012, the debt of the country's 295 public organizations reached about 493 trillion won (US$467.1 billion). The amount soars to as high as 566 trillion won if debt owed by public organizations of regional governments is included.

Finance Minister Hyun Oh-seok publicly lashed out at the organizations, saying, "The party is over," referring to the large bonus payouts and overly generous benefits.

Under the guidelines, public organizations will have to submit their debt reduction plans by the end of January along with reform measures aimed at improving their management efficiency.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/131230/public-entities-not-take-responsibility-losses-debt-reductio