Why is South Korea restructuring state-run firms instead of focusing on cost cuts?

A finance ministry official said the plan is intended to respond to major changes in the industrial landscape, including the AI transformation. The official described it as a comprehensive and preemptive reform rather than a cost-cutting exercise.

How many state-run firms will be cut under the government restructuring plan?

The government plans to reduce the number of state-run firms by around 20 percent, from 524 to 415. That means 109 entities are subject to restructuring, and they currently employ an estimated 120,000 full-time workers.

Will the restructuring of state-run firms affect hiring or relocation plans?

The official said the restructuring will involve workforce reallocation but will not change the total number of new employees hired. The official also said relocation to other regions is not automatic and will be decided separately.

State-run firms' restructuring aimed at reform, not cost cuts: official

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Summary

A finance ministry official said Friday that the restructuring of state-run firms is meant to respond to major industrial changes, including the AI transformation, rather than to cut costs. The government unveiled a blueprint the previous day to reduce the number of state-run firms by about 20 percent, from 524 to 415. The official said the plan is a comprehensive reform, will involve workforce reallocation without changing total new hires, and may also address wage gaps and relocation separately.

Key Facts

The blueprint would reduce state-run firms from 524 to 415, a cut of 109 entities.
The 109 entities subject to restructuring employ an estimated 120,000 full-time workers.
The finance ministry said the restructuring will not affect the total number of new employees hired.
Korea will establish a task force to explore ways to narrow wage gaps between higher- and lower-paying institutions.
The official said the restructuring does not necessarily mean the institutions will be relocated to other regions.

By Yonhap

Published Sep 4, 2026 2:16 pm KST

This undated file photo shows the flag of Korea, left, and its government. Yonhap

The proposed restructuring of state-run firms is aimed at responding to major changes in the industrial landscape, including the artificial intelligence (AI) transformation, rather than cutting costs, a finance ministry official said Friday.

The remarks came after the Korean government unveiled a blueprint to reduce the number of state-run firms by around 20 percent, from 524 to 415, the previous day.

"We are taking a completely different approach from previous initiatives to reform state-run firms," the official said.

"(During previous administrations), reforms were aimed at improving efficiency and tackling poor management. This time, however, we are pursuing comprehensive and preemptive reforms to address complex challenges, including the AI transformation," the official added.

The official said that although the restructuring will involve workforce reallocation, it will not affect the total number of new employees hired.

The 109 entities subject to restructuring currently employ an estimated 120,000 full-time workers, according to the finance ministry.

Korea will establish a task force to explore ways to narrow wage gaps between higher- and lower-paying institutions, the official added.

The official noted that the restructuring does not necessarily entail relocating the institutions to other regions, saying such arrangements will be decided separately.

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