Vocational Training and Employment Insurance
System in Korea
Dr. Choel-hee KIM
Research Fellow
I. Vocational Training Policy & Outcomes II. Policy Issues
III. Proposals
<Contents>
Vocational Training
in Korea
E
mbryonicStage (mid- 1960s
~1970s)
I
nnovativeStage (2000s)
T
ransitional Stage (midand late 1990s)
D
evelopmental Stage (1980~early1990s)
Vocational Training Policy & Outcomes
•
Socio-economic Background:
Export-driven economic development
• Major Policies:
Government-led training programs cultivating low-skilled workers
Introduction of compulsory vocational training system(1976)
E mbryonic Stage
(mid 1960s~1970s)• Export-driven development strategy demanding low-skilled workers in light industry and heavy chemical industry
• Low recognition of new trends in industries, insufficient
technology and professionalism resulting in limited outcome of private training programs
• Implementation of training grant programs
• Compulsory vocational training system in enterprises
• Expansion of public training institutes supported by international organizations and advanced countries
E mbryonic Stage
(mid 1960s~1970s)•
Socio-economic Background:
Labor-intensive → technology-intensive
Mass production → small quantity batch production
• Major Policies:
Cultivation of multi-skilled technicians
Increased role of public training organizations
D evelopmental Stage
(1990s)• Shift from labor-intensive industry to capital-intensive industry
• Technologization and automation
• Development strategy based on quality before quantity
• Focus on expanding the supply of high skilled technicians
• Establishment of organization responsible for qualification authorization as well as evaluation and management of public vocational training institutes
• Enhancing the role of public vocational training through mutual supervision among public training institutes
D evelopmental Stage
(1990s)•
Socio-economic Background:
Servicization and advancement of industrial structure Rapid increase in unemployment from Asian financial crisis
• Major Policies:
Skills development training for employed workers
Introduction of employment insurance serving as a social safety net
T ransitional Stage
(mid and late 1990s)• Moderate growth and low employment
• Servicization of industry, uplift in income and education level, rise of market economy limiting the role of Government
• Rapid increase in unemployment with Asian financial crisis
• Abrogation of Compulsory Vocational Training System
• Incentive provided to enterprises voluntarily conducting vocational training
• Active labor market policy to train unemployed workforce:
Introduction of unemployment benefit, training programs for job security
T ransitional Stage
(mid and late 1990s)•
Socio-economic Background:
Low growth, low employment
Low birthrate, increase in aging population
• Major Policies:
Establishment of lifelong skills development system
Increased cultivation of customized workforce
I nnovative Stage
(2000s)• Low growth and low employment
• Social polarization, low birthrate, increasing aging population
• Demand to support smaller enterprises and disadvantaged groups
• Complication of demand from industry and users
• Shift from supply-driven to demand-driven
• Expansion of lifelong skills development for incumbent workers
• Vocational training for smaller enterprises(SMEs) and disadvantaged groups(low income, female householders)
I nnovative Stage
(2000s)• Embryonic stage
Cultivation of technicians and just-in-time supply
Promotion of enterprises’ participation in initial training
• Developmental stage
Cultivation of medium and high skilled technicians and just- in-time supply
Supplementation of manpower development in private sector through public training
V ocational training Outcomes
• Transitional stage
Increase of skilled engineers
Successful recovery from financial crisis through promotion of reemployment
• Innovative stage
Increase of training program beneficiaries
Expansion of training areas
Reinforcement of demand-driven vocational training policy
V ocational training Outcomes
V ocational training programs
Vocational Training Program
Incumbent Training
(enhancement training)
Training for Unemployed
(initial training)
Support for business with skills development
program
Specialized program
Support program for skills development of
employed workers
Training program for national basic and strategic industries
Training Account System
Local training program Public training
Policy Issues
• Increase participation of SMEs in vocational training, enhance support for disadvantaged groups to achieve balanced growth and social integration
• Establishment of vocational training policy related to aged population and utilize retired workers in the labor market (social safety net)
• Industry-academia linkage in vocational education and training to solve job mismatch and to facilitate youth employment
Proposals
• Provision of demand-based training with linkage between
National Economic Development Plan and vocational training system (Korea’s experience: linkage between 1st ~ 6th The Five-Year Economic Development Plan and vocational training policy)
• Division of roles between the public and the private sector
(Proper division of role is a key factor in achieving successful HRD, Initiation of vocational training: active financial support from the
government and abroad , Expansion/Enhancement of vocational training:
increase in private investment)
• Flexible vocational training policy to respond to environmental change (Economic development, change in industry → readjustment of obj ectives and instruments of vocational training)
I. Purpose & Concept of the EIS II. Main Issues of the EIS
III. Characteristics & Challenges of the EIS IV. Lessons of Korean EIS
Contents
Employment Insurance
System in Korea
Purpose & Concept of the EIS
• “The purpose of this Act is to contribute to the economic and social development of the nation by ensuring livelihood of workers and promoting job-seeking activities of the jobless”
(Article 1 of the Employment Insurance Act)
• The EIS comprises many aspects of a social safety net
• Widely understood as a program that includes not only
unemployment insurance in the traditional sense but also more proactive initiatives such as employment stabilization and job skills development programs
Introduction of EIS
• Democratization & Liberalization late 1980s
• High economic growth & Industrialization
• Labor shortage, Skill mismatch & Technology intensive economy
• Introducing Pension system, Minimum wage in 1988
• 1993, the President promised to introduce EIS in 1995 in the five-year plan for new economy
• Launch of the Employment Insurance Research
Commission(EIRC) (Active Labor Market Policies, Prevent moral hazard problems of Unemployment Insurance)
Main Issues of the EIS
• Scope & Coverage of EIS programs (EI = UI + ALMP / Ministry of Commerce & Industry: 150 employees, Economic Planning Board: 30~70 employees)
• Cost responsibility (EPB 2/1,000, MCI 3/1,000)
• Link Job Skills Development Program
• UB Eligibility and Benefit Amount (50~60% of the average wage during the 1 year before the unemployment, duration of payment 60,
90~210 days)
• Management & Execution of the EIS (Public Employment Services)
EI Organization
(Ministry of Labor)EIS Programs
Employment Insurance
System
Employment Stabilization
Program
Skills Development
Program
Unemployment Benefit Program Marternity
Employment Creation Assistance Employment Adjustment Assistance Employment Promotion Assistance Subsidy for Construction Workers
Assistance to Employers Assistance to Employees
Promotion of Vocational Training
Basic Benefits
Employment Promotion Benefits
EI Coverage & Premium rate
Characteristics & Challenges of the EIS
• Combination of Labor market policy(ALMP) +
Unemployment benefit (Unemployment benefit, Job stabilization, Skills development programs)
• Strengthen requirement for unemployment benefit
• Incentive for active job search, participation in skills development programs, sanctions on lazy job search
• Covering SMEs employees & Informal sector (Part-time workers, daily workers etc.)
• Promoting PES system (Target specific one-stop service)
• Policy consideration vs. Economic efficiency
Lessons of Korean EIS
• National consensus (Necessity, Utilize)
• Development VT & PES (Labor market infrastructure)
• Financial stability of EI fund
• Coordinating programs
• Establish the foundation of Data management infrastructure
• Core role of social safety net
• Solution to social polarization in Korea
