South Korea's state-run firm restructuring focuses on AI transformation, not cost-cutting

By Kang Yoon-seung

SEOUL, Sept. 4 (Yonhap) -- The proposed restructuring of state-run firms is aimed at responding to major changes in the industrial landscape, including the artificial intelligence (AI) transformation, rather than cutting costs, a finance ministry official said Friday.

The remarks came after the South Korean government unveiled a blueprint to reduce the number of state-run firms by around 20 percent, from 524 to 415, the previous day.

"We are taking a completely different approach from previous initiatives to reform state-run firms," the official said.

"(During previous administrations), reforms were aimed at improving efficiency and tackling poor management. This time, however, we are pursuing comprehensive and preemptive reforms to address complex challenges, including the AI transformation," the official added.

The official said that although the restructuring will involve workforce reallocation, it will not affect the total number of new employees hired.

The 109 entities subject to restructuring currently employ an estimated 120,000 full-time workers, according to the finance ministry.

South Korea will establish a task force to explore ways to narrow wage gaps between higher- and lower-paying institutions, the official added.

The official noted that the restructuring does not necessarily entail relocating the institutions to other regions, saying such arrangements will be decided separately.