International -- Asian Business: SOUTH KOREA
Will This Seoul Bureaucrat Put Himself out of a Job? (int'l edition)
Jin Nyum's mission: Slash the gOvernment down to size
One of Jin Nyum's most powerful memories is watching Prime Minister Margaret Thatcher upend Britain after she came to power in 1979, when he was posted to the Korean Embassy in London. Now, as the point man for a sweeping overhaul of South Korea's bloated government sector, Jin, 58, is trying to bring a Thatcher-like revolution to Korea from his government Planning & Budget Commission. "The crisis gives us momentum to change," says Jin, drawing on a cigarette in his office in southern Seoul, "just like Margaret Thatcher restructuring Britain."
Investors worldwide are familiar with the efforts of Korean President Kim Dae Jung to achieve a major overhaul of the country's corporate Establishment, including the latest pressure tactics in the semiconductor industry. But they are less familiar with Kim's other urgent mission: to end government control of numerous state-owned businesses and dramatically cut back the size and influence of Korea's civil service. Kim made Jin head of a super-ministry formed in February to pursue this unpopular mission. With a staff of just 99, including his driver, Jin may be outnumbered by opponents of reform inside his own government.
The South Korean state is a monster, employing nearly a million people and accounting for more than one quarter of the economy. Meddlesome bureaucrats make life miserable for citizens and companies, while state-owned companies suck up capital but produce mostly paltry returns. A lifelong civil servant who also was Energy Minister and briefly ran the troubled Kia Group as government receiver, Jin knows the bureaucratic beast well. So Jin--who reports to the President--wants to slash the payroll. He plans to start by selling off 11 of 26 state-owned companies, ranging from tobacco to telecommunications, which account for about two-thirds of total production and employment by the state. The privatization program could raise $2.2 billion in 1999.COMPETITIVE. Jin will cut the civil service and rework government practices, drawing on the experiences of Britain, New Zealand, and Australia, which have undergone sweeping privatizations and shrunk their bureaucracies. He also wants to improve South Korea's standing in international competitiveness surveys.
Shaping up and selling off state companies are the toughest tasks facing the Kim administration in 1999. The sprawling state sector has traditionally had monopolies on everything from printing textbooks to making cigarettes. The government still owns big stakes in Korea Telecom and Korea Electric Power Co. Many of the state-owned companies are run as fiefdoms, with little accountability to the government. To prod the process along, Jin is offering individuals at state-run companies up to $40,000 in cash for cost savings they propose. Among the first benefactors are railroad workers, who will divvy up $3.6 million, half the cost reductions they achieved by managing staff more efficiently.
On Dec. 9, Jin sold a $300 million stake in Pohang Iron & Steel Co. (POSCO) to overseas equity investors, reducing the government's share to just under 20%. He promises to sell the remainder in the next two years. He also managed to unload Korea National Textbook Co. in November to a local buyer. POSCO is a world-class manufacturer, while the textbook publisher has a lucrative franchise; other state-owned companies don't have as much to recommend them.
Compounding the problems of Jin's job is his other mission: cutting payroll at the ministries. The government has said it will cut 11% of the 270,000 central government employees, who aren't permitted to unionize, by the end of 2000. "But it may be more," warns Jin. Local governments are supposed to lay off 30% of their 180,000 workers in the next three years. And Jin wants to cut the retirement age of teachers to 60 from 65, to reduce staff and get new blood into Korea's stodgy classrooms. Not surprisingly, he's meeting stiff resistance from the teachers' union.
By the standards of Korea's notoriously hierarchical society, Jin is fairly laid back. He regularly takes the public elevator, rather than the VIP one, to his sixth-floor office. Aides say he is more willing than many Korean bosses to entertain dissent from his staff. Nice touches--but they won't make Jin any more popular as he presses forward. It's shaping up as a year when Jin Nyum makes more foes than friends.By Mark L. Clifford in Seoul