5. Improving the financing and governance of the Korean adult learning system
In Korea, like in other OECD countries, the governance and financing of the adult learning system involves many actors. While the Ministry of Employment and Labour is the main body responsible for training policies, other ministries and local governments are also involved in adult learning. Stakeholders such as firms, trade unions, and training providers, also have a key role to play. This chapter examines the financing and governance of the Korean adult learning system, focussing on the programmes available to SMEs and SME workers.
Korea has put in place many adult learning policy measures to enhance training participation in SMEs. These programmes are financed by different actors and fall under the responsibilities of different government bodies and stakeholders. This chapter examines the financing and governance of adult learning in Korea. The key findings of this chapter can be summarised as follows:
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In Korea, training programmes for employees are mainly financed through a levy-grant system paid by employers that feeds into the Employment Insurance Fund. Despite the preferential support given to smaller firms, SMEs still do not use the financial incentive system as much as large firms do. In 2018, some 29.7% of insured SME workers took part in the training financed by the Employment Insurance, compared to 54.8% of workers in large firms.1
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Social partners have very limited responsibilities over adult learning financing. This is very different from what can be observed in many OECD countries with a training levy in place, where social partners are often responsible for managing (at least part of) the funding for adult learning.
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While the Ministry of Employment and Labour (MoEL) is the primary actor and funder of adult learning, other ministries and the local government also play a role. In a view to promote a whole-of-government approach in adult learning, in recent years Korea has updated the legal framework to prevent different ministries from implementing similar and overlapping programmes.
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Korea’s adult learning system has remained relatively centralised. However, recognising the important role that local actors could play in adult learning, MoEL has steadily increased the funding for local governments to implement adult learning programmes. MoEL is also empowering local quadripartite councils – i.e. an integrated governance body involving labour, management, government and civic groups, which deals with local employment, human resource development, and industrial relations in many regions.
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In recent years, the government has been taking steps to better involve social partners in adult learning. One important initiative was the establishment of regional skills councils (RSCs) and industry skills councils (ISCs). However, much remains to be done to ensure that these bodies can successfully fulfil their roles. Some of the challenges revolve around the lack of experience of the personnel; the weak cooperation between RSCs and ISCs; the imbalance of responsibilities between employers’ organisations and trade unions; and the fact that RSCs and ISCs are financially dependent to the government.
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Social dialogue at firm level could also be improved. Labour-Management Councils (LMCs) in Korea could represent a valid tool for workers and firms to jointly identify training needs, regularly discuss the quality of training programmes undertaken, and explore best training options. Despite their potential, the influence of LMCs on adult learning issues remains weak, especially in SMEs.
Introduction
In Korea, like in other OECD countries, the governance and financing of the adult learning system involves many actors. A variety of ministries, local governments, and other stakeholders have some degree of responsibility over adult learning. This chapter provides an overview of the Korean adult learning system, focussing on financing and governance. The chapter is structured as follows. Section 5.1 provides a snapshot of how the adult learning system is financed. Section 5.2 describes how the governance of the adult learning system is organised.
5.1. Financing adult learning
Adult learning in Korea is financed through two main channels: general accounts and the Employment Insurance Fund. Funding from general accounts are primarily used for training for the unemployed or vulnerable groups. The Employment Insurance Fund is mainly used for training for incumbent workers or the unemployed with an employment insurance record (see Box 5.1 for a description of the Korean Employment Insurance system).
The Employment Insurance (EI) system of Korea, introduced in 1995, is a compulsory social insurance that aims to prevent joblessness, promote employment, and improve workers’ vocational skills. Korea’s EI system finances unemployment benefits, vocational training for incumbent workers and the employment security to retain or create jobs.
All employers and employees are obliged to pay an insurance premium into the EI fund and are entitled to receive training subsidies or unemployment benefits. EI premium rates include a rate for employment security and vocational skills development programmes, and a rate for unemployment benefits (Table 5.1).
