Transition from school to work in Korea:
Reforms to establish a new pathway structure across education and the labour market

Round Table on The integration of youth into working life,
Second International Vocational and Technical Education Congress, Seoul, Korea April 26 to 30 1999

Kioh Jeong

The path from school to work in Korea has the following characteristics:

-Vocational high schools and junior colleges are more active in assisting their graduates to find jobs compared to universities;

-The schools´ role is limited in assisting students to find jobs after graduation, and those with lower school attainment typically do not remain employed longer in their first job compared with the students completing higher education.

-University graduates´ major path to employment is the recruitment examination held by big companies;

-Work experience before graduation (fieldwork practice) is an important factor in finding jobs. It is more effective in the case of academic high school graduates;

-Informal recommendation by friends or family is still the most frequent path to employment in the labour market. The lower the worker´s school attainment the greater his/her dependency on this informal path;

-The public employment service plays the almost negligible role in assisting students to find employment.

At the risk of oversimplification, the labour market in Korea has been divided into two distinctive sectors. One, the primary sector, is that of large-scale employers, both private and public. The other sector consists of services and manufacturing jobs in small and medium-sized enterprises (SMEs). The former has been characterised by a very stable structure of lifelong employment and relatively well-developed, on-the-job learning opportunities in the internal labour market. In the latter, the job turnover rate is usually high, and public labour market training serves only a small number of workers in this sector.

The secondary market covers two-thirds or over of total employment. Jobs in this sector, except some established professions, show a very low degree of professionalization, as these markets do not usually draw attention to specialization. An National Statistic Office (NSO) survey in 1996 found that the mismatch between school majors and current workers jobs is far higher with vocational high school graduates than in university graduates. Junior college graduates statistics fit in between. The results of the survey imply that Korea still has a very big volume of underdeveloped labour at the lower ladders of the national skill profile, where labour mobility inevitably tends to be high.

The current economic crisis has forced the Korean economy to hurry long-delayed structural adjustments. An employment survey released in September 1997 by the NSO, revealed some important aspects of the changes in the labour market hit by unprecedented unemployment between July 1997 and July 1998:

-The total labour force participation rate decreased from 62.9% to 61.4%; from 76.3% to 76.0% for male workers, from 50.2 to 47.6% for female workers;

-The unemployment rate increased dramatically from 2.2% to 7.6%;

-Unemployment was highest in the 15 to 19 and 20 to 29 age groups, 3 to 6 times higher than other age groups;

-The highest increase in unemployment was borne by simple craft skilled workers, manual and operational job seekers, and high school graduate workers.

The economic recession has greatly influenced the general features of youth transition from school to work. For a long time, labour force participation of youth have decreased concurrently with increasing entrance into higher education. The economic crisis further promoted this trend. At the same time, university and college students temporarily leaving study also increased due to decreasing family income. It is observed that university graduates are descending to the lower skill market, thereby increasing unemployment among high school graduates. They are marked with the highest unemployment rate, and should be given prime consideration as an at-risk group. They are largely composed of general high school graduates who gave up entering university and those who lost jobs in manufacturing. On the other hand, the unemployment among university and college graduates is becoming an urgent problem. In terms of the volume of graduates leaving the school system, junior colleges and universities are the major supplier of workers entering the labour market. Another important point is that the enrollment figure for vocational high schools is 700 thousand students, for junior colleges and universities the figure is 1,500 students. Those students are the legitimate interest group concerning employment prospects.

On the other hand, one must note that considering the volume of leavers from the education system every year, contrasted with the notably high and increasing participation rate of aged workers in Korea, the Korean economy should have kept increasing by over five thousand jobs a year. However, the Korean economy had already begun losing jobs by around 1990. Labour market observers diagnosed declining employment as a result of the loss of job creation and of weakening competitiveness in manufacturing industries. This decreasing trend might have continued between 1994-1997, if not for the government´s wrongful intervention and the use of expanded foreign loans to artificially boost the economy, which finally culminated into the foreign currency crisis. At present, the employment adjustment factor explains over half of the unemployment rate.

The government has responded to overflowing unemployment through various budgetary programs of active labour market policies, including public employment services and training programs. With more than 10 billion US dollars a year of expenditure, unemployment allowances and subsidized work comprises the biggest portion of expenditure now. In that, the current emphasis of government action is put upon short-term social protection and job security. Criticism against current policy measures is growing because of the questionable cost-effectiveness of the programs. The dilemma is that the government spends vast amounts of money on subsidized work in industries, while strongly recommending simultaneous employment adjustment within enterprises, necessarily increasing unemployment.

In 1998, over 350 thousand people enrolled in these training programs, run by 999 institutions including 150 higher education institutions. However, these programs are not considered effective enough to achieve their objectives. The weakness of the programs was analyzed in several points: quality of the programs, limited consideration of learners, and lack of clear job-orientation. Less than 20% of those enrolled become employed. The current training programs might be viewed as quick-fix social protection, rather than skill formation leading to employment.

