Vocational Training in Korea

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RM 01-9

Vocational Training in Korea

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K RIV E T b o ok le t s e rie s

V o c at io n al E du c at io n S y s t e m in K ore a

1. Definition of v ocational education

2. History of v ocational education in Kor ea 3. Leg al m ech anism s

4. M an ag em ent and administr ation 5. Pr ovider s of v ocational education

5.1 Vocation al high school 5.2 Junior colleg e

5.3 Univ er sity of technology 5.4 Gener al high sch ool 6. Pr ospect s and t ask s

V o c at io n al T rain in g in K ore a

1. History

2. In stitutional fr am ew ork

2.1 Inintiativ es b ased on the Vocation al T r aining Pr om otion Act 2.2 Collabor ativ e net w ork of or g anization s

3. Curr ent pr actice

3.1 Vocation al tr aining st atistics (1998 ~ 2000) 3.2 Differ ent types of v ocational tr aining 4. F utur e pr ospect s

Qu alif ic atio n S y s t e m in K ore a

1. In stitution fr am ew ork 2. National qu alification s

2.1 Intr odu ction of nation al qu alification s 2.2 Curr ent pr actice

3. Priv ate qu alification s

3.1 INtr oduction of priv ate Qu alification s 3.2 Curr ent pr actkce

3.3 Nation al r ecogtnition of priv at e qu alification s 3.4 Qu alification testing in th e w orkplace

4. F utur e pr ospect s

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Care e r Gu idan c e in K ore a

1. In stitutional fr am ew ork 1.1 Leg al m ech ani는 1.2 A dm initr ation 2. Deliv ery sy stem

2.1 F or stu dent s in schools 2.2 F or adult s

3. Car eer inform ation net w ork 3.1 Car eer - Net

3.2 W ork - Net

4. Center for Car eer Dev elopm ent 4.1 F unction

4.2 A ccomplishm ent s 5. F utur e Pr ospect s

E - T rain in g in K ore a

1. T he begining of e - T r aining in Kor ea 2. Leg al m ech anism s

3. E - T r aining st atistics 3.1 T r aining pr ovider s 3.2 T r aining cour ses

3.3 Learner s and in stru ctor s

3.4 Cont ent s , h ar dw ar e and sy stem

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Tables

Table 1. Comparison of the Framework Act on Vocational Training and the

Vocational Training Promotion Act 3

Table 2. Rate of government support for off-the-j ob training 6

Table 3. Characteristics of vocational training institutions 16

Table 4. Various public vocational training institutions 17

Table 5. Annual training statistics 18

Table 6. Vocational training for the workers 2 1

Table 7. Government support for vocational training in enterprises of

varying sizes 22

Table 8. Support for vocational training by industry 23

Table 9. Allocation of training tuition loan 24

Table 10. Provision of training scholarship 25

Table 11. Annual participation in various VT for the unemployed 27

Table 12. Unemployment rate and re-employment training for the unemployed 27

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Figures

Figure 1. Process of financial support for vocational training 7

Figure 2. The network of organizations involved in vocational education and

training 14

Figure 3. Number of people participating in VT each year 19

Figure 4. Annual budget for VT 20

Figure 5. Budget for vocational training of the employed workers 22

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1. History

Vocational training as an institution was first conceived as an effective means of meeting the demands for human resources, which could not be sufficiently met by formal education. Vocational training develops and enhances the competency of workers, thereby enabling them to enj oy work as well as raise their economic and social status. Moreover, vocational training transforms the non-skilled human resources into the skilled human resources, thus producing the workforce much needed in the economic development of the nation.

Korea's interest in vocational training sprouted after the nation gained independence from Japanese colonial rule in the mid 1940s. At the time training was taking place sporadically as part of the social education pursuant to the Education Act. The first legal basis for vocation training is the Labor Standards Act (Act No. 1268) promulgated in May 1953 wherein a 'regulation on fostering craftsmanship' was included. Other provisions for institutions similar to vocational training were also stated in the relevant special laws, including the Industrial Education Promotion Act.

Since the 1960s, when the implementation of the national economic development plan was in full swing, a new system of developing industrial human resources was called for. Thus, in 1976, the Vocational Training Act was legislated, officially introducing the concept of vocational training. In 1976, the Framework Act on Vocational Training, which obligates employers to provide vocational training for their employees, went into effect, thus setting up the basis for a vocational training system in Korea. Further on in the late 1970s, the focus of education and training, which thus far had been fixed on the employers' needs and demands, shifted to individual and social aspects, hence the integration of the respect for human beings in vocational training. The main obj ective of such compulsory vocational training was to supply the industry with skilled workers much in demand and encourage the population of youth, planning not to advance into post-secondary education, to become skilled workers in key industries.