The EI system has gradually expanded its coverage. As a result, the number of people insured went from just over 4 million at its inception, to 13.4 million in 2018. However, coverage is still far from universal. According to the Economically Active Population Survey (Supplementary Results by Employment type), in 2018 the ratio of the number of insured persons to the number of salaried workers was around 71.6% (87% for regular workers and 43.6% for non-regular workers, respectively).
Low coverage means that many workers are not entitled to benefit from training programmes financed through EI. To tackle this issue, in January 2019 the Korean government expanded the coverage of EI-funded training programmes to workers who are not enrolled in EI – using general account budgets. The government also plans to introduce an unemployment assistance scheme in 2020 to reduce “blind spots” in social protection.
Over the last decade, as shown in Figure 5.1, total expenditure on training has gradually increased reaching KRW 2.58 trillion (about EUR 2 billion) in 2018. Vocational training programmes in Korea rely mainly on the Employment Insurance Fund paid by employers. Indeed, in 2018, some 81% of the funding came from the Employment Insurance Fund.
Note: Ratio refers to the percentage of the funding that comes from the Employment Insurance Fund. Data excludes initial vocational education and includes only VET for workers, job-seekers, and disadvantaged groups.
Source: MoEL (2019[2]), Employment and Labor White Paper.
The employment insurance system is funded by a levy-grant scheme. All employers have to contribute to the EI fund, and are entitled to get rebates of training levies to recover the training costs for their workers. The advantage of such a system is that it encourages employers to provide in-company training for their workers, either directly or through outsourced providers. Another advantage is that training programmes are more demand-driven, since they are organised or purchased by the firms themselves in accordance with their needs (Lee, 2016[3]).
The Korean employment insurance system gives more favourable financial incentives to SMEs. Indeed, premium rates vary from 0.25% to 0.85% of the total taxable wage bill depending on firm size, with lowest rates applying to firms with less than 150 workers and highest rates applying to firms with 1 000 or more workers (Table 5.2).
Moreover, rebates are higher for SMEs than for large firms. The level of rebates for SMEs is at 100% of the training costs and up to a total of 240% of training levies paid. Conversely, for large firms it is at 40% of training costs, up to a total of 100% of training levies paid (Table 5.2).
As a result, the training levy recovery rate (which reflects the difference between training levy and rebates) is higher for SMEs than large firms. For example, in 2018, the recovery rate for SMEs with 50 to 99 employees was about 61%, compared to just 8.4% in large firm with 1 000 or more employees (Figure 5.2).
Note: Recovery rate refers to the difference between total training levy paid and rebates received through grant.
Source: MoEL (2019[2]), Employment and Labor White Paper.
Although it has served as an effective incentive for companies to conduct job-related skills training, the levy-grant system is not flawless. Despite preferential treatment given to smaller firms, SMEs still do not use the financial incentives system as much as large firms do. According to Employment Insurance administrative data, in 2018 some 29.7% of total insured SME workers (less than 300 employees) took part in the training financed by the Employment Insurance, compared to 54.8% of workers in large firms (with 300 or more employees). Participation rates are even lower for workers in micro- or small firms (Table 5.3.).
This situation shows how, as discussed in Chapter 2, financial incentives alone are insufficient to favour training in SMEs. Besides training costs, SMEs also face other obstacles – such as poaching risks, asymmetry of information on available training options, and administrative burdens to arrange training and recover levies – that needs to be tackled to favour skills investments.
In the Korean levy-grant system, workers’ training is largely financed through the premiums that employers pay into the employment insurance fund. Although in theory the Employment Insurance Committee – which is composed of various social partners – provides advice on the direction of vocational skills development programmes, in practice their voices are not always heard.
In the medium- to long-term, there is room for Korea to look at the experience of OECD countries with a training levy in place, where social partners are generally responsible for managing financial resources, at least in some sectors (OECD, 2019[5]).
