Can agencies with different functions truly merge?

Pay structure integration raises conflict fears

Relocation variable adds to workers' uncertainty

Prime Minister Han Seong-sook speaks at a press conference on the relocation of administrative and public institutions and public institution functional reform, held at Government Complex Seoul in Jongno-gu, Seoul, on Thursday. [Yonhap]
Prime Minister Han Seong-sook speaks at a press conference on the relocation of administrative and public institutions and public institution functional reform, held at Government Complex Seoul in Jongno-gu, Seoul, on Thursday. [Yonhap]

Employees at public institutions targeted for consolidation are growing uneasy after the government unveiled a sweeping reform plan to reduce the number of public agencies by 109. While the government has pledged to guarantee job continuity and maintain existing compensation levels, uncertainty is mounting over how duties and organizations will be restructured after mergers and how differing pay scales will be reconciled. As a second round of relocations of public institutions to regional areas is expected to accelerate alongside the consolidations, workers say their biggest concern is where they will end up.

According to central government ministries and their affiliated agencies, the government has decided to guarantee employment continuity for all staff — excluding executives — at institutions subject to consolidation, and to operate pay structures so that compensation does not fall below pre-merger levels.

The institutions targeted for merger say they will cooperate with government policy, but the internal mood is one of anxiety over uncertainty rather than anticipation.

An official at an agency under the Ministry of Climate, Environment and Energy said, "No details have come out yet, so employees have a great deal of anxiety about how things will unfold."

An official at an agency under the Ministry of Agriculture, Food and Rural Affairs said, "We first need to understand the staffing and budget situation of the institutions being merged," adding, "There are no specific guidelines yet on the timing of the merger, relocation or budget, and it feels suffocating."

An official at another affiliated agency said, "Employees are merely watching how things develop," stressing that "the government needs to communicate fully on what is needed during the integration process and take good care of employees' working conditions."

Merging institutions into a single entity requires considerable procedural steps. In some cases, relevant laws must be enacted or amended, and detailed adjustments are needed given that each agency has different staffing levels, budgets and organizational structures. Negotiations with labor unions are another variable.

The government has said each ministry will draw up functional reform plans for its agencies and simultaneously pursue any necessary legislative changes and labor-management consultations.

A representative case is the planned merger of the Rural Hope Foundation and the Korea Agency of Education, Promotion and Information Service for Food, Agriculture, Forestry and Fisheries, both under the Ministry of Agriculture, Food and Rural Affairs. Because the Rural Hope Foundation is a public-interest corporation that handles donation-related work, separate procedures — including amending relevant laws and dissolving the legal entity — will be required.

There are also concerns that if the staffing and budget needed for integration are not adequately supported, working conditions for existing employees could deteriorate. Some agencies already struggle to secure sufficient office space due to operating budget shortfalls, meaning that an increase in headcount after a merger could require additional spending on office space and organizational management.

Pay structures present a particularly thorny challenge. Aligning the different grade classifications, wages, performance bonuses and benefits systems that each institution has applied into a single standard could leave some employees better off than before while others find themselves at a relative disadvantage. The government has set "preventing a decline in treatment" as a guiding principle, but the specifics of how pay systems will be integrated still require follow-up discussions at each agency.

An official at one of the institutions targeted for consolidation said, "Once merged, employees will learn the detailed compensation levels by grade at each organization, and any disparities could become a source of internal conflict." The official added, "Aligning different pay levels will require additional funding, so the actual adjustment process will not be easy."

President Lee Jae Myung instructs officials to "carry out sweeping consolidations" of public institutions at a government fiscal savings meeting held at the presidential office in Yongsan, Seoul, on Aug. 13 last year. [Yonhap]
President Lee Jae Myung instructs officials to "carry out sweeping consolidations" of public institutions at a government fiscal savings meeting held at the presidential office in Yongsan, Seoul, on Aug. 13 last year. [Yonhap]

The selection of institutions for consolidation is likely to proceed in tandem with a full-scale second round of relocations of public agencies to regional areas. Employees now face the prospect of not only organizational and operational changes from the mergers but also potential changes to their work locations.

On Thursday, the government announced plans to relocate more than 350 public institutions currently based in the greater Seoul area to regional cities. The government said it would finalize relocation plans in the fourth quarter of this year, with moves to begin next year, under the principle of "minimizing the number of institutions remaining in the greater Seoul area."

Since the second round of regional relocations had already been the top concern for public institutions, observers expect the consolidation process for the targeted agencies to be discussed alongside the relocation plans.

An official at an agency under the Ministry of Health and Welfare said, "Detailed discussions will take place going forward, but whether a genuine merger of functions is possible remains to be seen given the different nature of the work involved." The official added, "Smaller agencies may feel anxious about being absorbed, and the consolidation talks will likely proceed in conjunction with the regional relocation plans."

Analysts expect that as consolidations inevitably alter the scale of institutions, regional relocation will be discussed alongside efforts to create working environments capable of accommodating the combined workforce.

Meanwhile, the government on Thursday announced its "Public Institution Functional Reform Plan," under which a total of 109 public institutions will be eliminated. Agencies under the Ministry of Land, Infrastructure and Transport (14), the Ministry of Oceans and Fisheries (11), the Ministry of Culture and Sports (8) and the Ministry of Climate, Environment and Energy (8) are among those set to be merged with other institutions.


thlee@heraldcorp.com
adastra@heraldcorp.com