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competency-based

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competency-based

    Skills Development for Decent Work and

    Korea's Experiences”

     Chapter 1. Korea's Experiences on Skills Development

    1.1. History of skills development

     1.1.1. Beginning in the 1970's

     1.1.2. Growth in the 1980's

     1.1.3. Transition in the 1990's

     1.1.4. Innovation in the 2000's

    1.2. Financing of skills development

     1.2.1. Compulsory vocational training

     1.2.2. EI skills development

    1.3. Implications

     Chapter 2. Environmental Changes and Innovations in Skills Development

    2.1. Recent environmental changes and directions for innovation

     2.1.1. Environmental changes

     2.1.2. Directions for innovation

    2.2. Innovations required

     2.2.1. Establish lifelong skills development across the working life

     2.2.2. Measures targeted for disadvantaged workers

     2.2.3. Reform the delivery of skills development

     2.2.4. Build information infrastructure to meet workforce needs

     2.2.5. Promote competency-based HRD culture

    2.3. Examples of policy innovations

     2.3.1. SME vocational training consortium

     2.3.2 e-Learning

     2.3.3. HRD-Net

     2.3.4. Renovation of public training institutions

     Chapter 3. Key Policy Issues for Discussion

     This paper is from the detailed report for presentation at "Labor Ministers' Special

    Session" of the 14th ILO Asian Regional Meeting(August 2006) and added key policy

    issues for discussion

    Overview

? Korea's fast economic growth is largely attributable to the successful development

    and use of human resources. This country has adapted its skills development

    system to the stage of economic growth, upgrading job skills and knowledge of

    workers to meet the industrial needs at each stage.

     Table 1-1. Summary of skills development policies in Korea

    Per capita Key policies Economic?social background GDP

    ?Government-led vocational training ?Industrialization demanded Beginning 254$? ?Compulsory Vocational Training (’76): a large number of simple- in 1970s 1,676$ large companies were required to skilled workforce. produce simple-skilled workforce

    ?Focus in training shifted from simple-?Labor intensive

    skilled to multi-skilled and multi-1,658$ Growth ? technology-intensive functional workforce. in 1980s ?5,418$ ?Mass production ?Increased support for training facilities,

    ? mass customization etc. at workplace.

    ?Compulsory Vocational Training ? EI

    Training (’95)

     - Compulsory training/training levies ? ?Knowledge-based economy 6,417$ Transition EI contributions/training subsidies ?Growth in service sector in 1990's - Production workers in manufacturing ?9,438$

    ?Foreign-exchange crisis ? All workers in all industries

    ?Large-scale training for the unemployed

    during the financial crisis

    ?Closer business-school links to produce ?New sectors, such as IT 10,841$ professional workforce ?Lifelong workplace ? ? ?Lifelong skills development system lifelong employability 20,000 ?Special supports to disadvantaged $ ?Labor market polarization workers (SMEs, non-regular, etc.)

    1.1. History of skills development

     1.1.1. Beginning in the 1970s

? Economic?social background

? The industrialization process began to pick up, with the kick-off of the 1st 5-year

    Economic Development Plan in 1962.

    ? In the 1970s, as the 3rd and 4th 5-year Economic Development Plan was

    implemented (in 1972~1981) with the goal of developing the heavy chemical

    industry, there was a sharp rise in the demand of production workers in the

    manufacturing sector.

    ? Policy responses

? The Central Government took the lead in producing skilled workforce, by

    providing public vocational training.

    - Starting from the year 1971, the Government set up 22 public training institutions

    ("Vocational Training Institutes") across the nation and supplied individual companies with quality

    workers. Local governments provided short-term courses of basic training.

    - Due to financial difficulties and lack of domestic capital, the Government had

    to use ADB and IBRD loans to establish public training institutions. With a

    view to learning from the advanced techniques and know-how on vocational

    training in industrialized countries, the Government conducted oversea, study

    programs for vocational trainers and training specialists.

    Table 1-2. Number of public training graduates in the 1970s

    Year 1972 1973 1974 1975 1976 1977 1978 1979

    No. of graduates 9,918 16,234 16,356 17,480 18,164 14,878 19,201 28,488

? As the Government found it impossible to meet the growing demand of skilled

    workers simply by expanding public vocational training, it adopted the

    Compulsory Vocational Training (under the Basic Vocational Training Act of

    1976) in which larger companies were obligated to train their employees to meet

    their workforce needs.