For example, in Italy, the training levy paid by employers (0.3% of payroll) is directly managed by the Fondi Interprofessionali, i.e. associations run by social partners that aim to finance workers’ training (see Box 5.2). Similar training funds exist in other OECD countries such as the Netherlands (O&O), and Ireland (Skillnet Ireland). As another example, in Sweden, Job Security Councils – associations run by social partners that are responsible for ensuring smooth transitions from one job to another, through training and other measures – are financed by a levy paid by employers (0.3% of payroll).
Allowing social partners to manage a training budget – e.g. part of the employment insurance fund2 – could empower employers and workers to work together on adult learning, increase their knowledge and understanding of adult learning challenges, and better align training to the needs of firms and workers. For example, one option could be to allow the Regional and Industry Skills Councils to manage at least part of the training budget (see Section 5.2.3). For this to happen successfully, parallel efforts should be taken to enhance social partners’ interest and involvement in adult learning, and strengthen their capability to manage funding in a transparent manner.
Training Funds (hereafter TFs) are associations run by social partners that finance workers’ training, using resources collected through a training levy imposed on employers. The main policy goal of the Training Funds is to provide incentives to firms to invest in the human capital of their workers and promote continuous learning and skills development opportunities.
One distinctive feature of Training Funds is that they are run by social partners. Training Funds’ management boards comprise equal numbers of representatives appointed from employers and workers’ organisations. All types of training programmes financed need to be agreed by social partners.
While Training Funds work autonomously, they function under the umbrella of government bodies. The Ministry of Labour and Social Affairs authorises the establishment of new Training Funds after verifying compliance with a set of requirements, and can temporarily suspend or terminate them if these requirements are no longer met.
Training Funds are financed through a levy-grant mechanism. Firms can allocate part of the ‘mandatory contribution for involuntary unemployment’ – 0.3% of workers’ payroll, paid to the INPS (National Institute for Social Security) – to a Training Fund of their choosing.
If a firm voluntarily joins a Training Fund, the INPS directly transfers the 0.3% to the selected Training Fund. Companies that do not elect to join a Training Fund still need to pay the 0.3%, which integrates government budgets and can be used to serve different purposes.
Since their inception, Training Funds have rapidly increased their importance and outreach. From 2004 to 2017, the number of firms enrolled in a Training Fund has tripled and the number of workers covered by the scheme has doubled. Today Training Funds cover almost 1 million firms and over 10 million workers, capturing almost the totality of potential adherents. Managing EUR 603 million in 2017, Training Funds represent one of the most important sources for financing workers’ continuous learning in Italy.
Source: OECD (2019[6]), Adult Learning in Italy: what role for training funds?, OECD Publishing, Paris.
5.2. Governance mechanisms in adult learning
In Korea, like in other OECD countries, adult learning is a complex policy area. It covers a variety of programmes with different objectives and target groups. As a result, the responsibility for adult learning often falls under several ministries, different levels of government and social partners. In this context, good coordination mechanisms are essential to ensure that policies do not overlap and complement each other. This section provides an overview of the governance of the Korean adult learning system and describes what Korea is doing to improve co-ordination across different actors involved in adult learning.
5.2.1. Horizontal (inter-ministerial) co-ordination
As in other OECD countries, adult learning in Korea is under the responsibility of several ministries. For example, a total of 11 ministries have implemented 38 projects in the field of adult learning policy in 2019.
The Ministry of Employment and Labour (MoEL), however, is the primary actor and funder of adult learning. Most adult learning policies are delivered by MoEL implementing bodies, such as HRD Korea and public employment services (in charge of training programmes for employees and the unemployed, respectively).
In adult learning, MoEL is responsible for making and revising laws; designating and managing training facilities; certifying training courses; and subsidising training costs. MoEL also is also responsible for operating public training institutions, evaluating training institutions, and fostering the private training market (MoEL, 2010[7]).
Reflecting its key role in adult learning, MoEL’s spending on training programmes is high compared to spending observed in other ministries. Indeed, in 2019, 87.6% of government spending on vocational training were under the responsibility of the MoEL (Table 5.4).
