By Kim Yoon-mi

The South Korean government said yesterday it would cut 19,000 jobs at 69 public firms in the fourth stage of its public sector reform program.

The Ministry of Strategy and Finance said the job cuts would be carried out gradually through a natural phasing-out process and voluntary retirement over three to four years, given the current grim economic situation and bleak job market.

"As we strive to improve public sector efficiency, 19,000, or more than 10 percent of jobs, will be reduced out of the 150,000 jobs (at 69 firms)," Vice Finance Minister Bae Kook-hwan told reporters in Gwacheon.

The ministry's restructuring program came two days after President Lee Myung-bak on Friday called for a strong restructuring drive for both public and private sectors to ward off a worse economic situation.

Since his inauguration in February, Lee has been pushing to overhaul government-owned enterprises, which have been criticised for negligent management and waste of taxpayer money.

According to the detailed restructuring plan, a workforce reduction will be the largest at the Korea Railroad Corp., which has to reduce 5,115 jobs or 15.9 percent of its workforce. The Korea Electric Power Corp. needs to get rid of 2,420 jobs. At the 69 firms, the job cut rate ranges from 10 to 37.5 percent, depending on the size of the unnecessary functions at those firms, officials said.

Bae emphasized that the government did not intend to focus only on layoffs, adding that about half of the reduced jobs that were naturally phased out would be covered by new recruits as well. Also, firms can use a job-sharing program in which colleagues help retain their co-workers' jobs through accepting pay cuts, he said.

To better use taxpayer money, the government said it would sell 8.5 trillion won-worth ($6.5 billion) of unnecessary assets at some state-run firms, including KORAIL. Out of the 8.5 trillion won, 7.6 trillion won would come from the selling of KORAIL's property in Yongsan, Bae said.

The restructuring and the selling of the public assets will save a total of 10.2 trillion won of state money, ministry officials said.

Out of the 305 public firms in Korea, five public firms are scheduled to be shut down and 22 privatised, according to the government's previously-announced public reform measures.

All the remaining 278 firms are also subject to restructuring or streamlining, but the government announced job cuts at 69 firms first, as those firms had already agreed with labor unions, officials said.

However, the restructuring plan may receive strong resistance from labor unions.

Woo Moon-sook, spokesperson of the major umbrella union the Korean Confederation of Trade Unions, criticized the government's privatization plan, saying the ministry had failed to reach a consensus with the labor union before announcing the plan.

"They didn't reach an agreement with us," she said, adding that the labor union group will prepare action plans to oppose the restructuring.

In January next year, the government will announce another job reduction plan and a desired ratio of executives at public firms, as well as job-sharing methods, government officials said.