5. Strengthening financing arrangements for adult learning in Korea
A strong financing model for adult learning facilitates the effective co-ordination of funding sources and the efficient distribution of funding to meet the diverse and changing learning needs of society, employers and individuals. This chapter explores two opportunities for Korea in terms of financing for adult learning: 1) co-ordinating adult learning financing arrangements across levels of government; and 2) improving financial incentives for individuals to invest in adult learning.
A strong financing model for adult learning facilitates the effective co-ordination of funding sources and efficient funding distribution. The main sources for adult learning funding are national and subnational governments, employers and individuals (OECD, 2017[1]; OECD, 2020[2]). The total available funding for adult learning needs to be adequate to meet the diverse learning needs of society, employers and individuals. While the need for adult learning is growing due to megatrends such as globalisation, technological change and demographic changes, the available funding for adult learning compared with other levels of education is still relatively small in Korea.
The distribution of funding also needs to be equitable, which means that it is distributed proportionately based on the ability of the beneficiaries to pay (OECD, 2019[3]). Beneficiaries of adult learning include individuals, employers and the government. Those that can afford to pay more should pay more, while those less well-resourced should be more financially supported. Due to the social and economic ramifications of COVID-19, many individuals, employers and governments have seen their income decrease, while expenses have risen. Targeted financial efforts are therefore necessary to ensure that funding is distributed to those in greatest need (OECD, 2020[4]).
This chapter provides an overview of Korea’s adult learning financing arrangements and explores two key opportunities for improvement: 1) co-ordinating adult learning financing roles across levels of government; and 2) improving financial incentives for individuals to invest in adult learning. For each opportunity, the available data are analysed, relevant national and international policies and practices are explored, and policy recommendations are provided.
The following section provides an overview of public and private funding sources for adult learning. Public adult learning funding comes from the national and subnational governments, while private funding comes from employers and individuals.
Public funding for adult learning
At the national level, funding for adult learning comes from a variety of ministries. The largest contributing ministry is the Ministry of Employment and Labour (MoEL), followed by the Ministry of Education (MoE).
Among national ministries, the MoEL makes the largest financial contribution to learning (Figure 5.1), with a budget of around USD 2.1 billion (year 2020). It manages public training institutions, evaluates training institutions, certifies training courses, operates training facilities and subsidises training costs, among other responsibilities. The funding of the MoEL is distributed through MoEL’s implementation agency (Human Resources Development Korea [HRD Korea] and its regional branches), subnational job centres (101 centres as of 2020) and subnational governments (Employment Insurance, 2020[5]).
Under the auspices of the MoEL, HRD Korea is in charge of distributing funds to support a variety of adult learning programmes. These include the Work-Study Dual Programme, employee vocational training provided by employers, and the universities under the auspices of the MoEL, such as the Korea University of Technology and Education. Job centres transfer funding for adult learning from the MoEL to employers or individual beneficiaries (Ministry of Employment and Labour, 2020[6]; Employment Insurance, 2020[5]), and provide financial incentives to employers to offer adult learning opportunities and to support training facilities. They also operate the National Tomorrow Learning Card programme and provide financial suport to those unemployed and employed to upgrade their skills (Ministry of Employment and Labour, 2019[7]). Subnational governments are in charge of distributing MoEL funding through the Local-customised Job Creation Support Programme, which is a matching fund supporting subnational job creation efforts and the provision of vocational training for adults.
Note: The reported values have been converted from Korean Won (KRW) to US Dollars (USD) using the exchange rate 1 KRW = USD 0.00084, as on 15 August 2020.
“Other ministries” includes the Ministry of Science and Information and Communication Technology, Ministry of SMEs and Start-ups, and the Ministry of Gender Equality and Family.
Source: OECD elaborations of KDI (2018[8]), Creating a Lifelong Learning Governance to Prepare for the Future.
The MoE is the second largest funder of adult learning, with a budget of around USD 600 million (2020). It allocates funding to subnational governments (e.g. lifelong learning cities), individuals (e.g. lifelong education vouchers) and education institutions (e.g. universities and colleges implementing lifelong learning) (Ministry of Education, 2020[9]).
