Excluding the wages of executives, the average annual salary of workers at state-run agencies amounted to W53.4 million (US$1=W997) per employee last year, according to an analysis of financial information gathered from the agencies by the Ministry of Strategy and Finance. That was 66 percent more than the average W32.2 million annual salary that an ordinary worker in Korea earns. The average annual wage at a total of 92 state-run agencies were found to be even higher than at Samsung Electronics, Korea's most-profitable company, which pays an average W60.2 million a year per worker.
Are the abilities and levels of expertise of staff in stage-run agencies worthy of such high wages? The Korea Securities Depository ranked highest in terms of the average annual salary with W96.77 million. That's even higher than what CEOs at most small and mid-sized companies make in a year. The KSD has a monopoly on the settlement of financial transactions in the stock market and the deposit of securities, which involves holding on to stocks and bonds that investors have purchased. It made W147.9 billion last year on commissions and fees. To put it bluntly, the KSD simply sits there and collects a commission each time investors make a financial transaction on the stock market. Out of this profit, it was left with an operating profit of W65.1 billion last year, even after splurging on salaries, workers' benefits and other expenses.
KOSCOM, which ranked third with an average annual salary of W91.85 million, has a monopoly on computerized systems involving the stock market. If it lost its monopoly and had to lower its commission to compete with rivals, there is no way it would be paying its workers higher average salaries than Samsung Electronics. Most state-run agencies have had their work entrusted to them by the government and are making money easily without worrying about competition. Staff have a lighter workload than their counterparts in private companies, get paid more and don't have to worry about getting laid off no matter what happens to the Korean economy. No wonder people say these jobs have been handed down from the gods.
State-run businesses and public agencies spent the last five years expanding, taking advantage of the absence of pressure to privatize during the Roh Moo-hyun administration. The total number of executives and workers at Korea's 302 state-run agencies grew from 192,686 in 2003 to 258,982 in 2007, swelling by around 66,000. As a result, staff accounted for 1.11 percent of Korea's total workforce, up from 0.87 percent. The overall productivity level of the Korean economy can only slow down if the share of state-run agencies, typified by low-productivity, accounts for a larger share.
Moreover, the total debt accrued by state-run agencies grew from W243 trillion in 2003 to W276 trillion, up W31 trillion. In contrast, net profit almost halved from W31.1 trillion to W17.4 trillion. Yet average annual salaries rose from W43.5 million to W53.4 million, up 5.3 percent a year on average. The average annual salary of the heads of state-run agencies rose from W120 million to W154 million, up 6.5 percent on average each year. That was a higher increase than the wage hikes enjoyed by ordinary employees. Where on earth can you find such a workers' paradise, where salaries rise without a glitch each year, while workloads decrease with the hiring of more staff, even though profits drop and debts rise?
Most of the top jobs at state-run agencies are doled out to retired government workers from the ministries that oversee them or to down-and-out politicians who used to go pass themselves off as some special advisor or other during presidential elections. With just three-year tenures, these officials who are appointed presidents have no interest in streamlining operations at their agencies at the risk of drawing criticism. More importantly, they are seen as outsiders parachuted into the top jobs due to their connections. This is their Achilles heel in their relations with the unions at their agencies, prompting these presidents to repeatedly raise wages across the board. The positions of auditors at state-run agencies are also awarded to washed-out politicians who have no idea of accounting procedures. These fake auditors don't keep an eye on management practices but are usually more concerned about being left behind in wage hikes. Because of this unique relationship, state-run agencies bleed, the country's economy bleeds and the public ends up paying the price.
The government, which should be monitoring state-run agencies, is actually on the same side. The heads of eight out of 10 state-run agencies who receive more than W400 million in annual salaries are former bureaucrats. For government officials who have set their sights on earning exorbitant salaries at state-run agencies after retirement, there is no reason to tinker with the wages offered there.
In the end, the only way to solve the lax management practices and high wages at state-run agencies is to find new owners for them -- in other words, privatization is the best method. If the Lee Myung-bak administration successfully privatizes even one state-run agency during its five-year term, it will go down in history as a government that stood on the side of the public and accomplished a major task.