The government is restructuring overlapping functions among state-run institutions and pushing mergers to make them run more efficiently. The aim of reducing waste at public agencies and easing the burden on state finances deserves support. But the yardstick for efficiency should be function, role, users and results — not the number of agencies. Merging two institutions into one does not necessarily make them more efficient.
There are broadly two ways to raise efficiency at state-run institutions: consolidating similar or overlapping functions, or drawing on private-sector competition and market mechanisms. Recent policy has leaned more toward mergers between agencies than toward market competition. Yet simply combining institutions that serve different functions and different users may cut the number of organizations while increasing inefficiency, through more complex decision-making and weaker expertise.
The past restructuring of the power industry illustrates this well. The Kim Dae-jung administration, seeking to overhaul the inefficiency of a monopolistic power sector, separated generation from transmission, distribution and construction, and split generation into six companies to introduce competition. But the six generators grew into large state-run institutions in their own right, producing the very problem of agency bloat. A plan to merge those generators back into Korea Electric Power Corp. was recently announced — a course that runs directly counter to addressing the managerial inefficiency caused by that bloat. What matters in the end is not the number of institutions but whether restructuring actually improved efficiency and competitiveness.
France's experience is also worth noting. In the mid-1980s, the government of Jacques Chirac pursued competition through privatization in response to public-sector bloat and rising fiscal pressure. The strategy was to shift the government's role from business manager to supervisor, raising managerial efficiency while maintaining public services. Vinci, the French company that has grown into a global construction group, can be understood in the historical context of that restructuring. Vinci acquired France's equivalent of a state highway corporation and, building on that foundation, grew into the world's largest construction group outside China.
Seen in this light, the proposed merger of the Construction Technology Education Institute and the Construction Industry Information Institute also warrants a second look. Both support the construction industry, but their founding purposes, functions and users are entirely different. The education institute exists to strengthen the capabilities of construction engineers and skilled workers, and its main users are private industry and construction professionals. The information institute, by contrast, has built databases of construction-related information for use in government policy. Whether combining two institutions with different functions and different service recipients is the right answer for efficiency needs to be examined.
The alternative is restructuring that matches function and role. For the education institute, it is worth considering adopting private-sector management practices and competition to develop it into a lifelong learning institution supporting the continuous skills development of construction engineers and skilled workers. In an era of spreading artificial intelligence and digital technology, there is an urgent need for a training system that goes beyond courses taken to maintain licenses and grades, and continuously builds new skills and capabilities. For the information institute, given that the government is its main user, linking it with state-funded research institutes and similar bodies that handle information functions required for government policy appears more reasonable.
Consolidation aimed at improving efficiency at state-run institutions is a means, not an end. What should be merged based on function should be merged, and where competition is needed, a competitive system should be introduced. It is time for the management of public agencies to move away from a focus on numbers. True efficiency lies in raising function and performance to deliver greater value to the public and to industry, rather than in cutting the number of institutions. The starting point for public agency reform should not be "how many to eliminate" but "what additional value to deliver to the public and to industry."