Particular consideration is being given to those graduating universities without job. Even before the economic crisis they were known as spending long period of job-search. Under a targeted employment promotion package prepared by the government for this group, 17,000 jobs were offered in the form of subsidized work or internship, and 10,000 people will be trained for jobs. Policy makers gradually began to shift the policy direction from simple training provision to the job creation and the collaboration for school-to-work transition. For example, the government began to fund the expansion of jobs and training information system linking employment service organizations. Fortunately enough, the rapidly growing infra structures of information network seem to be of great help for the development in these directions.

A study by the Korea Research Institute for Vocational Education and Training (KRIVET), after extensive research on unemployment training programs, concluded by following five remarks:

-High level of the mismatch between the study at school and the job opportunity is the main cause of unemployment of those with high educational attainment;

-Youth and unskilled workers with low educational attainment became exposed to the high risk of long-term unemployment;

-Significant loss of human assets is taking place due to the downward job seeking by the university and college graduates majorly from those who were employed in managerial and clerical work.

The survey developed by the KRIVET reported that among the government funded re-employment training programs, those run by the higher education institutions were found to do the least effort to find jobs for the trainees. Many experts in vocational education and training suggested that career guidance should be encouraged and systematically embedded in the school system to address the rising unemployment. However, in this critical situation, what matters at first is not so much the quality of student´s individual career decision and job search behavior but rather the structural problem of programs and curricular contents that do not adapt themselves to the changing industrial demands. For the vocational high schools, closed and unchanging teaching force has been, over a decade, the major obstacle to the desirable curricular change. As a result, the dropout rate in the vocational high schools continues to increase.

Amid the rising higher educational aspirations of the people, the government legislated, in 1990, a law obligating local authorities to increase enrollment of vocational high schools equal to that of academically oriented institutions. Strong emphasis was placed upon this policy, supplying a workforce from vocational high schools to manufacturing industries, which had already begun to lose competitiveness. As a result, during the first half of 1990s, vocational high school enrollment figures increased from 35.5% in 1990 to 42.2% in 1995. The government policy has been sharply criticized by educators in general and some industrial policy experts. They argued that the government subsidized the marginalizing industries indirectly by supplying cheap labour via the vocational high schools, and through this, the government has only delayed necessary industrial adjustment, thus suppressing individual development. As a pillar of upper secondary education, during the initial stages of industrialization, it effectively served the rapidly developing economy, while later becoming a sector of typical educational stigma, just a manpower vessel impinging the developing economy. We should now redefine vocational education´s role within the education system by re-articulating interdependencies with academic high schools and post secondary higher education institutions.

In 1998, there are more than 100,000 institutions of which most are run on proprietary basis. Students of formal institutions, before or after graduation used to attend programs on those institutions for the purpose of preparation for jobs. The non-formal education and training sector features far more dynamics than formal education sector. However, the quality and performance of the programs is not assured due to the poor financial condition and managerial instability. However, if one is to identify the primary pathways to work for the Korean youth, the non-formal education and training institutions should come first. Currently, institutions participating in the run of government funded training for the unemployed are coming mostly from this sector.

There exists a striking imbalance between the rapidly expanded size of schooling and the skill profile of the total population that has improved very slowly. The man power outlook, 1998, made by the KRIVET summarized the national skill profile as "overflow of low skills, and a shortage of high skills". The report explains the Korean economic crisis in the light of the manpower limit that hinders structural adjustment in the economy. The outlook observed the demands for refined skills, particularly in services and managerial occupations, which can be met only by education and training at the tertiary level. The skill base of the Korean economy was, from the beginning of 1990´s, already lagging far behind the level to secure sustainable development into a fully industrialized economy. Now, of the economically active population aged 25 to 64, workers with school attainment below junior high school are 39% and high school graduate are 41%.

Few opportunities for adult learning and the lack of lifelong learning perspectives and practices are other substantial indicators of segmentation. An important weakness of the Korean education system is that once one leaves schools, if not employed in a big enterprise, one can get little or no opportunity to come back to acquire new skills. For adult learners, various impediments exist in Korea: rigid school enrollment policy, long work hours, insufficient provision of adult learning programs, lack of government concern for adult learning and so on. In Korea, opportunities for higher education are not dispersed among youth. In a way, Korean universities play the role of gatekeeper of the segmented labour market and, to that extent, form the biggest obstacle to skill development of the whole workforce. It was not until 1993, when the government enacted the Employment Insurance Act, that the government came to recognize that skill development of the adult workforce should become a national agenda. The Employment Insurance Act stipulates that employment insurance funds should finance vocational competence development activities: promotion of in-plant training, job training for the unemployed, and training for employment adjustment.