Worldwide recession in the 1980s significantly slowed down the rate

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of economic growth in Korea, and this meant great changes in vocational training system. During this time, maj ority of the companies went through downsizing and adj ustment, and education and training of their workers was reorganized into intensive training of the few selected based on competency . Toward the end of the decade, external conditions, often referred to as the '3-low phenomena' - low oil price, low interest rate and low dollar value - boosted up the Korean economy, while internally labor disputes increased. To respond to these conditions, education and training in the enterprise shifted from being a formality to being practical, and from being uniform to being individual, personal and enriching. The enterprises also linked education and training with personnel management, systemizing and structuring education and training as a form of lifelong learning.

With the introduction of employment insurance in 1995, upgrading training and j ob-transfer training became an important issue and the focus of vocational training expanded and shifted from raising killed workf orce to develop ment of the worker 's vocational comp etency throughout lif e. This called for the need to revise the relevant laws, and the Framework Act on Vocational Training was replaced by the Vocational Training Promotion Act, which went into force in January 1999. With the new Act, compulsory vocational training system was abrogated and matters pertaining to vocational training were addressed by various initiatives implemented within the employment insurance system.

Whereas training in the past was generally focused on raising workforce skilled in manufacturing, the Vocational Training Promotion Act diversified the types of training so that j ob-seekers and workers could learn skills needed in different kinds of j obs, including office administration and various service work. All in all, the system became more demand-oriented, which promote autonomous initiatives of the private sector to provide and participate in training. Table 1 the compares Framework Act on Vocational Training and the Vocational Training Promotion Act in terms of their basic obj ectives, target group, etc. and shows the deregulation evident in the newer Act.

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Table 1. Comp arison of the Framework A ct on Vocational Training and the Vocational Training Promotion A ct

Framework Act on Vocational Training

Vocational Training Promotion Act

Objectives

Provision of VT as a mandate imposed by the government

Provision of VT as an independent initiative of the enterprise based on its own needs

Target groups

Primarily youth who plan to find employment rather than pursue tertiary education

All workforce, including the employed workers, the employed, and youth planning to find j obs rather than pursue tertiary education

Focus of training

Training for skills needed for production workers in the manufacturing industry

Focus of training expanded to skills needed for administrative personnel, workers in the service industry, etc.

Applicable to:

6 designated workplaces with staff of more than

1,000 workers

All workplaces and workers

Main contents of the Act

Stipulates form, standards, and process of VT

In addition to stipulating the form, standards, and process of VT, presents a comprehensive plan for developing workers' skills and competency

Range of training the Act concerns

Only VT that is provided in keeping with the training standards

Education and training as specified in Employment Insurance Act, and employment promotion training as stipulated in

Framework Act on

Employment Policy

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2. Institutional framew ork

The system of vocational competency development in Korea is composed of the various proj ect initiatives in support of vocational training and the stakeholders, made up of the various actors that are involved in the implementation of these initiatives. This section will first deal with the main initiatives aimed at fostering vocational training, which are:

support for employers and employed workers support for the unemployed

support for demand-oriented vocational training support for private training institutions

Then, each of the stakeholders in the vocational training sector will be examined, especially in terms of the relationship among them. The key actors are:

Ministry of Labor

Vocational training institutions Enterprises and trainees

2.1. Initiatives based on the Vocational Training P romotion Act 2.1.1. Support for employers and employed workers

Promoting initial training and up grading training

The employer may provide initial training, upgrading training, and j ob-transfer training by training type, and conduct them in the form of off-the-j ob training(Off-JT), on-the-j ob training(OJT), and distance training. All training courses must satisfy the general conditions set forth in the Vocational Training Promotion Act, such as regarding training materials, facilities, and training periods. Where training of the employed or would-be employed workers is directly provided by the employer or commissioned to other institutions, the employment insurance fund may provide partial or full support for training costs,

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depending on the type of training.

▶ Off-the-j ob training: Support is provided at a ratio that varies depending on a number of conditions. See Table 2 below.

Table 2. Rate of g overnment supp ort f or off -the-j ob training

Standard Training

Other Training provided by

large corporate enterprises

provided by priority target

enterprises Training cost per hour is

below government standard cost

100% 80% 90%

Training cost per hour is between 100 ~ 150% of government standard cost

90% 70% 80%

Training cost per hour is between 150 ~ 200% of government standard cost

80% 60% 70%

Training cost per hour is higher than 200% of government standard cost

70% 50% 60%

▶ On-the-j ob training: When an employer provides on-the-j ob training for those graduates and would-be graduates of technical high schools and would-be employees who have completed one month or more of initial training, financial support shall be provided to partially cover the costs of training and allowance for the trainees paid by the employer, but only up to 50% of the sum.

▶ Distance training: In the case of distance training through postal

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delivery service, the enterprise providing training may receive government support amounting to the training fee multiplied by the rate of financial support based on the size of the enterprise, multiplied by the number of trainees who have completed the program. For distance training through the use of internet and information and telecommunications technology, the support may amount to training fee multiplied by the rate of financial support based on the size of the enterprise, multiplied by the number of trainees who have completed the program.

