State-owned enterprises and other public organizations take up a large portion of the Korean economy. The combined budget of these 295 entities is 575 trillion won this year, far larger than the central government’s budget of about 350 trillion won.

These institutions exist to provide a wide array of indispensible public services, but they do not enjoy a high reputation among the public due to their rapidly growing debt and lax management practices.

Last year, their cumulative debt reached 493.4 trillion won, topping the central government’s liabilities of 425.1 trillion won. Despite the staggering debt mountain, many public corporations have kept on giving generous performance allowances to their employees.

For these reasons, all preceding governments tried to reform state-run enterprises and other public agencies. But their reform efforts fizzled out after they passed the halfway point in their tenure.

On Monday, the new government unveiled its version of reform, which involves a system of ongoing restructuring of public institutions and a new CEO selection method designed to prevent so-called “parachute appointments.”

The reform plan calls for assessing the functions of existing public entities on an ongoing basis to close or consolidate those whose roles overlap.

The Ministry of Strategy and Finance said the government would first readjust the functions of the institutions engaged in three areas ― support for small and medium-sized companies, development of broadcast content, and promotion of employment and welfare services. For this, it will conduct a review on them by December.

To keep public sector debt in check, the blueprint calls on the government to force heavily indebted organizations to make self-help efforts through asset sales, operation downsizing and cost-cutting.

It also suggests requiring them to submit a mid-to long-term financial management plan to the National Assembly, arranging for their annual performance appraisals to reflect whether they have met their yearly targets or not.

The reform plan also proposes a new CEO selection process to put an end to the practice of well-connected politicians or influential former government officials being parachuted in the top posts of public bodies, despite their lack of relevant expertise.

It suggests that the executive recommendation committees of public entities be made more independent by allocating more than half of their seats to outside figures.

It also proposes to empower the committees by ensuring that CEOs are picked directly from among the candidates they have recommended. Currently, CEOs are chosen from the shortlists drawn up by the Public Entity Steering Committee, which sits above the recommendation committees.

These plans, if implemented as proposed, will help make public entities more efficient, accountable and transparent. However, it remains to be seen whether the new government has the political will required to put them into practice.

Past experience shows that any attempt to restructure public entities faces strong resistance from the employees of the institutions to be shut down or consolidated.

To rein in public institutions’ debts, the government should first stop the practice of using them as a convenient vehicle for executing costly public projects without dipping into its own budget.

Empowering the executive recommendation committees of public entities would bring about positive changes. Yet it would be naive to expect that this alone would terminate parachute appointments. The task requires more systematic efforts.