Seoul: 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 South Korean government unveiled a blueprint to reduce the number of state-run firms by around 20 percent, from 524 to 415, the previous day.

According to Yonhap News Agency, the finance ministry official emphasized that the current initiative is distinct from past efforts. "We are taking a completely different approach from previous initiatives to reform state-run firms," the official stated. In contrast to earlier reforms focused on enhancing efficiency and addressing poor management, the current strategy aims for comprehensive reforms to tackle the complex challenges posed by the AI transformation.

The official clarified that while the restructuring will involve workforce reallocation, it will not impact the overall number of new employees hired. Currently, the 109 entities subject to restructuring employ approximately 120,000 full-time workers, as reported by the finance ministry.

Furthermore, South Korea plans to establish a task force dedicated to exploring ways to reduce wage disparities between higher- and lower-paying institutions, the official mentioned. The restructuring does not automatically imply relocating institutions to different regions, as such decisions will be made separately, the official concluded.