The enterprise drafts proj ect proposal for vocational training in the workplace

↓

The enterprise submits the application documents to the local labor affairs office no later than 14 days before the planned training begins

↓

The local labor office screens application and notifies the result to the enterprise

↓

The enterprise provides vocational training

↓

When training plan has been changed, the enterprise submits revised training plan to the local labor affairs office no later than 14 days

before the training starts

↓

After the training is complete, the cost of training is calculated and a budget statement and a grant payment request are submitted by the

enterprise to the local labor affairs office

↓

Before the next quarter year passes the local labor affairs office makes the payment of the requested amount to a bank

↓

The enterprise receives the financial support from the bank Fig ure 1. Process of f inancial supp ort f or vocational training

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Encourag ing the p ractice of p aid training leave f or emp loy ed workers Where the employer conducts paid leave training for its employed workers, which extends for one or more years, the employer may receive support for training expenses and 1/3 of the usual wage (company listed as priority target enterprise will receive 1/2 of the usual wage). The education and training course for paid training leave period shall be for 30 days or more (including legal holidays and Sundays) and 120 or more hours. As an exception, a training course which is 20 hours or more to promote acquisition and improvement of the technical skills of workers in production lines, as specified in Paragraphs 1-4, Article 27 of the Enforcement Decree of the Employment Insurance, and workers holding other j obs that belong to the categories as announced by the Minister of Labor has announced, can also benefit from this support.

Promoting overseas vocational training

The employer can receive support for expenses of vocational training, which takes place abroad. To receive such support, the employer must be able to submit a training contract with a vocational training institution overseas or some other form of document that may verify that a vocational institution abroad will provide such training. The training course must be a program which meets the conditions to be recognized or designated as a course which promotes the j ob competency of workers, including productivity and quality of the output. To be eligible for government support, the overseas training program must be 3 months or more. The amount of support shall be the total amount of training fee expended, but other expenses such as for accommodation, meal and miscellaneous purposes are excluded.

Promoting the training of construction workers

Support for training of construction workers may be provided in the following cases: where the concerned worker not employed on a stable and regular basis by a construction company who has the construction worker welfare book pursuant to the law on improvement of employment of construction workers; or where the worker has been confirmed as a construction worker from the employer insured under the employment insurance.

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Providing p ublic loan f or building and equipp ing vocational training f acilities

A long-term, low interest loan may be given to employers, employers' organizations, public organizations, workers' organizations, nonprofit organizations, and working women's centers, trying to build vocational training facilities or purchase equipment for training programs. Up to 90% of the necessary budget may be borrowed within the limits of 2 billion won for employers' organizations, 1 billion won for individual employers, 1 billion won for non-profit organizations and 500 million won for working women's centers. Annual interest on the loan is 1%

for small-and-medium enterprises, 2.5% for large corporate companies, and 6% for non-profit organizations and working women's centers. The term of the loan is 10 years with a 5 year grace period and 5 years for repayment. Interest shall be paid to the bank four times a year in equal amounts. After the grace period, the principal shall be repaid in equal amounts four times a year during the next five years. Affairs concerning support of vocational training facilities is entrusted to the Human Resources Development Service of Korea.

A ssisting j ob transf er of workers through vocational training

The government will financially support vocational training of persons covered by employment insurance, who are 50 years or older or who are in certain danger of becoming victims of downsizing, bankruptcy, and closing down of business, when they receive training for the purpose of re-employment or starting their own businesses. To be completely eligible for the government support, applicants must be trained in the public vocational training institutions, authorized education and training institutions, or in facilities recognized by the Minister of Labor. The government support may cover all of the training fee up to 1 million won per person. However, no subsidy will be given to cover expenses for purchasing supplementary learning materials, lodging and meals.

Encourag ing individuals ' voluntary p articip ation in vocational training An insured worker, who voluntarily enrolls in an educational institution higher than the j unior college, can take advantage of a long-term low

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interest loan for school tuition. However, workers who are already benefitting from a financial support covering full tuition, such as in the form of scholarship, bank loan, or subsidy, are not eligible for this advantage. Workers who are enrolled in the Korea National Open University or in a graduate course in the universities are also excluded.

The amount of the loan shall, in principle, be within the tuition's range.

Those who receive a partial scholarship for tuition may apply for a loan amounting to the remainder of the tuition not covered by the scholarship, and they may do so each semester they enroll.

2.1.2. Support for various types of training and for the unemployed

Vocational training f or the re-emp loy ment of the unemp loy ed

Re-employment training for the unemployed targets workers who had previously been employed in an enterprise insured under the employment insurance, but have lost their j ob. Re-employment training programs are either designed to develop skills useful in occupations with good future prospects or are geared to prepare the trainee to acquire a national technical qualification or other qualifications specified in the Framework Act on Qualifications. Re-employment training, in principle, is provided as daytime courses, but night courses or seasonal courses may be operated where certain conditions of the training institution or individual circumstances require it. The training period may range from as short as 2 weeks to 2 years, and the total number of training hours must be 60 hours or more. The amount of support will be calculated by multiplying the standard training fee by the average number of trainees.

