Financing Skills Development – Korean Experience

48 Pages Posted: 31 Dec 2016

See all articles by Sung Joon Paik

Sung Joon Paik

KDI School of Public Policy and Management

Date Written: December 1, 2016


The importance of skills development for national economic growth has been increasingly emphasized. Skills development system and strategy are critical in enhancing individual worker’s productivity, national competitiveness and consequently people’s economic wellbeing. Vocational education and training systems in many developing countries, however, are not properly responding to labor market skill demand. The budget for the skills development, which mainly relies on the government, is not secured and appropriately managed either. This study attempts to provide valuable guidance to designing and implementing effective skills development and its finance system of developing countries based on the Korea’s experience. It points out that when designing the skills development finance system the government needs to take into account critical factors such as close linkage with private sector, utilization of training fund borne by private firms, incentives to induce employer’s, employee’s and unemployed’s active participation in training, government’s fair and transparent management including monitoring and evaluation, constant adaptation of national skills development system and finance scheme according to national economic development(changes in skill demands), application of the ‘choice and competition’ principle, special support to the SMEs, priority industry sectors and the disadvantaged, and the participation of employers and employees in skills development policy making and implementation.

Suggested Citation

Paik, Sung Joon, Financing Skills Development – Korean Experience (December 1, 2016). KDI School of Pub Policy & Management Paper No. 16-27, Available at SSRN: or

Sung Joon Paik (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

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