Vocational Training for more & better Employment

Vocational Training for more & better Employment - from Korea's Experience & Perspective -

Nov. 24, 2010

By Peter Byung-Suk Chung, Ph.D III

Contents

• Brief History of Korea’s Vocational Training

1. Development of the Vocational Training System

2. Present System for Competencies Development

3. Future of Vocational Training for Employment

Brief History of Korea’s Vocational Training ~’70s

Introduction of Vocational Training System with Industrialization ● Setting up HW & SW for Vocational Training & Qualification Promoting supply of skilled manpower ● Public vocational training: key trades for industrialization ● Compulsory in-plant training for selected industries

‘80s

Level-up Development of Vocational Training ● Focus: Single skill  multi-skill training ● Upgrade training for employees organized

‘90s

Transition to Life-long Competencies Development System through Employment Insurance & ALMPs ● To every worker, through working life ● Employers pay premium / get subsidy when training  Backbone of the present system

2000 & after

Innovation & Enhancement of Competencies Development for Activating LMPs ● Reinforcing life-long competencies training ● Diversifying training programs for different target groups, focusing on the disadvantaged 03/22

Ⅰ. Development of the Vocational Training System 1. Beginning Stage in the 1970s 1.1 Systemized Economic Development Plans started in 1962 1.2 Massive demand for skilled workers, but facing ● lack of funds available ● lack of vocational training facilities ● lack of training experts 1.3 Technical difficulties in, ● designing and operating training institutions ● supplying qualified instructors * Technical high schools & apprenticeship within companies existed, but in premature stage * per-capita GDP $254  $1,676

04/22

Ⅰ. Development of the Vocational Training System 1. Beginning Stage in the 1970s

Major Policies 1.1 Vocational Training Law enacted in 1967 ● Setting up legal criteria for vocational training and qualification to promote public & private training programs ● Government’s financial support to companies to conduct vocational training 1.2 Government-led training to provide skilled manpower ● Founding public vocational training institutions for key trades of heavy/chemical industries in regions(over 20) ● Securing funds from ADB & IBRD loans

05/22

Ⅰ. Development of the Vocational Training System 1. Beginning Stage in the 1970s

Major Policies 1.3 Compulsory in-plant training adopted since 1974 ● in manufacturing, construction & service industries ● Training levies imposed on non-complying firms ● with training fund to finance private training programs 1.4 Special institution to train instructors established in 1971 1.5 Foreign technical assistance contributed to solve SW difficulties in a short period : mainly Germany, also ILO, Belgium, Japan, etc.  Now sharing Korean experiences & knowledge with other developing countries

06/22

Ⅰ. Development of the Vocational Training System 2. Level-up Development in the 1980s 2.1 Changes in industrial structure in Korea ● Labor-intensive  technology-intensive ● Mass production  flexible production (customization) 2.2 Increasing students in higher education, decreasing vocational trainees 2.3 Increasing demand of more qualified skilled manpower thus need for upgrading training levels *per capita GDP: $1,645  $5,418

07/22

Ⅰ. Development of the Vocational Training System 2. Level-up Development in the 1980s

Major Policies 2.1 Focus shifted from simple-skilled to multi-skilled ●Longer training periods ●Upgrade & refresher training emphasized ●Training for white collar workers & supervisors 2.2 Integration of training criteria and qualification criteria 2.3 Financial subsidies increased to activate non-governmental training

08/22

Ⅰ. Development of the Vocational Training System 3. Transition to Lifelong Competencies Development in the 1990s 3.1 Shift to knowledge economy, globalization, expansion of service sectors 3.2 Increasing instability in the labor market : gradual diversion from the labor shortage situation 3.3 Focus of training : to enhance competitiveness of firms and workers ● Initial basic training  upgrade training for the employed ● Public training  private in-plant training ● Target: manufacture workers all workers 3.4 Introducing Employment Insurance (EI) and incorporating ALMPs , thus establishing Lifelong Competencies Development System (‘95) ● ‘competencies development’ defined as upgrading professional skills and knowledge through training & education ● still working as backbone of Korea’s present system  After that, Asian financial crisis: 1998-2000 *per capita GDP: $6,145  $9,438

