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									  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
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
I. Introduction
1. 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

 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.

· 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.

 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
· 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.
    ·   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.

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.

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

     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.

     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

     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?

3. The Changes and Challenges of 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.

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.

     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

       • 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

     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

     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).

     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.

     Ⅱ. HRD systems in South Korea

1. HRD Base on Act of National Human Resource
     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
 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
  - The lowest participation of adults in lifelong
    learning among OECD countries

2. Mission, Vision, and Objectives of NHRD

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

 - 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

     - Identify and nurture talented lower-income
       people as a way toward the integration of
     - 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

Ⅲ. The Contributions of Education to
        Economic Growth
 1. Education Contributions
     Table 1. Relative Contribution to Growth in South Korea

                                        Contribution to Per   Total Predicted
                                         Capita Growth(%)       Growth(%)
            Intercept                         -0.70%               -19%

            RGDP60                            -0.40%               -11%

            PRIM60                            2.48%                67%

            SEC60                             0.71%                19%

            GPOP6085                          0.20%                5%

            I6085                             1.40%                38%

            Actual Growth                     5.89%

            Predicted Growth                  3.69%

            (Percent Actual    Growth          63%

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

      Factors     Parameter            Korea                          Korea
                  Estimate      (%Total Contribution                 (% Total
                               Predicted to Per-capita      Contribution Predicted to
                                      Growth)                 Per-capita Growth)
                                                                (after adjusting)
      BGDK        .0568                   1.59   (23.2)                1.59     (23.2)
      GER1        .0226                   2.31   (33.8)                2.31     (33.8)
      GER2        .3094                   9.59 (140.2)                 4.17     (65.4)
      GER3        -.7253                -3.92   (-57.3)                  .30     (4.7)
      BGEMP       .1478                 .419     (6.10)                .419      (6.6)
      BRD          -.0587               -2.50    (-36.5)              -.176    (-27.6)
      (Y/N)0       -.0496               -.645      (-9.4)             -.645    (-10.1)
      Actual Growth                                 7.54                          7.54
      Predicted Growth                              6.84                          6.38
      (Percent Actual Growth                      (90.8)                        (84.6)

2. Results and Implications of Empirical
 ● 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

     ●   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

         3. Comparison of Empirical Estimations
              (1970-2004) and (1965-1989)
                                          Korea(% Total Contribution Predicted to Per-capita
                   Parameter Estimate                         Growth)
     Factors                                              (after adjusting)

                1975~2004     1965~1989      1975~2004                  1965~1989
     BGDK         0.1248       0.0568         3.95(39.6)                 1.59(24.9)
     GER1         0.0061       0.0226         0.66(6.6)                  2.31(36.2)
     GER2         0.0818       0.3094         8.67(87.0)                 4.17(65.4)
     GER3         -0.239       -0.7253      -5.27(-52.9)                  0.3(4.7)
     BGEMP        -0.0616      0.1487        -0.14(-1.4)                 0.419(6.6)
      BRD         -0.3989      -0.0587        2.40(24.1)                -1.76(-27.6)
     (Y/N)0       -0.0005      -0.0496       -0.30(-3.0)               -0.645(-10.1)
                Actual Growth(A)                 5.97                       7.54
               Predicted Growth(B)               9.97                       6.38
                      (B/A)                    (167.0)                     (84.6)

4. Results and Implications of Empirical

     ●   What is a new significant difference
         between these 2 estimated results

     ●   Now estimates processing

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

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

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

 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

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

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
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

     V. Korean Labor Takes a Global

     - 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

 - 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

     VI. A New Paradigm of Labor Supply
                 & Demand

     ● 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

     ● 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
     VI. Conclusion

 South Korea

                               6.4% University                                  University

                                                     31.5% Sr.Sec
               Sr. Sec

                22%                                 21.1% Jr.Sec
               Jr. Sec

              36%                                       36.8%
            Primary                                    Primary
            16.3%                                     Illiterate
             1975                                     1985
         (GDP: 592$ )                              (GDP: 2229$ )

            19.4%                                    24.6%
           University                               University

          44.1%          Sr.
                                                    Sr. Sec
               Jr. Sec                              14.3%
                                                    Jr. Sec
               Primary                               16.7%
            1995               Illiterate                          Illiterate
        (GDP: 10823$ )                           (GDP: 8900$ )

     Educational Structure of Indonesia’s Labor Force

                                                                                6.4% University

                             South Korea            19.3%
                                                    Sr. Sec
                                                    Jr. Sec
                                                 (GDP: 592$)

                         .9% Acad./University               1.4% Acad./University                             2.3% Acad./University

                             6.6% Sr.Sec.                        8.9% Sr.Sec.                                      13% Sr.Sec.
                                6.2%Jr.Secs                         8.1%Jr.Secs                                      10.1%Jr.Secs
                 32.7%               6 Yrs           33.2%               6 Yrs                         33.7%              6 Yrs
     4      59.9% at Least                      63.1% at Least                                    59.1% at Least
            4 Yrs. Primary                      4 Yrs. Primary                                    4 Yrs. Primary
                26.4%              Illiterate       18.5%              Illiterate                     15.3%              Illiterate

              1982                                1986                                              1989


     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.

    Thank you
  Chang-Won Jang
E-mail :

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