Skills Development and

Korea’s Experiences

October, 2006

Korea University of Technology and Education

1. History of Vocational Training Policies in Korea

Economic Development Plans Started in 1962

Massive demand for skilled workers, but – Lack of funds available – Lack of vocational training facilities – Lack of training experts & experiences

Background

■ Beginning Stage in the 1960s and 1970s

Major Policies

Vocational training system established since 1967 – Training criteria determined to promote various programs Government-led training to provide skilled workers – Founding public vocational training institutions – Funding by ADB & IBRD loans Compulsory in-plant training adopted since 1976 – Training levies imposed on non-complying firms Institution to train instructors established in 1971

■ Beginning Stage in the 1960s and 1970s

Further Issues Technical difficulties in – Designing and operating training institutions – Supplying qualified instructors

Foreign technical assistance required to solve those difficulties in short period

– German technical assistance played an essential role

(also ILO, Belgium, Japan etc.)

■ Beginning Stage in the 1960s and 1970s

Changes in industrial structure: – Labor-intensive → technology-intensive – Mass production → flexible production

Increasing students in higher education, decreasing trainees

Increasing need for upgrading training levels

Background

■ Growth in the 1980s

Major Policies

Focus shifted from simple-skilled to multi-skilled – Longer training periods – Upgrading & refresher training emphasized – Training for white collar workers & supervisors

Integration of training criteria & skill test criteria

Financial subsidies increased to activate non- government training

■ Growth in the 1980s

Further Issues

How to improve efficiency of training facilities to better meet industrial demand?

– Policy emphasis changed from quantity to quality – Adjustment of training criteria & testing criteria to

the industrial needs – Integration of public training institutions

■ Growth in the 1980s

Focus of training to be changed, to enhance competitiveness of firms

– Initial training → upgrade training for employed – Public training → in-plant training – Target : manufacture workers → all workers

Financial crisis : 1998-2000

Background

■ Transition period in the 1990s

In-plant training system incorporated into Skills Development Program under Employment Insurance System in 1995

– Compulsory training → EI contributions / subsidies – Extended to all workers, all industries to cover

lifelong skills development Safety net for unemployed – Unemployment measures based on training for unemployed

Founded Korea University of Technology and Education in 1992 for upgrading of instructors & HRD experts

Major Policies

■ Transition period in the 1990s

Background

Growth of IT, BT, etc. Lifelong workplace → lifelong occupation Polarization of labor market; more

opportunities for skilled workers, less opportunities for disadvantaged

■ Innovation in the 2000s

Major Policies Closer link among business, school, research

& government in R&D, skills development programs

– Universities’ growing roles in providing industry needs-oriented manpower & skills development programs

Continuous skills development across working life

– Organized learning at workplace – Worker’s voluntary skills development – University–industry cooperation programs increasing at national and regional levels Special programs to improve skills of

disadvantaged

■ Innovation in the 2000s

Companies with 300 employees or more (1976)

→ companies with 150 or more (1992) Non-compliers to pay training levies Funds from the levies used for training expenditure

– Trainees : 2,180,000 (’76 ~ ’98)

2. Financing of Skills Development■ Compulsory Vocational Training (1976-1998)

3 programs in EI financed by EI fund – Unemployment benefits, job security & skills development Skills development program : – Contributions : 0.25% ~ 0.85% of total wage, depending on company size Support for employers & employees by

EI fund – Trainees : 2,460,000 (’06)

■ EI Skills Development (1995~)

Timely supply of workforce for each phase of industrial development

(light → heavy/chemical → high-tech industry)

Abundant quality workforce as a driving force behind the rapid economic growth

3. Implications

Driving Economic Growth

Policy responsive to changes in industrial structure

– Basic training in manufacturing → Basic & Upgrade training in overall industries

Private sector-led initiatives – Public training → Private & Voluntary training with

govt. support

Flexible Policy Responses

Large-scale training for the unemployed during the financial crisis

– Support for living & re-employment of the unemployed

Expanded training in IT sector facilitated transition to an information-based society

Tackling Mass Unemployment

One-stop services at PES (Job Center)

Closer link among unemployment benefits, job placement & skills development under EI system

Active Labor Market Policy