State-run firms' restructuring aimed at reform, not cost cuts: official

South Korea's finance ministry announced Friday that the restructuring of state-run firms, reducing their number by about 20 percent from 524 to 415, is aimed at preemptive reform to address challenges including AI transformation, not cost cutting. The official said the approach differs from previous administrations' efficiency-focused reforms, and while workforce reallocation will occur, total new hires will not be affected. The 109 entities being restructured employ about 120,000 full-time workers.

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 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. Korea will establish a task force