The case of the primary market described earlier, employers have little motivation to help and invest in education and training outside of enterprise. Employers have had a tendency to over-employ and to keep unnecessary workers for future demands. Hence, the selection process, usually composed of an open application and an entrance examination, incurs a high transaction cost. In addition, because of the on-the-job vocational training, the organizational cost of human resource management tends to be high. And this system hurt the competitiveness of the organization. The cost-push intensifies if wage increases as a result of union activity. So far, these factors have discouraged large employers to lose interest in education-industry cooperation. Not to mention the cooperation, on the contrary, prevailing recruitment practices employed by the large employers have influenced upon the curricula in colleges and universities since the recruitment exam became the major pathway to the prestigious primary labour market, regardless of the academic specialization of the applicants. However, practices are gradually changing. The weight of the recruitment examinations has been on a steady downward trend. Large companies are trying to diversify their recruitment practices by introducing internship programs leading to employment, recruitment throughout the whole year freed from the one-shot basis, and so on. At the same time, the economic crisis and employment adjustment has made the companies to abandon the life-long employment practice.

In the secondary labour market, the National Technical Qualification System played a great role of skill development promoting youth transition into the manufacturing and construction industries. However, the inflexible statutory qualification system gradually became outmoded in the light of technological progress and occupational changes. The employment capacity in the secondary labour market gradually shrank and technical qualifications rapidly lost their validity. As a result, some junior colleges introduced the employer-ordered instructional design in response to the industrial changes, while most of the commercial vocational high schools reshuffled the program in order to prepare their students for information processing jobs in the computerized work environment. The government also initiated a school-to-industry transition path. The government introduced the one-year work experience program in the third year of vocational high school leading to high school diploma. The 5-year experimental experience is not deemed succesful. Participating businesses were too small and do not have capacity to provide on-the-job training. The program simply served the demand for cheap labour. As the demand for the employment service increases, youth too are rushing into the public employment service offices. The Public Employment Service Authority has expanded the job information network. Despite the progress in this area, however, institutions and schools are not substantially integrated into the job information system, which is weakening the effectiveness of the information system.

The Education Reform Commission 1994-1997 (ERC) worked out a series of proposals that still serve as the basic framework upon which consecutive policies have been developed. Among them, the Second Education Reform Proposal (ERP 1996) is closely related with labour market issues. The ERP was actually a package proposal combined with the Labour Reform Proposal (LRP 1996) which was released in the second half of the same year by the Labour Reform Commission. The objectives of the structural adjustment promoted by the two proposals are to achieve flexible labour market and enhanced skill bases that can accommodate technological development and support further economic progress. The ERP and LRP were intended as mutually complementary reforms in education and labour. The ERP 1996 includes many policy suggestions to shift vocational education from a highly regulated institutional system to an interdependent complex of autonomous initiatives and practices. Under this scheme, contractual relations are developing between vocational high schools and higher education institutions. By the same token, some junior colleges are developing individual networks with industries. Being so used to the regulation by highly institutionalized rules, it is difficult and painstaking endeavor to create a feasible behavioral model.

In 1996, the newly enacted Foundation Act of Qualifications (FAQ) introduced the assessment recognition and certification undertaken by private businesses. Thirdly, the Vocational Education and Training Promotion Act (VETPA), passed in 1996, stipulates that the government is responsible for the building of networking bodies at the central and regional level; however, no such bodies exist at the regional level yet. With the continuing progress of overall democratization in society, various types of participatory movements now prevail in Korea. Development of these participatory movements would help reconcile the ruling practices with the Korean peoples´ older culture of association, and thus, social partnership for vocational education and training would develop.

Vocational high schools became a failing half of upper-secondary education which undermines the foundation of government policy since 1990 to expand vocational high schools in their current form. The policy was led by a set of premises: first, the manufacturing industry was suffering a labour shortage. Second, university and college graduates were in oversupply. Third, the workforce is over-educated. However, the recent unemployment survey data suggested that the government´s policy premises were very dubious. The fact is rather that vocational high school expansion policy since 1990 has worsened, not alleviated unemployment. The most viable option to consolidate the upper-secondary institutions and programs is to redefine the upper-secondary vocational education as a pathway to both higher education and jobs, free from the severe competition of college entrance examinations that have plagued academic high schools. To do this, the development of totally new curricula is an unavoidable pre-condition.

Despite the continuosly expanding size of the higher education, the quality of higher education in Korea has failed to meet industrial demands. Most labour market analysts consider the rapidly increasing unemployment of young university graduates as a result more from their unpreparedness than just from economic contraction. Although the ERPs of 1995 and 1996 pursued the objective of improving university and college programs so that they would meet the industrial demand, they did not deal with the necessary structural changes. 

 

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