The strategy and finance ministry said that 69 state-run firms would cut some 19,000 jobs, or 13 per cent of the total, in the next three to four years through retirement and early retirement programmes.

It said the job cuts, along with other cost-saving plans, would save 1.7 trillion won (S$1.94 billion) in the state budget.

The state-run companies also plan to sell their own land or other assets to raise 8.5 trillion won, the ministry said.

The South Korean parliament last week approved a 284.5 trillion won budget for 2009, up almost 11 per cent from this year.

The new budget, which will leave the government a fiscal deficit of 24.8 trillion won, focuses on constructing social infrastructure and helping finance small businesses and underprivileged people.

The finance ministry said on Tuesday some 70 per cent of spending would be done in the first half of next year to stop the economy worsening further.

State power monopoly Korea Electric Power Corp. and its subsidiaries are most affected by the latest government restructuring plan. -- AFP