    - Large companies (employing a set number of persons or more) were required

    to give vocational training to their employees (at a certain proportion of total

    permanent employees) every year, and the companies that failed to comply

    with the obligation had to pay training levies.

    - The training levies collected were used to finance public and private

    vocational training.

     Table 1-3. Number of compulsory training graduates in the 1970s

    Year 1977 1978 1979

    No. of graduates 58,739 73,038 90,992

     1.1.2 Growth in the 1980s

? Economic?social background

    ? With the change in the industrial structure, new needs for vocational training were

    raised in the 1980s.

    - As the industrial axis shifted from labor-intensive to technology-intensive

    sectors and from mass production to mass customization, there appeared a

    growing demand of high-skilled workers, instead of simple-skilled ones. ? Since, with a general growth in income and educational attainment, fewer workers

    wanted to get trained for simple-skilled or production jobs while more companies

    demanded an advanced version of vocational training, there emerged a need to

    establish a comprehensive HRD system covering both the public and private

    sector.

    ? Policy responses ? In 1982, Korea Vocational Training Management Agency(HRD Korea, today)

    was founded to have a general control over the 24 public training institutions,

    each of which had been an independent organization until then.

     Public training institutions numbered 24 in 1980, with two being added to the 22

    institutions that had been in place in 1970s.

    - The focus in public training was shifted from simple-skilled to multi-skilled

    and multi-functional workforce, and training courses were also reorganized to

    give priority to high-tech occupations.

     KVTMC was an integration of the Korea Technical Certification Corporation, the

    Vocational Training Research Institute and Changwon Polytechnic College under the

    Ministry of Science and Technology, in addition to 24 public training institutions. Its major

    functions were to coordinate the supply and demand of industrial workforce and to

    manage workforce in an efficient manner. With reform of the public training infrastructure

    in March 2006, HRD Korea has repositioned itself as a public agency specialized in

    supporting workers' lifelong learning and certifying technical qualifications, while

    transferring the role of providing vocational training for simple-skilled workforce to the

    Korea Polytech University.

    ? Towards the 1980s, the graduates of company-offered basic training reduced in

    number, largely due to a decrease in human resources subject to such training, and

    the companies showed a larger demand of vocational training for high-skilled

    workers in high-tech sectors.

    Table 1-4. Trend in the number of compulsory training graduates in the 1980s

    Proportion of training Class. No. of companies graduates No. of complier No. of training obligated (as permille of total companies graduates Year permanent employees)

    1980 1,103 3.14 669 66,213

    1981 1,103 4.13 485 48,406 1982 1,106 2.44 507 30,131 1983 1,185 1.78 382 20,960 1984 1,263 1.82 268 22,011 1985 1,341 1.73 519 23,876 1986 1,398 1.63 356 19,042 1987 1,537 1.73 239 14,774 1988 1,573 1.95 403 20,560 1989 1,612 1.76 392 17,570

    - The Compulsory Vocational Training required larger companies to train a

    certain proportion (10% or higher) of total permanent employees, but later

    replaced this requirement with a new one for training expenditure at a certain

    rate or higher (20/1000) of total wage.

    - Not only the direct training expenses, but also the cost of building facilities or

    buying devices needed for vocational training was counted for the purpose of

    calculating the training expenditure above, which helped expand the training

    infrastructure in the private sector and facilitate voluntary training at

    individual companies.

     1.1.3. Transition in the 1990s

? Economic?social background

? The centralized planned economy, which was manifested by the 5-year Economic

    Development Plans, began to give way to the economic growth strategy based on

    efficiency of market forces and autonomousness of individual companies.

    ? With an increasing sophistication of the industrial structure, as illustrated in the

    transition to the knowledge-based economy and the remarkable growth of service

    sector, more attention was paid to the importance of high-quality human resources.

    ? Immediately after the foreign exchange crisis (19982000) hit Korea, the nation

    underwent an unprecedented level of mass unemployment and was in need of

    active employment policy measures to address the problems of the unemployed in

    the dimension of skills development.

? Policy responses

? The Compulsory Vocational Training was useful in bringing forth simple-skilled

    or production workers who were required in the intial phase of industrialization.

    However, it could not satisfy diverse training needs from individual companies at

    a time of the sophisticated industrial structure.

