Human Resources Development System, Policy and the Contributions of HRD to Economic Growth in South Korea

1. Human Resources Development System, Policy and the Contributions of HRD to Economic Growth in South Korea Chang-Won Jang Senior Research Fellow Korea Research Institute for Vocational Education & Training

2. Contents Ⅰ. Introduction Ⅱ. HRD systems in South Korea Ⅲ. The Contributions of Education to Economic Growth Ⅳ. Current Situation and Direction of Human Policy in South Korea Ⅴ. Korean Labor Takes a Global Perspective Ⅵ. A New Paradigm of Labor Supply & Demand

3. I. Introduction

4. Global Trends in Human Resource Development • Trends in Human Resource Development · Macro HRD at the government level · In regard to macro HRD, as it is initiated by governments, the main concern is strengthening overall national competitiveness in the global marketplace · Micro HRD at the enterprise level, of late, appears to primarily take the form of organizational reform, company policy revisions toward greater productivity, and incentive programs aimed at boosting performance among individual employees

5. Evaluation in HRD Systems · First, both governments and companies are increasing investment in HRD · Second, the key change in development systems is the move away from "supplier-centered" education and training systems that are planned and controlled by the central government. Now flexibly responding to labor market demand, programs are more region-specific and are conceived through a decentralized decision-making process · Third, countries around the world are trying to develop cost- efficient yet effective education and training programs, and design evaluation programs to be used to assess implemented programs on a regular basis so as to identify areas of improvement.

6. · Fourth, a wide variety of continuing education programs are under active development in many countries across the world. · Fifth, with the dawning of the age of knowledge and information, college graduates worldwide have emerged as a leading component of workforces. Accordingly, one of the main focuses in educational reforms worldwide is widening access to higher education and enhancing the quality of higher education.

7. HRD Projects around the World · First, policy focus is laid on information-related skills training to provide future workforces with the necessary abilities to meet information-age labor market requirements. · Second, comprehensive continuing education systems are under construction. This phenomenon is a response to the shortened lifecycle of knowledge, making learning a lifelong requirement, due once again to the fastchanging technological environment. · Third, skills and competencies specifically demanded by the knowledge and information age are becoming the priority in education. These competencies are basic job skills, general knowledge and specialized knowledge.

8. · Fourth, institutes of higher education are integrating vocational training into curriculums. · Fifth, school system reforms are being pursued with the goal of creating viable schools, adapted to a knowledgebased society.

9. 2. Historical Background of South Korea Education Market Korea started in the early 1960s as a typical labor-surplus economy with a scarce endowment of natural resources In the 20 years following 1945, the number of · College students increased almost 20-fold · Middle and high school students about 15-fold.

10. As a result, by 1965 Korea's human resource development had exceeded the norm for a country with three times its median per capita GNP Primary driving forces was parents’ belief of education

11. The education explosion continued after early 1960s through 90s is well above even OECD standards. • Impressive achievement of quantitative aspect of Korean education: • More than 80 percent of high school graduates advance to the tertiary educational institutes within the couple of years after graduation. • Impressive achievement of quality aspect of Korean education: • Especially good in primary and secondary schools as far as their performances on international standardized tests are concerned.

12. This human resource situation has been conductive to the rapid growth of the export-led labor-intensive manufacturing sector during 60s and 70s This human resource situation has continued to work especially for the rapid expansion of the exported heavy and chemical industries during 80s and 90s

13. The Korean economy such as industrial structural change toward an OECD-type mature economy becomes increasingly dependent on technology-intensive and knowledge-intensive growth • The coming age of globalization and information also accelerates trends toward this direction. • Then, will educational institutions produce the "right human resources" to meet the rapidly changing demand for labor in the coming 21st century?

14. 3. The Changes and Challengesof South Korea 1) The transfer into knowledge economy (KE) In the 21st century, a high technology, information and communication industry, and a sophisticated service industry will make up the core section of the economy, which means that society will become more knowledge and information centered. In Korea, it is expected that an industry based on knowledge and a service sector related to information technology will play an important role in creating job opportunities in the next five year. Meanwhile, it is also expected that the size of the industry relying on labor force and monetary investment will decrease.

15. 2) Role of Information and Communication Technology (ICT) • In sum, a brief overview of the KE debate suggests the following: • The KE is substantially an effect of innovations in the ICT sectors, taking place in a globalized market • The KE is more than the sum of the technological and economic processes associated with ICT • The challenge of the KE lies particularly in its impact on productivity, growth and competitiveness • Inclusion in the global KE is essential for high standards of income, comparable with those of successful KEs. • These conclusions set the scene for a discussion of HRD issues associated with the KE.