For those trainees who cannot enj oy the unemployment insurance, training allowance may be provided for transportation, (but not if the trainee is staying in the dorm), family support (given to trainees who are levied a property tax of 30,000 won or less and have dependents to support), childcare (paid to unemployed female workers whose head of household has a levied property tax of 30,000 won or less), competency development (paid to those who had been insured under the employment insurance for 6 months or more), and training in priority occupational

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skills (paid to those being trained in skills for priority occupations).

Government commissioned training

The Korean Chamber of Commerce & Industry and other private vocational training institutions train people without j obs to find employment in high-tech industries or to take advantage of labor demands for 3-D (Dirty, Dangerous and Difficult) j obs in manufacturing and construction industries. The main target group are unemployed workforce between the ages of 15 and 65, including unskilled workers, youths not advancing to post-secondary education, females seeking employment, etc. By duration, government commissioned training is divided into two types: the six-month programs and the one-year program. The government pays for the training fee and training allowances for the people participating in the training.

Emp loy ment p romotion training

Employment promotion training assists the unemployed low-income class, who are not covered by employment insurance, to enhance their economic independence and to increase their earning. In particular, the employment promotion training aims to help the beneficiaries of the Basic Livelihood Security Act, small-scale farmers and fishermen, and other workforce in poverty .

Emp loy ment training

Employment training aids the highly educated yet unemployed population.

The programs are designed to develop the vocational competency and skills needed in administrative and professional j obs.

Priority occup ation training

The obj ective of priority occupation training is to raise large pools of skilled manpower to meet the workforce demands of industries suffering from shortage of labor, such as the manufacturing and construction industries. The newly trained workforce is expected to facilitate the demand-and-supply cycle of labor.

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B usiness start-up training

Business start-up training provides the unemployed people who are planning to start their own businesses, with the necessary information on business management, and orientation in practical theories and skills.

Initial technicians ' training

Initial technicians' training is carried out with the aim to raise the much needed skilled technicians, who have the basic skills and knowledge that are valued in the actual site of production.

2.1.3. P romoting a demand-oriented vocational training

Develop ment of training and p rograms f or diff erent occup ations

As new industries, such as the information and communications industry, emerge the demand of those industries has rapidly increased. Especially the shortage of computer engineers, programmers and other professional manpower in the IT industry, has raised the need to identify the occupations that will be much in demand in the future and to develop new programs to raise workforce capable of working in these occupations. As an active response to these newly rising conditions, a plan has been drafted to reorganize the training provided in the various public training institutions, such as the polytechnics and various vocational schools under Human Resources Development Service of Korea, so that by year 2002, 40% of the training conducted will concern knowledge-based occupations. According to this plan a total of 7,880 people will be trained in 32 occupations.

Customized training

Customized training, introduced in March 1999, is different from training initiated by and oriented to suppliers. demand-oriented, customized training produces the kind of manpower the industries demand and that at the right time. Customized training is provided in accordance with the training contract signed between the training institution and the enterprise. The contract stipulates details of the training programs, regarding the target occupation, level and method of training and employment after training completion. In recruiting workers, the enterprise gives priority to trainees who have successfully completed the

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customized programs. Customized training is an active effort to help the unemployed find j obs.

The government supports customized training in ways unprecedented in past training programs. For one, the government financially assists the development of training - up to 10% of the first month's training fee - geared to meet the enterprises' manpower demands. Moreover, when the employment rate of the trainees is 80% or above, the government reimburses 10% of the sum of training costs.

2.1.4. Support for private training institutions

Financially supp orting the establishment of vocational training institutions and op eration of training courses

The government provides financial support to cover expenses when employers' organizations, workers' organizations and non-profit organizations set up training facilities or operate training courses.

Loans f or establishment of vocational training f acilities and equip ment The government supports the installation of facilities and/or purchase of equipment for employers' organizations, workers' organizations and non-profit organizations by offering a loan for part of the expenses.

2.2. Collaborative network of organizations

Vocational competency development of the workforce requires the participation of diverse actors performing different roles and functions.

These actors can be individuals such as the employed and unemployed workers, the enterprises in need of competent workforce, the government agencies that develop and implement policies, and the training institutions, the actual providers of training. These actors, while playing different roles, work together in an interconnected way .

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Ente rp ris e s provide s e mploye e tra ining

provide s initia l tra ining pays fo r e mployme nt ins ura nce

VT Ins titutio ns provide s VT fo r the une mploye d

provide s VT a s co mmis s io ne d by the e nte rpris e provide s VT a s co mmis s io ne d by the gove rnme nt

Tra ine e s re g is te rs fo r jo b s e a rc h

re ce ive s tra ining a llowa nce s

Min is try o f La bo r s e ts tra ining s ta nda rds de s ig na te s tra ining fa c ilitie s

re cog nize s prog ra ms fina nc ia lly s uppo rts tra ining

pays tra ining

a llowa nce s to tra ine e s

Po ly te c h n ic s ra is e s multi- s kille d te c hnic ia ns

Vo c atio na l s c ho o ls ra is e s s kille d wo rkfo rce

HRD S e rv ic e o f Ko re a co nd ucts voca tio na l co mpe te ncy deve lo p- me nt proje cts

de c ide s q ua lifica tio n pro mote s e mployme nt of wo rke rs

Ko re a Un iv e rs ity o f Te c h no lo g y a nd Ed uc atio n ra is e s tra ining te a c he rs

