Release of medium-to-long term outlook on respective agenda based
on the analysis of pending macroeconomic issues

Public Finance

Research Monograph

A Study on Reforming Public Service System

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  • Author Jaehoon Kim, PARK. Yoonsoo, BAEK Jisun, Changhui Kang, KIM. Sangsin
  • Date 2016/12/31
  • Series No. Research Monograph 2016-09
  • Language Korean
SUMMARY This study started from a very simple observation that the openness of the organization affects the incentive system of the organization. If the organizational openness is high, employment and promotion can not be guaranteed, and so efforts in the job and human capital accumulation should be exerted otherwise low-performing human resources can only be replaced. Therefore, the open organization's performance is likely to be high.

On the other hand, if the organizational openness is low, the employment is guaranteed and the promotion is guaranteed over the period, so promotion or the increase of wages is not an incentive to work and it is difficult to make employees invest in human capital accumulation. Therefore, the closed organization's performance and efficiency are likely to be low.

If the organization is a public organization, it is particularly problematic that policy decisions are unclear for the survival and protection of the organization, public funds are opaque, and even if there is a supervisory body, corruption is rampant and government expenditure is wasted. For this reason, the closedness of the public service system causes social inefficiency. The relationship between the openness of the public service system, the human capacity of the public servants, and the efficiency of the government in this context is as follows.

The capacity of Korean civil servants is somewhat lower than that of Germany and Japan, but is similar to that of OECD countries, and is higher in all ages and genders than in the domestic private sector. The higher the level of mass formal examination for civil servant recruitment, the higher the level of civil servants' capacity. This implies that if the closedness of government organizations increases, the capacity of public officials will increase.

On the other hand, the higher the job security of public officials, the lower the discretionary decisions of public officials in executing their job. High job security means retirement is guaranteed. In this case, a public official is promoted after a certain period of time, so that promotion or wage increase does not attract incentive to work or accumulate human capital. In such a situation, public officials don’t have need or incentive to create a situation where they should be held accountable. This means that they do not exercise their discretion even if they have discretion in their job.

The increase in the openness of public office in one country is analyzed to be linked to the overall efficiency improvement of the government sector. The efficiency improvement was greater in countries with lower levels of public openness than in countries with higher levels of openness. In order to compare the civil servants of the developed countries with those of the civil servants in Korea, we examined the system of public servants of the Netherlands, New Zealand, Singapore, England, Australia, Japan, Germany and France. We examined the centralization of human resource management, the guarantee of retirement, the existence of mass formal examination, the existence of long-term education and training opportunity, and the existence of a separate civil servant pension.

The main characteristic of the Korean civil service system is that due to retirement security, there are more people than the number of people required for the job. This can be confirmed by the fact that the ratio of education, training, dispatch increases as the rank goes up. In addition, some officials say that they do not want a quick promotion. The reason is that if you are promoted too fast, you have to go to senior civil service and in this case you have to retire sooner than the cohorts. What this means is that promotion is not an incentive to accumulate human capital or work hard, and second, it is more advantageous for public officials to fill retirement years than promotion. In such a situation, it will be difficult to expect the public officials to perform their duties properly.

The most important determinants of openness of public office are retirement guarantee and existence of separate civil servant pension, and the former is more critical. This is because through competition in securing human resources with the private sector, promotion in the public sector actually provides incentives to accumulate human capital or to work on the job. It is also possible to expand the openness of public service and improve government performance and public service integrity by introducing a position classification system that allows the introduction of performance-based payments, the dismissal of low-performing workers, effectively abolishing retirement guarantees, and the incorporation of separate civil servant pension into the national pension scheme.
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