Finance Minister Jin warned, "If banks receiving public funds fail to turn out profits, wages will be frozen"

Finance and Economy Minister Jin Nyum said Monday that banks wanting to receive additional public funds should abolish a progressive severance payment system. Also if they fail to achieve 220 million won in per employee profits, wages would also be frozen.

In an explanatory session on current economic conditions, Jin said that the government will come up with a package of drastic measures including these, aimed at effectively controlling the injection, operation and retrieval of public funds.

Under the envisaged plan, the ministry will report the operations of public funds to the National Assembly every three months and will strictly monitor possible lax management and morale hazard of institutions receiving the funds to maximize the amount of public funds retrieved.

Regarding the liquidity crisis of Hyundai Engineering and Construction (HEC), the minister also said that it would be desirable to keep the company running by any means, in light of the expected economic burden to the nation and for the sake of overseas projects underway. However, he made clear the government will never be swayed by a company like it was in the past.

The minister said that the best way to solve the HEC crisis is for the company to come good through its own efforts, the last option would be to place it under court receivership. Jin emphasized once again that if the construction firm fails to rescue itself, the government will consider a debt-for-equity swap to deprive the company of its managerial control and reduce its capital.

At the meeting, the ministry also unveiled projections that jobless figures will reach 900,000, with the unemployment rate rising to 4.1 percent next month, following the exit insolvent companies Nov. 3 and seasonal factors. Compared with the end of September, the number of jobless people will mark an increase of 100,000 and the unemployment rate will indicate a rise of 0.5 percentage points.

Minister Jin noted that it is urgent to revive consumer and investor sentiment, which as been drastically dampened recently. If corporate restructuring and management reforms are completed successfully, it will create a boost to the real economy, possibly by next spring, he predicted.