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[Op-Ed] Communist-like Public Companies

Posted September. 28, 2009 08:26,   


A government committee on the management of 92 publicly funded corporations and organizations has recommended the firing of four public CEOs after an assessment conducted in June. The heads of 17 state-funded organizations received warnings for lax management. Another warning will result in dismissal. The Lee Myung-bak administration introduced the management evaluation system to speed up reform of state-funded organizations, but managers complain that implementing reform is hard because of strong union resistance and a lax work ethic among executives and staff at public entities. Many managers whose appointments were made out of political considerations seek to avoid trouble while in office rather than confront unions.

Lee Chae-wook, former chairman of General Electric Korea who won the top job at the Incheon International Airport Corp. in September last year through open competition, compared the corporate culture of state-funded companies to that of a communist party. “Those with a lot of work complain while doing their jobs. Those with little work try not to do anything at all,” he said. Almost all communist countries have failed to keep their promises of work in accordance with individual ability and distribution according to need. Despite a communist party-like culture, however, Korea’s state-funded corporations are not improving their corporate environment. The key to their survival lies in “taming” their chief executives through hard-line struggles by their unions.

The Kim Dae-jung administration, which was inaugurated amid the 1997-1998 Asian financial crisis, tried to privatize all state-run companies that needed restructuring. Of 11 state-run companies selected for spinoff, eight were sold to private investors. The succeeding Roh Moo-hyun administration, however, committed an about face in the policy, canceling privatization of the remaining three and seeking to make state-run companies bigger. The privatization drive was derailed by the vociferous unions of public companies. The Roh administration was nearly on the same side as the unions, whose members wore red headbands.

At state-run companies, there is labor but no management. They are not run by the government but rather by unions. Seo Sa-hyeon, who has headed three state-run corporations, said nobody but the CEO could stand up to the unions. Many CEOs at public companies collude with unions to reach illegal deals, including paying groundless allowances and even early retirement money to workers who move to a subsidiary. Reform of the public sector was a campaign pledge of President Lee, but how hard he will push for this remains to be seen.

Editorial Writer Park Yeong-kyun (parkyk@donga.com)