By Na Jeong-ju
Staff Reporter
The Lee Myung-bak administration plans to cut the tenure of heads of public firms from the current three years to one year as part of efforts to reform the public sector, Cheong Wa Dae said Monday.
Heads of public firms can renew their contracts but will be sacked if they fail to meet performance expectations. They must provide management goals every year to keep their jobs.
The measures are the centerpiece of a new monitoring system for public firms, which often become the target of public criticism due to a lack of efficiency and ethical problems in management. The new scheme will go into effect next month.
``Heads of some 300 public firms will have to sign new contracts and present their ideas to improve bottom lines to related ministries,'' a Cheong Wa Dae spokesman said. ``The government will decide on whether to fire them next year based on assessment of their managerial performance.''
The measures will affect chief executives of the Korea Development Bank (KDB), the Export-Import Bank of Korea, the Industrial Bank of Korea (IBK) and other state-owned financial firms, who are receiving higher salaries than those of other public companies.
The public sector reform is one of the key pledges Lee made during last years campaign.
His administration is reportedly considering sacking approximately 70,000 public employees nationwide to streamline management. There are currently around 258,000 employees working at 305 state-run, quasi-government and government-funded institutions.
Heads of state-run companies also face steep cuts in paychecks.
The Ministry of Strategy and Finance said last week that to lower wages for public company CEOs, the base annual salary for all state-run firms will be set at 108 million won, equivalent to that of a Vice Minister.
The KDB governor and presidents of the Export-Import Bank and IBK will see their base salary fall by 42.4 percent, 38.3 percent and 32.1 percent, respectively, and the ministry will introduce performance-based bonuses for them.
``So far, heads of public firms have been allowed to finish their three-year term even if considered incapable,'' the spokesman said. ``They should work harder to keep their posts, or they will lose their jobs.''
Since the inauguration of Lee in late February, the government has dismissed chief executives of many state-run or state-invested firms. The CEOs were mostly former senior government officials or politicians, many of them having no managerial experience.