SEJONG -- The Yoon Suk-yeol administration on Friday unveiled a policy scaling back payrolls at 350 public firms nationwide next year, as part of its effort to raise overall productivity and eradicate negligent management of some state-run agencies.

It also plans to revamp the wage payment structure for workers in the public agency sector, by slashing taxpayer funding injected from the central government for operation of their businesses.

This marks the first time that the government has cut public payroll in more than a decade since the right-wing Lee Myung-bak administration of 2008-2013.

The Yoon administration, which took office on May 10, confirmed a guideline for revamping the public agency sector, according to the Ministry of Economy and Finance.

The payroll cut would feature lowering the excessive portion of management-level staff and streamline their regional and overseas units. By segment, divisions such as policy planning, personnel affairs and management assessment will be the core targets for streamlining based on manpower quotas.

The ministry, however, clarified that the payroll slash would not be conducted in the form of layoffs. It said the government would minimize hiring of new workers, and relocate a certain portion of workers by consolidating some divisions.

“While the number of workers at public firms increased by 115,000 (34.4 percent to 449,000) over the past five years, inefficiency has accumulated due to their bloated structure,” Deputy Prime Minister and Finance Minister Choo Kyung-ho said during a public agency operation commission meeting.

He said the collective debt of the public agency sector shot up 84 trillion won ($64 billion) from 499.4 trillion won at the end of 2016 to 583 trillion won at the end of 2021.

“Their profitability and productivity have drastically worsened,” Choo said. “The tally for public firms, who even failed to pay the interest on their loans with their earnings, surged to 18 in 2021, compared to five in 2017.”

The minister said that the new administration “would not tolerate inefficiency and lax management anymore,” adding it would cut the 2023 payroll at 350 state-run agencies across the nation.

The government is mapping out details to revise the pay levels for executives and employees, which will be confirmed in the fourth quarter of the year.

Policymakers seek to tighten oversight of the overtime work and payment structure to ensure that employees are actually doing work during overtime. They also aim to consolidate or streamline pay for work that goes beyond regular duties. Thirdly, they seek to revise the payment structure to differentiate pay based on duties’ level of difficulty.

The government is poised to reduce the amount of money to be poured into public firms for operation of their businesses by 10 percent or more compared to past periods, starting from the second half of 2022.

For the welfare sector, the government will abolish support for employees’ child care and educational expenses, which had been provided in addition to state support for all citizens.

State support for the educational expenses of state agency employees’ children stationed overseas will also be overhauled in a revised scheme, said the Finance Ministry.