    - In response, the Government began to seek after a private-led and demand-

    oriented paradigm of skills development, instead of the traditional

    government-led and supply-oriented paradigm.

    ? In 1995, the Government introduced the Skills Development Program as part of

    the Employment Insurance System (the Employment Insurance Act of 1993), to

    substitute the 20-year-old Compulsory Vocational Training.

    - Under the Skills Development Program, companies should pay contributions

    to the EIS, with no obligation of vocational training, and are entitled to EIS-

    funded subsidies for voluntary company-based training. - The support resources are directed to upgrade training for all workers in all

    industries, instead of being concentrated on basic training for productions

    workers in manufacturing.

    - Moreover, the Basic Vocational Training Act was repealed and the training

    requirements and support procedures were eased and simplified (with the

    Vocational Training Promotion Act of 1997).

    ? In addition, public training institutions underwent structural changes, in

    accordance with the goal of better job skills.

    - In 1992, Korea University of Technology and Education (with 4-year courses)

    was founded to produce vocational training instructor equipped with both

    theological knowledge and practical expertise.

    - Additional Polytechnic Colleges (with 2-year courses for professional and

    technical workforce) were established (the number increased to 19 in 1997

    from 2 in 1990). A separate agency was built in 1997 to have a coordinating

    control over the 19 colleges, which, until then, had been under the direct

    control of the HRD Korea.

     Polytechnic Colleges were renamed the Korea Polytechnic University by the reform of

    the public training infrastructure in March 2006. The Korea Polytechnic University, after

    absorbing 17 vocational technical schools (with 6-month or 1-year courses for technicians)

    of the HRD Korea, had a structure of 40 campuses in 7 regional areas.

    ? Meanwhile, a large-scale training program was conducted for the unemployed, in

    order to address the mass unemployment in the aftermath of the onset of the

    Korean IMF crisis.

    - The training for the unemployed was successful as a social safety net to

    maintain or improve employability of the unemployed while they were out of

    employment and facilitate their re-employment.

     1.1.4. Innovation in the 2000's

    ? Economic?social background

    ? New high-tech-based sectors, including IT and BT, emerged as a new engine for

    economic growth.

    ? With a growing use of the profit-first business strategy and the labor-saving

    production system in the course of recovery from the Korean IMF crisis, the

    conventional notion of 'lifelong workplace' was losing ground to the new notion

    of 'lifelong employability' involving frequent labor mobility.

    ? One of the hot labor issues was the labor market polarization with a widening gap

    between large companies and SMEs and between regular and non-regular

    workers). Policy makers faced with the challenge of drawing up a solution to help

    the disadvantaged groups out of the low-skill trap (a chain of low skills, low

    productivity and low wage).

     Wage gap : SME/large companies: 54.8% (manufacturing in 2004), non-regular/regular

    jobs: 62.6% (in 2005)

    ? Policy responses and Issues

    ? There were closer links among business, school, research and government, to

    concentrate their effort on producing professional workforce for growth-engine

    sectors and knowledge-based sectors with high value added.

    - The Government support has been offered to package programs for "R&D -

    technological development - HRD", especially involving universities (or

    graduate schools).

    ? Recognizing that the school-age education alone is not good enough for workers

    to survive in this age of lifelong employability.

    - the Government has encouraged continuous skills development across the

    working life, organized learning at companies and voluntary skills

    development of individual workers.

    ? There will be more subsidies to increase skills development opportunities of the

    disadvantaged groups (SME workers, non-regular workers, women, aged, etc.)

    and enhance equitability of the opportunities.

    ? The structure for delivery of the skills development policies will be reformed to

    ensure a participatory and decentralized delivery of the policies. And multi-

    layered partnership will be created at national, regional and industrial level.

    1.2. Financing of skills development

    1.2.1. Compulsory Vocational Training (’76~‘98)

? Companies with a set number of employees or more were obligated to offer

    employee training.

    - Companies with 300 employees or more in 1976 ? companies with 200

    employees or more in 1989 ? companies with 150 employees or more in

    1992 ? companies with 1,000 employees or more

     With inauguration of the Employment Insurance System in 1995, the EIS Skills

    Development Program was introduced the same year, in addition to the existing

    Compulsory Vocational Training. Accordingly, the coverage of the Compulsory

    Training was reduced to companies with 1,000 employees or more, for the last years

    (1995~1998).

