[Ministry of SMEs and Startups]
[Ministry of SMEs and Startups]

Distribution agency's 295 staff, public home shopping channel's 379 to form single 674-member body

Eliminating overlapping functions is key; pay scales, job grades and duplicate units to follow

Startup incubation body, facility management subsidiaries also to merge; ministry says it will consult unions

The broad outline of a restructuring of public institutions under the Ministry of SMEs and Startups has taken shape, but the real work of merging the organizations has only just begun. Changing the nameplates of two agencies into one is a different matter from actually unifying pay scales, job grades and personnel systems. How staff and functions will be redistributed during the integration is also drawing close attention, given the government's stated goal of eliminating overlapping and duplicative roles.

The Ministry of SMEs and Startups said Tuesday it would push ahead with functional reforms of its affiliated public institutions in line with the government's "Plan for Reforming Public Institution Functions" announced Thursday.

The largest change is the merger of the Korea SMEs and Startups Distribution Agency, known as Hanyuwon, and the public home shopping channel into a new entity to be called the Korea SME Marketing Promotion Corporation. The idea is to have a single agency handle everything from identifying promising small and medium-sized enterprises and their products to commercialization, online and offline retail and actual sales. The two organizations have a combined headcount of 674 — 379 at the public home shopping channel and 295 at Hanyuwon.

While the policy direction has been set, a number of issues remain to be resolved internally. The ministry said it would consolidate overlapping functions the two agencies have each been running separately, such as identifying promising products and commercializing them. How to divide the work of departments with overlapping mandates, and how to design the new organization's structure and personnel system, remain as follow-up tasks.

Harmonizing the two organizations' separate pay and job-grade systems will be a particularly significant variable. Depending on which benchmark is used to align existing employees' salaries and grades, the interests of staff from each institution could diverge sharply. How the merged entity's headquarters and management positions will be structured is also likely to be addressed in future labor-management consultations. The public home shopping channel has higher average pay, but salary structures vary considerably by grade and job function.

The division of roles between the two organizations' policy support and sales functions will also need to be worked out. Hanyuwon focuses on helping small and medium-sized enterprises, venture companies and small business owners find sales channels, while the public home shopping channel sells products directly through TV home shopping and online platforms. The government intends to build a pipeline from product discovery through to sales, but how to separate the selection of policy support recipients from the management of sales channels within a single organization is expected to be a central challenge in designing the new entity.

Startup support organizations will also be consolidated. The Korea Business Incubation Association will be merged into the Korea Institute of Startup and Entrepreneurship Development. The plan is to link the institute's existing startup support programs with the on-the-ground network of 248 business incubation centers nationwide and to foster collaboration with regional startup support bodies, including 17 Creative Economy Innovation Centers. The ministry said the integration would underpin its "Everyone's Startup Project" and help reorganize the regional startup support system.

Facility management units will also be brought together. Three facility management subsidiaries — Kibo Mate, Jungjingong Partners and Hanyuwon Partners — will be merged into a new company to be called SME Venture Management Co. Because facility management organizations that previously operated under different parent agencies will be consolidated into a single company, work will be needed to align pay and personnel systems, labor-management relations and working arrangements.

Some institutions will move outside the ministry's purview altogether. The Korea Institute for Small Business and Entrepreneurship will be transferred to the Economic, Humanities and Social Research Council under the Office for Government Policy Coordination. It will continue to carry out policy research projects for the ministry while expanding collaboration with research institutions in the economic, financial, employment and regional fields. The Comprehensive Support Center for Enterprises of the Disabled will be transferred to the Korea Employment Agency for Persons with Disabilities under the Ministry of Employment and Labor.

The Korea SME Certification Institute, the Korea Industry-Academia-Research Cooperation Association and the Women's Enterprise Support Center will be reorganized to shed their designation as public institutions under the Act on the Management of Public Institutions. The aim is to reduce the scope of government oversight while giving the organizations greater operational autonomy and expanding their collaboration with the private sector.


hong@heraldcorp.com