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Public sector targets 10 percent cut in operating expenses

Money saved likely to be used for welfare, economic stimulus

Government ministries and agencies will cut 10 percent of their basic operating expenses in their 2013 budget in an attempt to tighten their belts amid the protracted economic downtown, the Ministry of Strategy and Finance said Tuesday.

“It is true the government asked for ministries to submit a plan to cut their basic operation costs by 10 percent,” a ministry official said.

The cut will be made by reducing spending on administrative activities, information technology system operations and public service workers. Administrative activities include business trips, utilities, meals, and education and training.

The basic operating costs of all the ministries take up 0.7 percent of the 2013 total government budget scaled at 342 trillion won ($310 billion). Therefore, the reductions would amount to just 0.07 percent of the total 2013 budget, or 238.6 trillion won ($216.5 billion), the ministry said.

According to the ministry, it is the third time the government has launched a cost-saving campaign targeting ministries, following 1998 when the country was hit by the IMF crisis and 2008 when it faced the U.S.-triggered global economic downturn. The previous budget cuts included not only a reduction in the cost of basic operations but also a 10 percent reduction in the payrolls of high-ranking officials and a spending cut in core business activities.

The funds pulled from the latest ministry budget cut are likely to be spent on activities to boost the economy or to expand welfare, the ministry official said.

The ministry, in particular, sought extra funds from the 2013 budget to increase welfare programs, but it expressed difficulties in fulfilling this without a tax increase.

By Seo Jee-yeon  (jyseo@heraldcorp.com)
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