Regulatory Body Faces 10% Budget Cut, Layoffs
By Na Jeong-ju
Staff Reporter
The Financial Supervisory Service (FSS) faces a budget cut and layoffs under the government's plan to streamline state organizations and strengthen relations with the private sector.
In a report to President Lee Myung-bak, the Financial Services Commission (FSC), which governs the FSS, said it will restructure the regulatory body to ensure more efficiency and higher quality of services for financial firms.
The report came days after new FSS Governor Kim Jong-chang pledged to drop a seniority-based wage system and pay more to capable and performance-oriented employees regardless of age.
The commission proposed outsourcing more than 25 percent of 1,700 FSS employees. Currently, about 14 percent are outsourced. The commission says firing more than a hundred employees is inevitable to hire experts from the private sector.
It also said it plans to reduce the budget of the FSS and the Korea Deposit Insurance Corp., a state-run deposit insurer, by more than 10 percent.
The decisions reflect worries that the regulator has failed to improve two-way communication with the market and is too rigid to accept change.
Under the current rule, ranking FSS officials are banned from getting jobs at private firms less than two years after retirement. However, the FSC is considering easing the rule to accept better talent from outside the company, the commission said.
``The budget cut and outsourcing of outside experts are necessary to improve the quality of services for private companies,'' an FSC official said. ``We will also have outside auditors evaluate our policies regularly to enhance transparency.''
The government established the FSS after combining four supervisory bodies of banking, securities, insurance and non-banking businesses. Each financial firm contributes a certain amount of money to share the budget of the FSS. Its annual income stood at 222.5 billion won in 2006, of which 176.4 billion won came from private firms.
The government plans to overhaul state organizations and privatize a number of state-invested public companies in line with President Lee's pledge to drastically restructure them into more efficient and profit-oriented entities. Lee has said he will pursue a small government.