HRD Ce nte r provide s

e mploye e tra ining deve lo ps tra ining s ta nda rds a nd me thods

Fig ure 2. The network of org anizations involved in vocational education and training

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2.2.1. Ministry of Labor

The Ministry of Labor performs the following functions:

establishment of training standards, designation of training facilities, recognition and authorization of training programs

financial support for training costs and providing training allowances for trainees

management of public training institutions, such as the Human Resources Development Service of Korea

2.2.2. Vocational training institutions

Vocational training institutions provide various types of training such as training commissioned by the government or the enterprises, and vocational training for the unemployed, etc. In return for their service, the training institutions receive training fee from the government or the enterprises.

2.2.3. Enterprises and trainees

The enterprises provide training for their workers or potential workers and pay employment insurance. The enterprises receive government subsidy for proj ects that are aimed at the development of vocational competency . Trainees, on the other hand, participate in training supported by training allowance that covers various expenses.

2.2.4. Different types of training institutions

Training institutions can be divided into two large categories, the public training institutions run by the government and the private institutions.

The characteristics of training institutions are summarized in Table 3 and Table 4.

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Table 3. Characteristics of vocational training institutions

Type of organization Characteristics

Public training institutions

public organizations

- Select public organizations are designated by law to manage training institutions - 45 institutions are under HRD Service of Korea and other organizations, one under Korea Employment Promotion Agency for the Disabled (KEPAD), and 8 training institutions under The Korea Chamber of Commerce and Industry.

organizations under local government

- Local government bodies take direct responsibility of running training institutions - 7 training institutions are currently operated in Seoul, Kyonggi-do, Gyeongsangnam-do, etc. Programs focus on occupations popular in the local community.

central government institutions

- The State (or the central government agency) runs vocational training institutions.

- 36 training institutions are run by the Ministry of Justice for the development of j ob skills of prison inmates.

corporate training institutions

- These institutions are founded by nonprofit organizations that have been approved by the Ministry of Labor to launch proj ects for the development of vocational skills and competency.

Private training institutions

working women's centers

- These centers are established and operated by women's organizations to develop, among others, the vocational competency of women pursuant to the Equal Employment Act.

facilities authorized by Ministry of Labor

- Facilities run by universities, junior colleges, enterprises, employers' organizations, and individuals that satisfy a set criteria are authorized by Ministry of Labor as training institution

other training institutions

- Universities, junior colleges, enterprises, and employers' organizations that have not been authorized by Ministry of Labor as a training institution but have acquired recognition for their programs may function as training provider.

Source: Ministry of Labor (200 1), Vocational competency development in Korea.

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Table 4. Various p ublic vocational training institutions

Institution Characteristics

Vocational schools under HRD Service of Korea

- 22 vocational schools nationwide.

- raise youths not advancing to post-secondary education into technicians in key industries.

Polytechnics

- 22 polytechnics nationwide.

- raise mid-skilled workers, including the multi- skilled workers through 2-year programs.

Korea University of Technology and Education

- provides 4-year course to raise vocational training teachers with sound theoretical understanding as well as strong background in practice and skills

Human Resources Development Center

- one center but has an extensive nationwide

network that provides upgrading training for employed workers and develops training standards, material and media.

Source: Ministry of Labor (200 1), Vocational competency development in Korea.

3. Current practice

3.1. Vocational training statistics (1998 ～ 2000)

Vocational competency development is one of three main initiatives pursued by employment insurance. The primary purpose of this initiative is to upgrade the general level of human resources by encouraging enterprises to develop the competency of their workers and workers to make voluntary efforts to enhance their skills. It is expected that this will help enterprises and workers to make timely and effective responses to rapidly changing economic conditions.

Providing training for workers brings higher productivity for the enterprises and upscaled competency for the workers. In 1998, a total of $642.8 billion were spent to train 1,088,000 people, in 1999 $804.8 billion on 1,189,000 trainees, and in 2000, $762.9 billion on 1,516,000 trainees.

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Table 5. A nnual training statistics Type of Training