16. 3) The change of the employment structure • The Uncertainty of the labor market is expected to increase with the rapid change of the economic and industrial structure • The shift of the labor forces will occur with globalization, a rapid change of the industrial structure, and the advent of knowledge and information oriented industry • In Korea, moving to the other workplaces to suit their capabilities and preference • The variety of types of employment, such as part-time employment and working at home, will become more prevalent

17. 4) The advancement of tertiary education • The entering rate of tertiary education from general and vocational high schools has increased from 27.2% in 1980 to 82.5% in 2004. • The advancement of tertiary education

18. 5) The aging society Since 1960, the birth rate has decreased, resulting in the gradual decrease in the number of adolescents. The number of the population aged 18-21 has slightly increased from 310 million in 1998 to 323 million in 2000; however, it is expected that the figure will sharply decrease to 261 million in 2005 (Korea National Statistical Office, 1996).

19. 4. New Paradigm for HRD The need for continuing education and life-long education is increasing continuously in the labor market. A society based on knowledge and information technology needs employees who are creative and able to adapt rapid changes in society. In order to meet such societal demands, employees should be given ample opportunity to study constantly, and the recommended method is a self-directed learning.

20. Ⅱ. HRD systems in South Korea

21. HRD Base on Act of National Human ResourceDevelopment 1) Concept of NHRD National Human Resource Development" refers to all national efforts, including education, training and cultural activities, taken to develop and utilize human resources efficiently 2)  Issues of NHRD Current Situation ① National policy   - Lack of overall coordination in NHRD policies   - The late entry of Koreans into the job market - Insufficient utilization of women   - Imbalance in the distribution of talent

22. ② Public school education  - Education focused on college entrance - National competence outside the school system not utilized ③ Social culture   - Social and employment practices that put more value on academic background than on competence   - The lowest participation of adults in lifelong learning among OECD countries

23. 2. Mission, Vision, and Objectives of NHRD

24. 3. Policy Directions on NHRD  Policy Goal : Set  the Supply and Demand of Manpower in Korea, efficiently and properly - Therefore, Analysis of Mid to Long-Term Projections for the Supply and Demand of Manpower is very important(See the appendix for more information) - Ensure quality education at elementary, middle and high schools to nurture - Improve higher education so as to realize the goal of "Knowledge Power" - Establish lifelong vocational training that covers all sectors of society - Nurture talented people in national strategic areas so as to promote sustainable growth

25. - Identify and nurture talented lower-income people as a way toward the integration of society - Nurture talented women and promote the participation of women in society from a strategic perspective - Provide HRD tailored to regional needs - Promote cultural awareness to promote harmony within society - Promote exchange programs and cooperation as a means toward globalization Build an infrastructure that enhances efficient HRD

26. Ⅲ. The Contributions of Education to Economic Growth

27. 1. Education Contributions Table 1. Relative Contribution to Growth in South Korea

28. Table 2. Accumulation: Contribution to Growth for Korea, 1965∼1989

29. 2. Results and Implications of Empirical Estimations(1965-1989) ● The results show that 65 percent of the total predicted per-capita growth in Korea since 1965 is due to expanded secondary school enrollments. Primary education comes second with 36.2 percent, followed by higher education, at 4.7 percent, while physical investment contributes 24.9 percent and raw unimproved labor contributes only 6.6 percent in Korea ● Second, the rationalization of the public sector's investment in schooling and training requires the examination of a broad array of labor market imperfections and failures, private training capacity, and structural changes involving strategic skills that require long lead times for acquisition

30. ● Key conclusions are that productivity of education is of prime importance to per capita growth ● The model also includes endogenous technological change which together with human capital formation leads to increasing returns to scale ● These effects of education on per capita growth are seen in three ways: (1)through the effects of increased educational attainment as the labor force increases its skills and hence its productivity, (2) through the contribution of investment in higher education to the conduct of R&D, and the training of R&D personnel for firms as part of endogenous technical change, and (3) through the ability to transfer technology from more advanced countries, as well as to learn and adapt these new technologies while on the job

31. 3. Comparison of Empirical Estimations(1970-2004) and (1965-1989)

32. 4. Results and Implications of Empirical Study(1970-2004) ● What is a new significant difference between  these 2 estimated results ●Now estimates processing

33. IV. Current Situation and Direction of Human Policy in South Korea

34. 1. Upgrading Human Resource Development • Let's explore the current status of HRD in Korea and the issues facing it by looking at three essential areas: - First, development of human resources through education and training - Second, use and management of human resources thus developed, their deployment in the labor market and re-education and re-training - Third, the infrastructure necessary for effective development and deployment of human resources, such as communication channels or other forms of close linkage between the educational and labor markets

35. 2. Traditional Vocational Education in Decline ●The government is also trying to find a remedy to the problem of declining performance among vocational high schools in producing skilled personnel. This phenomenon is not due to a drop in labor demand from industry, but rather owes more to a sharp decline in applicants ● The shortage in qualified manpower in Korea is generally a result of labor market dysfunction, rather than a real lack in educated personnel