09/22

Ⅰ. Development of the Vocational Training System 3. Transition in the 1990s: Introducing EI System

Before EI ● Compulsory in-plant training ● Non-compliers to pay training levies ● Selected industries : manufacturing, construction, electricity, transportation, etc. ● Companies with over-300 employees (150 later)

After EI ● ALMPs incorporated in EI : Employment Stability, Competencies Development , Unemployment Benefits and Employment Service ● Compulsory EI premium  subsidy when training * premium: 0.25%~0.85% of total wage, depending on company size

● Expanded to all industries ● Applied to all companies through gradual expansion ● Continuous competencies development introducing life-long learning ● Safety net for the unemployed

 KUT(*) founded in 1992 to upgrade instructors & HRD experts (*) Korea University of Technology & Education Aim: To supply skilled workers for rapid economic development to meet quantitative demand from industries

Aim: To provide training opportunities for enhancing professional competencies through working life to meet qualitative demand and lifelong learning needs 10/22

Ⅰ. Development of the Vocational Training System 4. Innovation in the 2000s 4.1 Increasing transitions over individual’s life-course ● Life-long job life-long employment ● Polarization of labor market: more opportunities for skilled workers, less opportunities and increasing risks for disadvantaged * Per capita GDP: $10,841 around $ 20,000

4.2 Vocational training reinforced as critical means of ALMPs ● Activation of the unemployed and improving transitions through training : enhancing employabilities emphasized 4.3 Enlarging continuous competencies development across working life ● Employer-led competencies development at workplace ● Worker-initiated competencies development supported by EI 4.4 University-Industry cooperation programs increasing at national and regional levels 4.5 Special considerations to improve training opportunity for the disadvantaged (temporary, aged etc.) 11/22

Ⅱ. Present System for Competencies Development 1. Major public organizations related

Other Ministries and Local Governments

KUT (Korea University of Technology and Education )

Ministry Of Employment and Labor

Korea Poly-tech Colleges

HRD Korea

12/22

Ⅱ. Present System for Competencies Development 2. Training Facilities : 2009

2,225

1,692 1,398 Others

1,084 Training Centers within various schools

2.1 Public Institutions : 36

Individual -owned training centers

Training Centers within compani es

2.2 Private Institutions: 6,399 ● Individual-owned training centers : 2,225 ● Training Centers within companies : 1,398 ● Training Centers within various schools : 1,084 ● Others: 1, 692

Private Institutions 13/22

Ⅱ. Present System for Competencies Development 3. Performances of Competencies Development in 2009 3.1 Training of employees : 4,949K (50.7% of the insured employees) from 124K companies (8.9% of the insured companies)

3.2 Training of the unemployed : 153K ● Unemployed with work experiences : 36K ● Unemployed without experiences : 117K

47% 37%

3.3 Total budget for competencies development ( for 2009) : KRW 1,734 bil.

16%

(EI-fund KRW 1,368 bil., Government’s general budget KRW 366 bil)

A. Training of incumbent employees : 802 bil.(47%) B. Training of the unemployed, new hires : 649 bil.(37%) C. Public training for workforce : 283 bil.(16%)

A

B

C

14/22

Ⅱ. Present System for Competencies Development 4. Special Features of the Competencies Development System of Korea

4.1 Life-long competencies development for employees through EI 4.1.1 Employer-organized training for employees ● Types : upgrade or re-training for employees basic training for new hires ● Method : off-the-job, on-the-job or on-line training ● Financial support : training expenses and allowances supported by EI fund (100% support for SMEs)

● Loan for training facilities and devices ● Subsidy for paid training leaves

4.1.2 Worker-initiated competencies development ● financial support for upgrade training of temporary or SME workers : - providing individual training account - free short-term training for night or weekend programs ● Loans of tuition and fees for college attendance of workers 15/22

