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 : 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 ( )

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