The MoE allocates funding to subnational governments mainly through the Lifelong Learning Cities programme, which provides 100% matching funds to either newly designated lifelong learning cities or existing lifelong learning cities with a good performance (Ministry of Education, 2020[10]). The MoE distributes funding to individuals through the Lifelong Education Voucher Programme, which provides up to USD 290 annually to individuals to cover the costs of participating in lifelong education courses recognised by the MoE. Every four years, the MoE selects 30 universities and colleges and provides annual support to their adult learning programmes (Ministry of Education, 2020[9]). For most adult learning programmes, with the exception of vouchers, the MoE transfers funding to subnational governments and agencies to implement the adult learning programmes themselves, and subnational governments provide additional funds to supplement this funding.
Other ministries also provide funding for adult learning. The Ministry of Science and ICT (USD 49 million) provides funding for adult learning in specific skill domains (e.g. science, engineering, information and communication technology [ICT]), which is distributed through the Korea Industrial Technology Association and/or the National Research Foundation of Korea to enterprises, research institutes and unemployed individuals with a science and engineering background (Ministry of Science and ICT, 2019[11]). The Ministry of SMEs and Start-ups (USD 33 million) provides funding to small and medium-sized enterprises (SMEs) and SME workers for programmes such as training organised in co-operation between industry and universities. It distributes the funds through its implementation body, the Korea SMEs and Start-up Agency (Ministry of SMEs and Startups, 2019[12]). The Ministry of Gender Equality and Family (USD 18 million) provides funding for adult learning targeting women with career gaps, and distributes the funding through subnational governments (Ministry of Gender Equality and Family, 2020[13]).
At the subnational level, regional and local governments also fund adult learning policies (Table 5.1). Examples of regionally funded adult learning policies include regional lifelong education promotion councils and regional lifelong education information portals. Local governments also fund specific adult learning policies, which typically address specific local contexts and needs and therefore vary significantly in their purpose and level of funding across local governments (see Opportunity 1). In some cases, the national government provides full or partial funds to regional and local governments to support specific subnational adult learning policies (e.g. regional lifelong education promotion support, lifelong learning cities). Some regional governments also provide adult learning funds to local governments within their region. The total adult learning funding available for subnational governments varies significantly across subnational areas. For example, the amount spent on adult learning on a per resident basis at the subnational level (i.e. combining the funding sources from national, regional and local governments for adult learning policies implemented at the subnational level) ranges between USD 5 (Sejong) to USD 33 a year (Jeollanam-do) (Ministry of Education, 2020[14]). These funding differences are due to varying revenue generating capacities and different amounts of transfer from the national government (see Opportunity 1).
Private funding for adult learning
Employers provide an important funding source for adult learning in Korea, although the share of employer-sponsored adult learning is still relatively small compared to other OECD countries (Figure 5.2). Around 37% of adults in Korea reported that they were fully or partially funded by their employer to participate in job-related training. This is significantly lower than the OECD average (50%) and the rates of other countries such as Finland (66%), Norway (72%) and Denmark (72%). Most adults in Korea (around 39%) reported using another funding source, which could include, for example, the government or individuals themselves. Only Greece (41%) and Turkey (49%) had a higher share of adults reporting this source of funding.
Note: The United Kingdom (UK).
Source: OECD elaborations of OECD (2020[20]), Survey of Adults Skills (PIAAC) (2012, 2015, 2019) (database), http://www.oecd.org/skills/piaac/.