36. 3. Is Telecommuting the Future? ●Work-from-home jobs are now being given serious consideration as a means of tapping into a huge pool of potential female labor. Also, demand is likely to surge in this labor market segment in areas such as computer and sales-related work that are ideally suited to telecommuting

37. 4. The Need to Support Working Mothers ●The female participation rate in economic activities stood at 49.7 percent in 2002, some 10 percent points lower than the OECD average of 59.6 percent ● Career interruptions are frequent among women of childbearing age, especially those aged between 25 and 29. Statistics show, however, that more and more women of these age groups are returning to work

38. 5. Toward National Standards for Skills ●The Korean government is preparing to establish national skill standards (Korea Skill Standards), to create a basis for nationwide recognition of state or private organization-issued qualifications ● The new classification system will be conceived to be consistent and cross-referenceable with academic major and program classification systems, and job training category classifications ● To encourage partnership in HRD, the government is working toward formulating organized guidelines for industry sector or business associationled partnerships for evaluating qualifications and competency

39. 6. Closely Linking Academic and The Workplace ●To promote closer collaboration between the educational and labor markets, the government is preparing the necessary infrastructure ● No infrastructure for creation, use and diffusion of knowledge can be complete or viable without a quality management system for human resources. To assist the construction of a human resource quality management system, the government is evaluating the performance of educational and training institutions and their programs, in order to identify their strengths and weaknesses and to design a more efficient educational and training model

40. V.Korean Labor Takes a Global Perspective

41. - Korean workers are now armed or becoming armed with necessary prerequisites for globalization. Their foreign language proficiency has substantially improved, and they are more creative - International mobility in the labor market is rapidly rising in Korea. Amidst a continuing inflow of cheaper foreign workers, professional Korean workers migrate abroad in growing numbers ●Major changes are occurring to the structure of labor demand in the country - Demand for innovative manpower is on the rise - The growing importance of China and Northeast Asia as an economic power is another factor making the outlook bright for Korea's labor sector - Koreans as a whole are favorably disposed toward foreign investors and foreign corporations

42. - Labor/management relations, after some hitches and bumps, have now entered a stable phase. Except for a handful of large corporations, at most workplaces, labor and management have successfully built highly cooperative relationships and viable modes of interaction • The country's industry/university cooperation system, now at its mature stage, is effectively fueling innovations - Active efforts toward building industry clusters, widely participated in by foreign firms, are underway

43. VI. A New Paradigm of Labor Supply & Demand

44. ●Just as the mass production system has revealed its limitations as a means to further the progress of an industrialized society, conventional forms of human resource development are now faced with the necessity of fundamentally revising their supply and demand structures ● Particular efforts are directed toward qualitative improvement in high-tech labor, as these human resources will lead the national enterprise to develop new growth-engine industries, and in technical manpower in the production segment at the forefront of industry. No less important is the capacity for efficient labor supply in a timely fashion where needed. These measures are critical components of Korea's effort to narrow the gap between itself and more advanced industrialized nations

45. ●The government, to back up its policy measures with public support, is launching communications campaigns to increase public interest in science and technology, and is working to build a state-sponsored system for developing human resources and ensuring their effective distribution in the corporate sector. To boost national competitiveness through new high-tech growth industries and progress in science and technology, the government is creating a state-level resource to support universities in the development and deployment of scientific and technological personnel. The government's effort to introduce greater flexibility in the HRD system in science and technology has been in progress for some time. Its initiatives to redesign the national HRD system by eliminating existing inefficiencies and updating obsolete areas to better meet the labor demand in today's industry have already produced concrete results

46. VI. Conclusion

47. South Korea

48. 6.4% University 16 19.3% Sr. Sec .9% Acad./University 1.4% Acad./University 2.3% Acad./University 12 22% Jr. Sec 6.6% Sr.Sec. 8.9% Sr.Sec. 13% Sr.Sec. 9 36% Primary 6.2%Jr.Secs 8.1%Jr.Secs 10.1%Jr.Secs 6 32.7% 33.2% 33.7% 6 Yrs 6 Yrs 6 Yrs Illiterate16.3% 4 59.9% at Least 4 Yrs. Primary 63.1% at Least 4 Yrs. Primary 59.1% at Least 4 Yrs. Primary 0 1975(GDP: 592$) 26.4% Illiterate 18.5% Illiterate 15.3% Illiterate 1982 1986 1989 Educational Structure of Indonesia’s Labor Force South Korea

49. Conclusion The best way to successfully consolidate HRD policy issues is to set up a "policy issue body" that will outlive the current government or regime. Thereby, a more consistency and continuity in the policy issue management could be politically possible and institutionally guaranteed, thus more successful consolidation of policy issue could be generated.

50. Thank you Chang-Won Jang E-mail : cwjang@krivet.re.kr