While the MoEL is the main body responsible for training policies, the Ministry of Education (MoE) takes charge of overall lifelong education policies including some formal types of adult learning and basic skills training. For example, MoE has selected and supported lifelong education universities and colleges to serve the needs of lifelong learners and workers going back to school to obtain university diplomas (MoEL, 2017[8]). MoE is also supporting local learning centres, which run a variety of lifelong learning courses for adults in the community centres or senior citizen centres (OECD, 2020[9]).
The Ministry of SMEs and Start-ups (MSS) also runs adult learning programmes tailored to the needs of SMEs, in the overarching aim to tackle chronic labour shortages in SMEs. For example, MSS promotes industry-academia cooperation in vocational high schools and junior colleges. Other projects aim to raise awareness among SME CEOs and business owners on the importance of training (see Chapter 2).
Other ministries are also involved in adult learning, and often work on specific sectors or target groups. For example, the Ministry of Science and ICT focuses on the development and use of workforce in science and technology.
All in all, these ministries oversee different adult learning policy areas, rely on different legal frameworks, organise their work around different governance bodies, and use different delivery systems. Table 5.5 provides a summary of the key ministries responsible for adult learning in Korea, and the main frameworks under which they operate. In addition, as shown in Table 5.6, each ministry has its own strategy and masterplan for adult learning.
The Korean central government is aware that a lack of inter-ministerial co-ordination can lead to overlaps and gaps in adult learning provision, and a whole-of-government approach is needed to achieve better results.
To promote better coordination, Korea has updated the legal framework (Framework Act on Employment Policy) to prevent different ministries from implementing similar and overlapping programmes (OECD, 2019[10]). Alongside updates in the legal framework, and to facilitate implementation, MoEL has been developing and distributing the “Guidelines for the Design and Operation of Government-Funded Employment Programs” every year.
Through this initiative, MoEL examines whether any new government-funded employment programme is similar to or overlapping with any existing programme, e.g. whether they share similar objectives, content, and target groups. The examination results are sent to the government offices concerned and the Ministry of Strategy and Finance. Similar or overlapping projects are not reflected (or included) in the government’s budget.
5.2.2. Vertical co-ordination between different levels of government
Korea’s adult learning system has remained relatively centralised. Central government has been traditionally responsible for most of legislation, policy design as well as implementation and financing. Conversely, local governments have played a relatively minor role in adult learning, with some notable exceptions in some regions where they directly operate training institutions.
The important role played by the central government is also reflected in how adult learning is financed. As of 2019, the local governments’ expenditure on employment supports is KRW 1.4 trillion (about EUR 1.1 billion), representing only 6.1% of the central government’s budget (KRW 22.9 trillion, about EUR 17.9 billion). In particular, the vocational training budget stood at KRW 67.8 billion (about EUR 53 million), just 3.5% of the central government’s budget (KRW 1961 billion, about EUR 1.5 billion) (Table 5.7).
Recognising the important role that the local level could play in adult learning, the government has been taking steps to encourage local actors to be more engaged in adult learning policy. For example, in 2010 the MoEL introduced the “Local job creation target notice system”. Under this system, heads of local governments announce to local citizens the goals and plans associated to job creation, which are to be pursued throughout their term in office. These goals and plans include measures to create jobs, reduce supply demand mismatches, and develop vocational skills. Since 2012, all (a total of 243) local governments have joined the system.
Moreover, during the past years, MoEL has gradually increased the funding for the “Local-customised job creation support programme”. The project, in operation since 2006, aims to select and support projects to ensure that local governments can take a lead role in designing and implementing their own training and employment projects (OECD, 2014[11]). This programme has provided an opportunity to broaden local vocational education and training market and contributed to the capacity building of local governments (MoEL, 2014[12]).
