Current State of Public Institution Designation System and Improvement Initiatives

Published on 24 May 2022
Published by Public Institution Evaluation Division

   When the「Act on the Management of Public Institutions」was enacted in 2007, the number of public institutions designated as such was 298, and in January 2022, the number increased to 350. Due to the increase in the number of public institutions, the number of (current) employees hired by public institutions has jumped as well from 323,727 in 2017 to 414,610 in the first quarter of 2022. This points to a growing need for management and operation of public institutions in line with expansion in both the number of public institutions and public resources that have been put towards that end. Accordingly, in this report, analysis focused on the public institution designation system, which serves as the basis of oversight and operation of public institutions, and it was followed by identification of areas for improvement. These improvement initiatives were discovered by breaking them down into key improvement initiatives under the 「Act on the Management of Public Institutions」 and detailed improvement initiatives under the public institution designation system.
   As for the former, the Act needs to define the properties of being “public” as an anchor that can be used as a reference in relation to the actions, operation, and goal setting of potential public institutions; and the mechanisms on which the Act on the Management of Public Institutions are based upon should be reviewed to ascertain discretionary properties of the designation practice. Furthermore, the concept, identity and significance of each public institution type should be clearly stated in the law; current mechanisms of public institution classification should be changed to those where practical benefits are used for such categorization; and public institutions falling under ‘other’ categories need their level of regulating provisions adjusted accordingly.
   Next, as for the detailed improvement initiatives under the public institution designation system, first, a public institution classification dictates the number of employees be 50 or more, the total revenue to be 3 billion won or more, and the asset size to be 1 billion won or more as detailed classification criteria under the 「Enforcement Decree of the Act on the Management of Public Institutions」, and this set of detailed requirements may need to be revisited to ascertain its effectiveness.
   Second, current laws and regulations describe designations granted in relation to institutions aimed at R&D only, but they do not properly address areas related to operation and management of the said R&D-purpose institutions, including, specificity of budgeting and settlements in these institutions. Thus, a mechanism with which the R&D-purpose institutions is managed should be streamlined to improve its effectiveness.
   Third, currently, details of institutions without a designated classification following data submission for review by the Ownership Steering Committee (OSC), are not publicly disclosed, causing confusion about the scope of discretion and the criteria applied to reach such decisions. Thus, a legal basis should be established by specifically prescribing review criteria regarding failed designation of public institution applicants.
   Additionally, amendment of the legal basis needed to manage fund-management-type quasi-governmental institutions, and the public disclosure of reasons for canceled designations of previously designated public institutions have been suggested as initiatives for improvement.