    - The content of the training obligation was changed: from training an industry-

    specific percent (around 10%) of total permanent employees in 1976~1987, to

    spending training expenses at a certain percent (about 20/1000, depending on

    industry and company size) of total wage in 1987~1998.

? When an employer failed to comply with the training obligation, he/she should

    pay a training levy to the Government and the levy was used to create a fund to

    promote vocational training.

    - The Vocational Training Promotion Fund was to finance public training,

    facilities and devices for in-company training and research and studies on

    vocational training.

    ? Under the Compulsory Vocational Training, a total of 2,180,000 workers received

    vocational training in the 1976~1998 period.

    1.2.2. Employment Insurance System (’95~)

? Employment Insurance System is more than a remedial means to provide the

    unemployed with unemployment benefits for a minimum living. EIS, as is in line with

    the active labor market policy, is a proactive arrangement that includes the programs

    for employment stabilization and skills development in order to minimize

    unemployment and promote an efficient use of workforce.

    ? The EIS Skills Development Program is financed by the employers' contributions.

     - For the purpose of a flexible operation of the EIS fund, the Employment Security

    Program and the Skills Development Program were integrated in financial terms in

    2006.

Table 1-5. EIS contribution rates (as % of total wage)

    Classification Employee Employer

    Unemployment benefits 0.45% 0.45%

    Employment stabilization / skills Companies with fewer than 150 - 0.25% developmentemployees

     Companies with 150 or more (preferred - 0.45% companies)

    Companies with 150 1,000 - 0.65%

    Companies with 1,000 or more - 0.85%

     Total 0.45% 0.70%1.30%

    ? Employer, employees and the unemployed are free to provide or receive vocational

    training, and the EIS Fund grants subsidies for the training implemented.

     - Subsidies for employers : An employer who gives vocational training to his/her employees

    is entitled to a subsidy covering the whole or part of the training cost; and an employer who

    offers a paid training leave is entitled to a subsidy covering the whole or part of the training

    cost and the employee wage. In addition, loans for training facilities and devices are

    available.

     - Subsidies for employees : An employee who is enrolled in a training course is entitled to a subsidy

    covering the whole or part of the training expense (employee enrollment subsidy), and loans for

    college tuition are also available.

     - Subsidies for the unemployed : The unemployed who were covered by EIS for a

    qualifying period are entitled to a training cost subsidy and a training allowance.

     The unemployed with no work experience who have never been EIS-covered are entitle to

    the subsidies from the general account of the budget.

    Table 1-6. Trend in budget and beneficiaries of the EIS Skills Development

    Program (’02~05)

    Year 2002 2003 2004 2005

    Budget 559.3 592.1 642.4 686.4 (1 billion won)

    Beneficiaries 1,740 1,780 2,090 2,460 (1,000 persons)

1.3. Implications

? Driving force behind the growth of the national economy

     - The skills development system (including the Compulsory Vocational Training) has

    contributed to a timely supply of appropriate workforce in step with the stage of

    industrial development ("light industry ? heavy chemical industry ? high-tech

    industry”).

     - The abundant quality workforce, a product of well-performed skills development, has

    laid the groundwork for the fast growth of the Korean economy.

? Flexible policy management

     - In response to the changes in the industrial structure, the Government took a flexible

    approach to shift the training focus from basic training especially in the

    manufacturing sector to basic and upgrade training in all sectors.

     - The structure of skills development, which was heavily represented by government-led

    public training in the initial stage, is in transition to a private-led paradigm marked by

    voluntary participation and government support.

? Contributing to riding over mass unemployment during the crisis

     - The large-scale training for the unemployed during the financial crisis helped them

    make a decent living and find a new job and contributed to an earlier recovery from

    mass unemployment.

     - A much larger part of the training for the unemployed was related to IT occupations,

    which later facilitated a transition to the information society.

     1-1 Trend in unemployment rate and unemployed trainees (1998-2005)

? Active labor market policy

     - The Employment Insurance System interlinks the programs of "unemployment benefits,

    job placement and skills development", enabling the unemployed to do the work

    search while improving their employability and leading a minimum living.

     - Meanwhile, Job Centers (PES) offer every user one-stop services regarding

    unemployment benefits, job placement and skills development.

    Chapter 2

     Environmental Changes and Innovations in Skills Development

2.1. Recent environmental changes and directions for innovation

     2.1.1. Environmental changes

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