Finally, in order to increase local policy co-ordination and integration, in the past years the government has reorganised local governance structures that had overlapping functions. For example, existing bodies were consolidated into local quadripartite councils – a governance body involving labour, management, government and civic groups – which today deals with local employment, human resource development, and industrial relations in many regions. Major training projects initiated by the central government can now be coordinated by local quadripartite councils and going forward a variety of local projects could be actively carried out under their leadership.
5.2.3. Co-ordination between the government and the social partners
Traditionally social partners have played a very minor role in adult learning policy in Korea (OECD, 2019[13]). Because vocational education and training historically had a strategic role for the economic growth of Korea, its coordination has been managed by the state, with little involvement by companies and workers (EPF, 2017[14]). However, recent rapid technological innovation and the deterioration of the employment situation have put great pressures on the adult learning system, setting the scene for the reform of its governance. In particular, strengthening partnerships with private sector stakeholders has emerged as an important policy priority.
Empowering Regional and Industry Skills Councils
Among the various initiatives launched over the last few years to better involve social partners in adult learning, one significant step has been to set up Regional Skills Councils (RSCs) and Industry Skills Councils (ISCs). The objective of these bodies is to make the adult learning system more responsive to business needs and to introduce more flexibility in the delivery and implementation of vocational training programmes. For example, the two councils support drafting HRD plans, administer skills surveys, and deliver training programmes.
Since 2013, a total of 17 RSCs have been set up. RSCs are led by relevant stakeholders in each region, such as industries representing each region, members from the local government, local employment and labour offices, regional small and medium business administrations, and local education offices (Table 5.8). The main tasks of RSCs are to perform surveys of skills demand for employers in their regions, and to designate joint training centres to satisfy the demands identified through the surveys.
Since 2015, a total of 17 ISCs have also been set up. ISCs are led by business associations/organisations and trade unions representing each industry (Table 5.9). ISCs analyse manpower supply and demand by industry and are actively involved in promoting National Competency Standards (NCS) and the Work-Study Dual System.
The establishment of RSCs and ISCs signals a partial devolution of the adult learning governance, and it is seen as a policy shift to make adult learning more responsive to local and industrial demands. Going forward, many of the roles that Korean social partners could undertake more thoroughly – e.g. policy design, quality monitoring, adult learning financing – could be successfully undertaken by RSCs and ISCs.
However, Korea’s training market is still strongly influenced by the central government, and much remains to be done to ensure that RSCs and ISCs can successfully fulfil their roles and effectively promote social dialogue on adult learning. Some of the key challenges they are facing include:
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RSCs and ISCs are at an earlier stage of development and still require training and development of their personnel (Moon, Ryu and Jeon, 2019[16]).
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Because they are assisted or funded by the MoEL, they have little autonomy and are still perceived by some stakeholders as a central government body rather than a region- and industry-led initiative.
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Cooperation between RSCs and ISCs remains weak and their operations are segmented and at times overlapping.
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RSCs and ISCs still require more active participation from trade unions (OECD, 2015[17]). For example, of the 17 RSCs, 15 are co-chaired by employers’ organisations and local government. Trade unions, on the other hand, co-chair only two RSCs. They have only 1-2 member representatives in RSCs. Recognising this challenge, the Korean government has announced a plan to increase the share of trade union Skills Councils representatives from 5-6% (as of the first half of 2019) to 10% (MoEL, 2019[18]).
To ensure that Regional and Industry Skills Councils can successfully fulfil their new roles and effectively promote social dialogue on adult learning, Korea should:
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Invest in capacity building of Regional and Industry Skills Councils and provide adequate training to their personnel.
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Allow Regional and Industry Skills Councils to autonomously manage a training budget. This would give them greater autonomy and recognition as a social partners’ body rather than as a government body.
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Ensure better cooperation between Regional and Industry Skills Councils. This would ensure better coordination and fewer overlaps in roles and responsibilities.
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Balance the power between employers’ organisations and trade unions. Ensure that trade unions are more equally represented in Regional and Industry Skills Councils.