Ⅱ. Present System for Competencies Development 4. Special Features of the Competencies Development System of Korea

4.2 Special Support for SMEs 4.2.1 Consortium of SMEs for competencies development ● Consortium organizers: employers’ association, big company or university * 96 organizers(’09) to train 231K from 111K companies

● Benefits to SMEs : to solve collectively difficulties of providing employee with training courses for themselves due to lack of facilities, experience, expertise etc. ● Financial support by EI : facilities, equipment, operation & training cost 4.2.2 Subsidy for study group in SMEs ● Financial assistance to set up study groups within SMEs for company’s specific study to bridge work and learning of employees 4.2.3 Financial support for training core workers in SMEs ● Full coverage support for attending high quality advanced courses ● Courses: marketing, HR management, production management, quality control, etc. 16/22

Ⅱ. Present System for Competencies Development Example of Industry - University Consortium KUT/Samsung Electronics (SE) Advanced Technology Education Center

Established in Korea University of Technology and Education (KUT) Participating company: SE & other 5 large companies and over 300 SE-related SMEs

KUT BRIDGE

Bi-polarization Relief through Innovation of Developing Globalized Employee

Aim : SESE

● Continuous upgrade of engineers’ competencies from these companies ● to reduce technology gap between SE and SMEs ● New type of industry-university corporation model sharing knowledge and experiences

SME

Courses : ● PLC , motor , sensor, robot control, etc. ● Financial support by EI and equipment contributions of large companies 17/22

Ⅲ. Future of Vocational Training for Employment Aim of Korea’s Employment Policy : more & better Employment, for which Vocational Training System of Korea, as critical means of ALMPs, to be reformed continuously

1. Further Development from the perspective of the Transitional Labor Market

1.1 Reinforcing social safety net through training for competencies development : ● To expand target groups to self-employed, refugees from North Korea, married immigrants, etc. in addition to the usual unemployed ● To increase the fund for this program when employment situations become worse

● and to start loan program for living expenses during training period

18/22

Ⅲ. Future of Vocational Training for Employment 1. Further Development from the perspective of the Transitional Labor Market

1.2 Improving the operation of Individual Training Account (ITA): ● To reform ITA as basic means for individual-initiated training both for the unemployed and for incumbent workers ● To deploy professional consultants in Job Centers for prior consultation of training needs, job prospect and self-confidence building before training ● To impose 20% of the training cost to be borne by trainees

to avoid moral hazard problems but can be waived for the poor unemployed or certain youths participating in special programs * youth unemployment rate(‘09) : 7.0% * total unemployment rate(Oct.’10) : 3.3%

19/22

Ⅲ. Future of Vocational Training for Employment 1. Further Development from the perspective of the Transitional Labor Market

1.3 Diversifying training programs : ● To provide more diverse and flexible programs like modular training, e-learning, blended learning, etc. at trainees’ convenience to induce more temporary workers, married women, handicapped, and aged workers into training * temporary workers(‘09) : 33.3% of wage workers

● To upgrade training qualify level through competition and evaluation among training centers with more incentive schemes

1.4 Incorporating competencies development programs more closely into employment services at the Job Centers : ● To have closer relations with Activating LMP programs

● To increase activation activities with more consultation ● To improve HRD-net in contents and linkage with other sites 20/22

Ⅲ. Future of Vocational Training for Employment 2. For Employment Creation

2.1 Expanding training courses on newly growing industries ● Example: green technology, high convergence technology, high value added service ,etc. ● Especially for youngsters to be prepared for better employment opportunity ● To support leading public institutions to include those courses ● To assist sector councils by industry to better match industrial specific needs with training programs

2.2 Improving governance of training ● To empower more to regional level ● To make efficient governance involving related parties in preparation, operation and evaluation of training programs to better meet regional demand 21/22

Thank You!