1998 1999 2000

T r ainees^a Budg et^b T r ainees Budg et T r ainees Budg et

Total 1,008 6,428 1,189 8,048 1,516 7,629

VT for the unemployed 327 3,486 325 4,561 209 3,384

Upgrading training 683 664 803 1,120 1,246 1,807

VT provided by

employers ⁶⁶⁷ ⁴⁰⁴ ⁷⁸¹ ⁸²⁸ ^1,220 ^1,405

Financial support and

loans ¹² ¹⁶⁹ ¹⁴ ²³⁵ ¹⁹ ³⁴⁶

Paid training leave 4 91 8 57 7 56

Technical workforce

training ⁷⁸ ^2,369 ³⁶ ^2,424 ⁶¹ ^2,494

VT for multi-skilled

workers ⁷⁶ ^2,122 ³⁴ ^2,205 ⁵⁹ ^2,294

Initial training for

training teachers ² ²⁴⁷ ² ²⁰⁹ ² ²⁰⁰

Training for re-employment 301 2,966 324 3,926 189 2,845 Re-employment

training for the unemployed

170 1,912 226 3,062 120 2,155

Employment

promotion training ¹⁰⁷ ⁹⁶² ⁶⁹ ⁶¹⁰ ⁴⁷ ⁴⁸⁷

Employment training 11 77 10 54 7 63

VT in sectors of good employment opportunities

- - 11 151 10 111

Business start-up

training ¹³ ¹⁵ ⁸ ⁴⁹ ⁵ ²⁹

Human resources

development training ³⁰ ⁵²⁰ ³⁴ ⁶³⁵ ²⁷ ⁵³⁹

technicians ¹⁵ ⁹⁶ ¹⁷ ¹⁸⁵ ¹³ ¹²²

VT for priority

occupations ¹¹ ³³³ ⁹ ³⁹³ ⁷ ³⁶¹

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a. The number of trainees is recorded in units of 1,000 people.

b. The budget amount is recorded in units of 100 million won.

Source: Ministry of Labor (200 1). Vocational competency development in Korea.

p. 43.

Per year, the number of people who received vocational training for unemployed has dropped since 1999 while the number of trainees in upgrading training for employed workers has dramatically increased.

Vocational training for technical workforce, on the other hand, has shown little change in the size of participation since 1998.

Fig ure 3. N umber of p eop le p articip ating in VT each y ear

Figure 4 shows a comparison of budget expended from 1998 to 2000 for vocational training for the unemployed, upgrading training for employed workers and technical workforce training. The share of expended budget accounted for by vocational training for the unemployed is showing a declining trend from 54.2% in 1998, 56.7% in 1999 and 44.3% in 2000. Upgrading training for the employed workers is expanding its share in the expended budget from 8.9% in 1998, to 13.2% in 1999 and 23% in 2000. Initial training for technical workforce stayed in the 30% range, showing little variation from 36.9%, 30.1% and 32.7% during the three years.

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Fig ure 4. A nnual budg et f or VT

3.2. Different types of vocational training 3.2.1. Training for employed w orkers

The number of businesses/employers that received support for carrying out vocational competency development proj ects was 8,863 in 1997, 25,922 in 1998, 43,850 in 1999 and 86,692 in 2000. It is notable that the number has doubled in 2000 from the previous year, and nearly tenfold since 1997. As for annual financial support for training of employed workers, including paid leave training, tuition loan for trainees, training allowance, and loans for facility and equipment, the total amount of support given was 56.611 billion won in 1997, 70.692 billion won in 1998, 115.047 billion won in 1999 and 188.727 billion won in 2000.

By 2000, in other words, financial support had more than tripled from that of the year 1997.

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Table 6. Vocational training f or the workers Total VT Paid leave

training

Training tuition

loan

Training scholarship

Loan for equipments

/facilities

'97

workplaces 8,863 4,969 144 3,748 - 2

trainees 197,931 184,007 5,559 8,365 - -

financial

support 56,6 11^a 28,362 13,027 15,222 - -

'98

workplaces 25,922 17,74 1 339 7,842 - 4

trainees 424,895 408,603 3,940 12,350 2 -

financial

support 70,692 40,409 9,117 16,949 1 4,2 16

'99

workplaces 43,850 43,511 333 - - 6

trainees 802,800 781,408 7,789 13,552 51 -

financial

support 115,047 82,764 5,724 23,484 40 3,035

'00

workplaces 86,692 73,4 11 309 12,960 - 12

trainees 1,246,932 1,220,334 7,756 18,590 252 - financial

support 188,272 140,475 5,589 34,626 59 7,978

a. The amount of financial support is recorded in units of 1,000 won.

p.44.

Since 1998, the number of recipients of training scholarship steadily increased from 2 in 1998, 51 in 1999 and 252 in 2000. Figure 5 indicates that recipients of training tuition loans is also gradually rising.

While financial support for training of the employed workers has generally risen, support for paid leave training is dwindling.

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Fig ure 5. B udg et f or vocational training of the emp loy ed workers

S upp ort f or vocational training

The government has been aiding the vocational training of employees in enterprises of varying sizes.

Table 7. Government supp ort f or vocational training in enterp rises of vary ing sizes

Year Number of firms

Sum of Subsidy

Number of workers in firms of different sizes Total 150 workers^{less than}

150~ 1000 workers

more than 1000 workers 1999 43,511 82,764,007^a 781,408

( 100.0)^b

98,479 ( 12.9)

232,062 (29.7)

450,867 (57.7)

2000 ^{73,4 11} 140,475,492 1,220,334 ( 100.0)

166,149 ( 13.6)

3 15,881 (25.9)

738,304 (60.5) a. The sum of subsidy is recorded in unit of 1,000 won.

b. The numbers in parentheses indicate the percentage share.