Make quality assurance a joint responsibility with social partners
Due to their proximity to workers and firms, social partners could play an important role in Korea in promoting training quality and ensuring that training is aligned with skills needs. However, social partners in Korea are not much involved in the quality assurance and monitoring of adult learning programmes. For example, unlike what can be observed in many OECD countries, in Korea social partners do not have representation on national agencies responsible for the quality assurance of adult learning (e.g. the KSQA), they do not participate in the accreditation of training providers, and do not actively collect information on training quality. Perhaps Korea could learn from the experience of OECD countries – such as Belgium, Denmark, Germany and Sweden – that have successfully involved social partners in adult learning quality monitoring mechanisms (Box 5.3).
Social partners should have representation on national agencies responsible for the quality assurance of adult learning (e.g. the Korean Skills Quality Authority); they should participate in the accreditation of training providers; and actively collect information on training quality, for example through surveys among workers and firms.
National Agencies for Quality Assurance
In Sweden, the Swedish National Agency for Higher Vocational Education (Myndigheten för yrkeshögskolan) ensures the quality of higher vocational education programmes. Both trade unions and employers are represented on the agency’s advisory council for labour market issues. The role of the advisory council includes the inspections of providers and programmes, including work-based training elements. The inspections entail observational visits, interviews with students, tutors, teachers and head coordinators. Based on the inspection, as well as an assessments of labour market needs, the council advises the Swedish National Agency for Higher Vocational Education about which training programmes should receive state grants and be included in the higher vocational education offer.
Accreditation of training providers
In Flanders (Belgium), since September 2019 there are three accreditation streams for adult learning programmes that benefit from government incentives: i) automatic accreditation for certain (often more general or formal) training programmes (e.g. adult education centres and higher education institutions); ii) accreditation through social partners (Paritaire Comités) for training organised at the sector level; and iii) accreditation by the Flemish accreditation commission (Vlaamse erkenningscommissie) for all other training. The Flemish accreditation commission consists of social partners.
In Germany, certification of trainings in the context of active labour market policies is conducted by certifying bodies (Zertifizierungsstelle). One of the better-known certifying bodies, CERTQUA, is run by the leading German employer organisations. Certifying bodies, in turn, need to be accredited by the German Federal Public Employment Agency (Bundesagentur für Arbeit). An advisory council, composed of trade unions and employer organisations among other stakeholders, supports the agency in this work.
Collection of data on training quality
Social partners in Denmark are involved in the 11 continuing training and education committees, which monitor adult vocational training in different sectors of the labour market. One of the key inputs to the monitoring of programmes and providers is information produced through the system Vis Kvalitet. This system collects data from each participant about their satisfaction with the training via a questionnaire, as well as data from a sample of companies whose employees have attended training. Results are used by the committees to identify quality issues and develop remedial action.
Source: OECD (2019[13]), Making Adult Learning Work in Social Partnership, OECD Publishing, http://www.oecd.org/employment/emp/adult-learning-work-in-social-partnership-2019.pdf.
Ensure that trade unions are more actively engaged in adult learning
Trade unions could play an important role in understanding (SME) workers’ training needs and reflecting these needs into training programmes. They have incentives to protect the interests of existing workers, ensure that all employees have access to training, and that their skills are sufficiently transferable to allow for mobility across companies.
Yet, traditionally labour unions in Korea have not paid much attention to adult learning issues and seemed to have had a rather passive role on training (Oh and Park, 2012[19]). They have given priority to other working condition issues considered as more urgent and important than training (e.g. seniority-wages; job stability; dismissals).
Sometimes, policy priorities supported by trade unions seem to be in stark contrast with policy measures that could create an enabling environment in adult learning. For example, trade unions understandably provide large support to seniority-wages (OECD, 2018[20]), a system that may considerably reduce workers’ motivation to train and upskill.
Another related challenge is that trade unions lack technical expertise on training and skills issues, and they have poor understanding of the training needs of the workers they represent. Perhaps Korea could learn from the experience of OECD countries that have taken steps to build the expertise of trade union members on adult learning issues (Box 5.4).
