Ballooning Public Sector

The economic downturn in the wake of the oil shock in the late 1970s highlighted the importance of nurturing small and mid-size companies in Korea. In response, the Commerce Ministry (now the Knowledge Economy Ministry) established the Small and Medium Business Corp. Non-civil servants were initially nominated to work at the company but retired executives of the ministry were later appointed en masse. The corporation’s size also grew bigger as overseas offices and 12 regional headquarters in the country were set up. In 1996, the Small and Medium Business Administration was established, and now has 11 regional offices as well as a support center for smaller companies. Support institutions have been created rather than small businesses. It is surprising how government officials can create so many organizations and jobs in the public sector.

The growth of government organizations and offices is not restricted to Korea. In the U.K., the number of employees at the Colonial Office increased faster after most British colonies became independent after World War II. The number increased from 372 in 1935 to 1,661 in 1954. British economist Northcote Parkinson even devised Parkinson’s Law, which says, “Work expands to fill the time available.”

The Korean Employment and Labor Ministry will form an organization to support social enterprises. The organization will develop social enterprise models and promote management consulting and education for social entrepreneurs. The head will receive more than 100 million won (90,000 U.S. dollars) in annual salary and have 42 employees. Open recruitment for 33 positions is being promoted. A Grade 1 civil servant at the ministry is highly likely to take over the organization. The labor minister has the right to appoint the head. Creating jobs for those who need them should take priority instead of hiring ex-bureaucrats.

When a crisis, employment problems and plans to foster small and medium businesses emerge, the number of related organizations and civil servants increase. Once an organization is created, it never disappears. After establishing an organization under the government, ex-bureaucrats usually get vacant positions. The British government recently decided to lay off some 500,000 public servants, its largest downsizing since World War II, apparently to cut tax spending. The Korean government should also put a halt to the expansion of the public sector.

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