22

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Firms of size larger than 1,000 employees had accounted for 57.7% of the total number of firms benefiting from government subsidy in 1999 and the proportion rose to 60.5% in the following year. For firms of size in the 150 to 1,000 employees range, the percentage point had decreased from 29.7% to 25.9% during the same period. For small enterprises with less than 150 workers, the proportion increased slightly from 12.6% to 13.6%.

Table 8. S upp ort f or vocational training by industry

1999 2000

Number of workplaces supported 43,511 73,4 11

Amount of support^a 82,764,007 140,475,492

Industry

Total 781,408

( 100.0)^b

1,220,334 ( 100.0) Agriculture, forestry, fishery,

mining

1,158 (0.2)

3,746 (0.3)

Manufacturing 376,463

(48.2)

6 19,223 (50.7) Electricity, gas, waterworks 14,827

( 1.9)

33,289 (2.7)

Construction 34,058

(4.3)

66,429 (5.4) Trade, restaurant business,

lodging

55,100 (7.1)

69,948 (5.7) Transportation, warehousing,

communication, leasing

6 1,765 (7.9)

95,6 10 (7.8) Financing, insurance, real estate 198,497

(25.4)

278,767 (22.8)

Service 39,540

(5.0)

53,322 (4.4) a. The amounts of support are recorded in units of 1,000 won.

b. The numbers in parentheses indicate the percentage share.

p.45.

(30)

S upp ort f or p aid leave training

Support for paid leave training since 1998 has been allocated to 339 workplaces until in 2000 when the number of workplaces supported for paid leave training decreased to 309. The financial assistance for paid leave training has been almost exclusively, that is to say up to 95%, concentrated on enterprises employing more than 150 workers. Smaller enterprises of less than 150 workers accounted for only 0.9% of the support given for paid leave training, which indicates that participation of small-and-medium enterprises in paid leave training is minimal.

Table 9. A llocation of training tuition loan

1997 1998 1999 2000

Amount of loan^a 15,222,398 16,949,229 30,520,635 34,626,000 Total number of loan

receivers

8,365 (100.0)^b

12,350 (100.0)

17,652 ( 100.0)

18,590 (100.0) Average amount of loan

per person^a 1,820 1,372 1,729 1,863

concentration

science and technology

4,287 (51.0)

8,333 (67.5)

17,004 (96.3)

9,729 (52.3)

others 4,078

(48.7)

4,0 17 (32.5)

648 (3.7)

8,861 (47.7)

size of enterprise

small-and- medium

2,543 (30.4)

7,892 (63.9)

7,654 (43.4)

8,659 (46.6)

large 5,882

(69.6)

4,458 (36.2)

9,998 (56.3)

9,931 (53.4)

gender

male 5,484

(65.6)

8,555 (69.3)

11,7 18 (66.4)

11,776 (63.3)

female 2,881

(34.4)

3,795 (30.7)

5,934 (33.6)

6,814 (36.7)

schooling system

2-year program

3,57 1 (42.7)

6,375 (51.6)

8,4 18 (47.7)

9,775 (52.6) 4-year

program

4,794 (57.3)

5,975 (48.4)

9,234 (52.3)

8,815 (47.4)

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a. Amounts are recorded in units of 1,000 won.

b. Numbers in parentheses indicate the percentage share.

p.47.

Training tuition loan

The average amount of loan for training tuition has, with the exception of 1998, remained at 1.8 million won. More employees of large corporate firms than of small-and-medium enterprises have taken advantage of the training tuition loan, but 1998 was exceptional.

Workers being trained with science and technology concentration have received training tuition loan greater than all the rest combined. The gap between the amount of support was 35% in 1998, reaching its height in 1999 at 92.6%. There is thus a serious imbalance in the distribution of support.

While program concentration was a critical factor deciding the allocation of financial assistance, the schooling system was proven to be a non-factor. In other words, support was almost equally divided between trainees in 2-year and 4-year programs. Meanwhile, gender was found to be a critical factor in deciding whether an applicant would succeed in receiving the loan. The ratios of female and male workers receiving the loan differed by 30%, and women were the disadvantaged.

Table 10. Provision of training scholarship

Year

P rovision of training scholarship

Number of recipients Amount^a

1997 - -

1998 2 1102

1999 51 39,983

2000 252 59,49 1

a. The amounts are recorded in units of 1,000 won.

(32)

p.47.

Training scholarship

While the number of recipients of training scholarship is continually on the rise, it is still quite small compared to the number of those benefitted by other vocational competency development proj ects. The training scholarship is expected to steadily increase as corporate restructuring weakens the labor market, and as more individuals take the initiative to develop their competency .

3.2.2. Vocational training for the unemployed

The local labor affairs office within its annual budget, conducts re-employment training for the unemployed who have registered on the j ob search list. The training is carried out with the money saved up from the vocational competency development proj ect insurance paid by employers who benefit from the proj ect.