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In the United Kingdom, the great majority of unions now include Union Learning Representatives (ULRs) in their management structures – i.e. trade union members who encourage the take-up of learning in the workplace, help workers identify training needs and arrange learning opportunities within their companies. Since its inception in 2006, Unionlearn has trained more than 40 000 URLs. Today, there are around 450 jobs within Unions that relate to supporting skills, around 15-20% of all union employment.
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In Italy, the national collective agreement of the chemistry industry appointed a “training delegate”, i.e. a trade union representative whose main role is to develop a deep understanding of the workers’ skills needs within the sector, and help shape training plans accordingly.
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In Belgium, training of workers’ representatives at the company level is an important element of adult learning. Several branches have specific agreements between the social partners, whereby employers pay for the training of workers’ representatives and allow their participation to training during working hours.
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In Switzerland since 2017, Movendo, the institute for the training of trade unions (Institut de formation des syndicats) has developed a network of ambassadors for continuous learning.
There is also no cultural expectation that skills are a legitimate union business. Unsurprisingly in this context, over the past years, trade unions have developed and implemented only few, often short-lived, training initiatives themselves. The only example found in this review is the Labour Management Joint Training Programme developed in 2006 (OECD, 2020[9]). The programme was designed taking into account the training needs of workers, and was built with the direct involvement of the local tripartite committee. Although the programme was initially supported by the government and evaluated as an excellent case of Labor-Management-Civil-Government collaboration, it was terminated in 2010 due to lack of transparency in the way budgets were being managed. Lack of awareness around the initiative was also an issue of concern.
The little influence of trade unions on adult learning issues also partly reflects the fact that trade unions represent only a minority of the workforce in Korea – particularly among SME workers. This lack of representation may undermine trade unions’ ability to defend workers’ (and particularly SME workers’) rights and weaken their influence on important labour market matters, including adult learning.
Indeed, trade union density (i.e. the percentage of employees that are union members) in Korea is at 10%, well below the OECD average of 26.2% and at the bottom of the OECD ranking after Estonia, France, Lithuania and Turkey (Figure 5.3, Panel A). Similarly, collective bargaining coverage (i.e. the percentage of employees with the right to bargain) is very low in Korea by international standards. Indeed, only 11.8% of employees have the right to bargain, below the OECD average of 47.3% and among the lowest levels in the OECD (Figure 5.3, Panel A).
The absence of trade unions is even more apparent in SMEs. Indeed, trade unions have usually remained focused on workers in very large enterprises, overlooking workers employed in SMEs. As shown in Figure 5.3, Panel B, in 2017 trade union density ranged from 0.2% in small firms with less than 30 employees to 57.3% in large firms with more than 300 employees.
Korea is taking steps in the right direction to expand trade union coverage, including to SME workers. Over the past two decades, Korean trade unions have made efforts to organise the SME and non-regular workers as members of the industrial or regional-level unions, which may more easily represent their interests than enterprise-level unions (mainly organised by large firms and regular workers). These efforts may also provide an effective bargaining structure (beyond the boundaries of a single company) for SME workers to advocate their interests, including on adult learning, at the sector or regional-level.
Source: OECD stat for Panel A; and MoEL (2018[21]), “Analysis on trade unions based on data at the local labour office in 2017” for Panel B.
Efforts should be taken to build expertise on adult learning among trade union members. For example, Korean trade unions could appoint dedicated ‘training’ specialists, whose objectives are to encourage the take-up of learning in the workplace and/or to develop an understanding of the workers’ skills needs. Efforts should be undertaken to ensure that trade unions undertake sufficient training themselves, notably on adult learning issues.
5.2.4. Co-ordination between the government and training providers
In addition to social partners, training providers are also important actors in adult learning. The training providers market in Korea is quite fragmented. Private training institutions account for a significant portion of Korea’s vocational training market, with 99% of training providers being in the private sector as of 2017 (Table 5.10). However, most institutions rely on government funding and business capacity is relatively small, with only 13% of training provider having 500 or more trainees per year (MoEL, 2017[22]). The competition in the training market has increased after the introduction of My Work Learning Card system in 2008, when individuals were given greater autonomy in making training choices and selecting training providers independently.
