As the government reorganization plan pushed by the Lee Jae-myung administration hits a snag amid ruling-opposition strife, the likelihood is growing that the restructuring of economic ministries—including the partitioning of the Ministry of Economy and Finance, which had been targeted for January next year—will be delayed by at least three months. There are concerns that if the organization is split after budget execution has begun, the continuity of policy implementation will be shaken and that confusion over duties within ministries and a slackening of civil service discipline could occur.
According to the political bloc on the 19th, the Democratic Party of Korea set a policy to designate the related bills as fast-track items if it cannot secure cooperation from the People Power Party in the process of handling the government reorganization plan.
On the 12th, the Democratic Party submitted to the National Assembly a bill to amend the Government Organization Act that includes the partitioning of the Ministry of Economy and Finance and the creation of a Financial Supervisory Commission. The amendment passed the subcommittee of the Public Administration and Security Committee on the 18th, and it is expected to be handled at the full committee meeting of the same committee on the 22nd, undergo review by the Legislation and Judiciary Committee on the 23rd–24th, and be put to a plenary vote on the 25th.
But this alone cannot complete the reorganization work, including the partitioning of the Ministry of Economy and Finance. Eleven follow-up bills must be handled together, including nine under the jurisdiction of the National Policy Committee—the Act on Corporate Governance of Financial Companies, the Banking Act, the Act on Internet-only Banks, the Financial Consumer Protection Act, the Insurance Business Act, the Credit Information Act, the Specialized Credit Finance Business Act, and the Electronic Financial Transactions Act—and two under the jurisdiction of the Strategy and Finance Committee—the Act on the Management of Public Institutions and the Statistics Act.
The Democratic Party is aiming for "reorganization in January next year," but cooperation from the People Power Party is essential to achieve this. That is because the chairs of the National Policy Committee and the Strategy and Finance Committee are People Power Party lawmakers (Yoon Han-hong and Lim Lee-ja).
However, as the ruling and opposition parties clash while linking the reorganization to the handling of special prosecutor bills, it has become difficult to secure cooperation from the People Power Party. The Democratic Party and the People Power Party reached a tentative agreement to handle the Government Organization Act simultaneously with a revised plan that does not extend the investigation periods for the three special prosecutors and minimizes increases in investigative personnel, but the Democratic Party reversed course due to internal backlash.
The Democratic Party plans to persuade the People Power Party by the 25th, when the plenary session is scheduled. If the negotiations fail, the partitioning of the Ministry of Economy and Finance and the reorganization of the Financial Services Commission will inevitably be delayed by at least three months. If designated as a fast-track item, it will be placed on the plenary agenda after going through a standing committee review (180 days), Legislation and Judiciary Committee review (90 days), and referral to the plenary (60 days). If designated as fast-track around the 25th, the bill will be automatically referred to the Legislation and Judiciary Committee in mid-March next year.
The problem is that the restructuring of the Ministry of Economy and Finance had been prepared in line with the schedule for next year's economic policy rollout. If the organization is split when budget execution is already in full swing, there is a high possibility that the continuity of policy implementation will be shaken. With the overhaul of the financial supervisory framework also delayed, policy confusion is unavoidable.
A government official said, "Internally, we are already working on the reorganization on the premise of splitting, but if this is pushed to April, practical confusion will be inevitable," adding, "As the organization becomes unsettled, there is a high possibility that work momentum will drop." The official added, "Economic policy moves in tandem with budget execution, and splitting ministries in the middle makes things ambiguous," saying, "A January reorganization is optimal."
Even compared with past administrations, such delays are unprecedented. The Lee Myung-bak administration launched the current Ministry of Economy and Finance by integrating the Ministry of Planning and Budget and the Ministry of Finance and Economy just two days after its launch (based on Cabinet approval). The Park Geun-hye administration revived the Ministry of Oceans and Fisheries in 26 days and created the Ministry of Science, ICT and Future Planning (now the Ministry of Science and ICT).
Although the Moon Jae-in administration launched without a Presidential Transition Committee, it upgraded the Small and Medium Business Administration to the Ministry of SMEs and Startups in 76 days. Unlike the past, when reorganization was completed within 80 days of inauguration at the latest, the Lee Jae-myung administration will end up completing the reorganization of economic ministries only after more than nine months since its launch.
In addition to weaker policy execution, there are also concerns that a slackening of civil service discipline will be unavoidable. A government official said, "When the placement of new ministries has already been signaled, if the delay drags on, civil servants will pay more attention to the ministries where they will be assigned in the future than to their current posts," adding, "As morale drops and discipline slackens, the overall atmosphere within ministries could become lax."