In 1997, 1,949 workers who had lost their j obs in an enterprise covered by employment insurance, took part in the re-employment training. A year after the number had risen sharply to 170,096 trainees, and further to 226,356 in 1999. In 2000, the number of trainees nearly halved down to 120,296 trainees, and from this it could be inferred that the overall decrease in unemployment rate reduced demands for re-employment training. In fact, a clear correlation can be observed between unemployment rate and participation in re-employment. When unemployment rate was as low as 2.6% in 1997, participation in re-employment training recorded a minor 1,949 people. As unemployment rate rose by 4.2% point in 1998, the number of participants multiplied 87 times that of the year before. The slight decrease of 0.5% point in unemployment the next year slowed down the increase of participation in training to expanding only 1.3 times of what it was in year 1998. A 2.2% point drop in year 2000 marked a significant reduction of participation by 47% point.

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Table 11. A nnual p articip ation in various VT f or the unemp loy ed

Ty pe o f tra in ing 199 8 19 99 20 00

TOTA L 326 ,759 350 ,562 209 ,06 0

Re -e m p lo y m e nt tra in ing 30 1,244 324 ,62 3 188 ,864 VT for the unemployed 170 ,096 226 ,356 12 0 ,296 employment promotion

training 106 ,835 6 9 ,466 4 7 ,057

employment training 10 ,7 15 10 ,022 6 ,666

VT in sectors of good

employment opportunities - 11,054 10 ,146

business start-up training 13 ,598 7 ,72 5 4 ,699

HRD tra in ing 2 5 ,5 15 2 5 ,939 2 0 ,196

technicians 14 ,5 15 16 ,8 17 13 ,3 11

VT in priority occupations (commissioned by the

government)

11,000 9 ,122 6 ,885

p.49.

Table 12. Unemp loy ment rate and re-emp loy ment training f or the unemp loy ed

Unemployment rate^a

Participants in re-employment training

for the unemployed

Difference per 1% point change in unemployment unemployment rate

rate difference^b participants difference^b

1997 2.6% 1,949

1998 6.8% ↑4.2% 170,096 ↑ 168,147 ↑40,039

1999 6.3% ↓0.5% 226,356 ↑56,260 ↑28,130

2000 4.1% ↓2.2% 120,296 ↓ 106,060 ↓48,209

(34)

a. National Statistical Office.

b. Difference is calculated from subtracting the previous year's figure from this year's figure.

Sources: National Statistical Office. http://www.nso.go.kr

Ministry of Labor (2001). Implementation of Vocational Competency Development Proj ects.

The above data can be used to calculate the optimal of participants in re-employment training for the unemployed. For per 1% point of rise or fall in unemployment rate is on the average accompanied by increase or decrease of 15,723 trainees.

4. Future prospects

Built on the Framework Act on Vocational Training legislated in 1976, which obligates vocational training, Korea has strategically concentrated on providing initial training to convert the abundant yet untrained human resources into industrial workforce. Globalization and informationization of the world economy since mid- 1980's and ensuing changes in the national economy and labor market have raised new training needs. The unemployed, the elderly, and the women, for example, were potential labor force which through training could be absorbed into the labor market. Moreover, employment security and development and upgrading of skills of workers in employment became important issues.

The legislative mechanisms were too complicated and ineffective in addressing these issues. Korea's vocational training system was divided between the vocational competency development proj ects pursued under the Employment Insurance Act starting July 1995, and vocational training that had been carried out obligatorily under the then existing Framework Act on vocational Training. Within the legal framework it was difficult for private and voluntary initiatives for training to bear fruit and for the diversification of training to meet workers' varying needs. As an effort to streamline institutional and legal mechanisms guiding the vocational training sector, the Framework Act on Vocational Training was abrogated

28

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in December 1997 and the Vocational Training Promotion Act established in its place on January 1, 1999.

Ideally, vocational training in Korea should achieve three obj ectives.

First, it should support voluntary initiatives by the employer and the worker to develop vocational competency . The emergence of a knowledge-based society wherein capabilities of an individual are highly valued calls for an environment that is supportive of the workers' voluntary effort to develop their vocational competency throughout life and the enterprise's effort to establish an institutional basis on which to raise the kind of human resources they need.

Secondly, vocational competency development and employment of the unemployed and the employed who seek j ob-transfers should be promoted. In the process of rapid corporate restructuring, many are bound to change j obs or lose their employment. Workers going through these transitional periods should be assisted to facilitate the flow of labor in the market.

Finally, the private sector initiative to develop vocational competency should be promoted and guided. Training standards need to be developed and information on vocational training, including innovative training methods, should be circulated. Publication and dissemination of training material is also important in fostering private vocational training.

The comprehensive system of vocational training need to go through a continuous reform effort to adapt to the changing environment and needs. Such effort should include clearer identification and categorization of training types and methods, and systematization of the conditions and procedures of qualifying training providers through the participation of the different stakeholders, such as the for-profit corporations, non-profit organizations and social groups and individuals, etc. As the domestic training market opens, an environment should be created which fosters fair competition and management of the quality of vocational training.

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Author: Mee-Souk Kim

Research Material 01-9