In this fragmented context, ensuring good coordination between the government and training providers is particularly important. Korea has already established a variety of committees/councils, where training providers and government can meet and discuss training policies. By leveraging these channels, Korea can strengthen its co-ordination between government and training providers to align training programmes to business needs, facilitate the sharing of good practices, and improve training quality.
5.2.5. Promoting social dialogue within firms
Social dialogue at the firm level is also key in adult learning. Indeed, many important training decisions – e.g. whether training should be provided; how much funding should be devoted to training; what types training programmes should be offered to workers – are ultimately taken within firms.
The international experience shows that one way to jointly set priorities for adult learning at company level is to involve staff representatives. Yet, in Korea more could be done in this area. According to several stakeholders, the content of training is often supply- or employer-oriented, and rarely represents the interests and needs of workers (Rok, 2013[23]). Oftentimes, firms unilaterally take training decisions without any inputs from staff.
The little involvement of staff representatives in setting training decision is particularly marked in SMEs, a challenge that Korea shares with other OECD countries (OECD, 2019[13]). Indeed, about half of SMEs in Korea report that workers are not at all involved in training decision: some 44.4% say that workers are informed only once training decisions are taken, and 6% report that workers are not even informed beforehand (against 39% and 5.7% of larger firms respectively) (Figure 5.4) – according to the Workplace Panel Survey (2015).
Note: Data refers to workers’ involvement either official channels (e.g. unions, labour-management councils) or other unofficial channels.
Source: OECD elaborations of the Workplace Panel Survey (6th wave, 2015).
In this context, Labour-Management Councils (LMCs) could represent a powerful tool to promote better dialogue on training issues between firms and workers. LMCs are consultative bodies formed to help improve the welfare of workers and ensure the sound development of enterprises, through cooperation between workers and employers. They must be composed of company members and employee members in equal numbers, and should hold at least one meeting every three months.
According to the current legal framework, LMCs are able to deliberate on a number of working condition issues, including adult learning. The Act on the Promotion of Workers’ Participation and Cooperation specifies that certain matters that are directly related to training (e.g. the establishment of education and training plans) require LMC’s approval (ICLG, 2019[24]).
Despite their potential, the influence of LMCs on adult learning issues remains weak, especially in SMEs. First of all, regulation does not bind smallest firms to set up a LMC. The Act on the Promotion of Workers’ Participation and Cooperation establishes that only businesses and workplaces with 30 or more regular workers should set up a LMC.
Even when LMCs are in place, they do not seem to put training at the top of their agenda. Although regulation allows LMCs to discuss training issues during their regular meetings, other topics seem to take the bulk of the discussions. Only 20% of SMEs report that training and education is one of the most frequently discussed topics in LMC meetings (Figure 5.5). Conversely, performance-related pay, and safety and health, are reported to be the most frequently discussed topics by over 70% and 50% of SMEs, respectively.
Note: Data refers to the year previous to the survey.
Source: OECD elaborations of the Workplace Panel Survey (6th wave, 2015).
Steps to tackle these ongoing challenges are already underway. In April of 2019, for instance, MoEL announced that preferential financial support will be given to companies that have established training plans that reflect workers’ training requests through LMCs. This policy is a clear step in the right direction, and Korea should carry out careful monitoring to assess the impact of the measure on social dialogue within firms.
Strengthen dialogue within firms between employers and workers on adult learning issues. This could be done by continue enhancing the role that Labour-Management Councils play in establishing training priorities within firms. Recent government efforts go in the right direction and should be continued.
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Notes
← 1. SME workers are defined as employees working in firms with less than 300 employees.
← 2. Collected through the premiums paid by employers relevant to the vocational skills development programmes.
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