Employers in Korea provide adult learning funding through their contributions to the Employment Insurance (EI) Fund, which is a levy-grant system that requires employers1 to contribute a variable insurance premium rate of between 0.25-0.85% (as of 2020), depending on their workforce size. The purpose of the EI Fund is to increase job security and support skills development programmes. In Korea, contributing employers are entitled to get a rebate of training levies to recover the training costs of their workers. All employers are legally obliged to join the EI, but as micro businesses, which employ fewer than five workers and make up the majority of businesses in Korea, suffer financial difficulties due to low profit margins, some do not join. In response, the government encourages employers to participate in the EI by subsidising insurance costs through the DuruNuri Social Insurance Support Programme. This programme is a premium subsidy scheme introduced in 2012 to provide financial assistance to low-wage salaried workers (and employers) at workplaces of up to ten employees, and thus increase the number of workers registered in the EI. For those self-employed, who account for about a quarter of the total workforce, participation in the EI is optional. Overall, around 90% of workers employed in firms are covered by the EI, and 53% of all employed (including self-employed) participate. Employers can also directly fund adult learning programmes. According to the Human Capital Corporate Panel2 (HCCP) survey, 71% of responding firms provided in-house vocational training, 35% provided outsourced vocational training, and 6% supported both in-house and outsourced training for employees (KRIVET, 2017[21]).
Individual spending on adult learning in Korea varies significantly based on personal characteristics. Although the share of adults participating in formal education is relatively small (1.5%), when adults do participate they spend a significant amount, averaging USD 3 600 per year (Figure 5.3). This includes tuition costs and other related expenses from attending university education, vocational education and other types of formal education institutions. In contrast, around 40.9% of adults participate in non-formal education for job-related or personal reasons, and spend on average USD 277 per year. Most of this is spent on private tutoring services, courses in lifelong learning centres, religious education activities and private courses associated with workplaces, among others (Ministry of Education and KEDI, 2019[22]). However, individual adult learning funding amounts vary significantly and are particularly low for women, older adults, adults with lower levels of education and adults with lower monthly income levels (Figure 5.3). While individuals can benefit from a number of financial incentives (e.g. individual learning schemes, loans, tax incentives, education or training leave), they could be better tailored to benefit disadvantaged groups, who are more likely to report not being able to participate due to higher costs (see Opportunity 2).
Note: The reported values have been converted from Korean Won (KRW) to US Dollars (USD) using the exchange rate 1 KRW = USD 0.00084, as on 15 August 2020.
Source: OECD elaborations of Ministry of Education and KEDI (2019[22]), Lifelong Learning Survey 2019.
This chapter presents two opportunities to improve the funding arrangements for adult learning in Korea. Opportunity 1 examines the challenges of co-ordinating public funding across levels of government. As Korea seeks to become more decentralised, as noted in Chapter 3, it is imperative that funding for adult learning is distributed equitably at the subnational level so that individuals, regardless of where they live, can access and benefit from adult learning opportunities. Given that Chapter 2 explores how relevant ministries need to co-ordinate with one another, including on the financing of adult learning, the co-ordination of funding across ministries is not examined further in this chapter. Opportunity 2 examines how to improve the financial incentives for individuals to participate in adult learning, and tailor these to disadvantaged groups. As other recent OECD publications (OECD, 2018[23]; OECD, 2020[24]) have discussed extensively the government financial incentives given to employers for adult learning provision, this topic will not be further elaborated in this chapter.
Korea can improve financial co-ordination and alignment in adult learning by:
1. Co-ordinating adult learning financing arrangements across levels of government.
2. Improving financial incentives for individuals to participate in adult learning.
Opportunity 1: Co-ordinating adult learning financing arrangements across levels of government
This section first provides an overview of the funding arrangements across levels of government in Korea, and then examines the distribution of adult learning funding across subnational governments, how the national government could support subnational governments with fewer resources to finance adult learning programme provision, and how to raise adult learning funding in subnational governments. Relevant country examples and specific recommendations are also presented.
The subnational government share in general government revenue and expenditure has risen over the years in Korea: around 40% of general government revenue and expenditure now occurs at the subnational level (Figure 5.4). This is similar to the OECD average and reflects the decentralisation process that has taken place in Korea since the 1980s. This process was implemented through the Local Autonomy Act and the Local Finance Act in 1988 to better address the local needs of citizens and to promote more balanced regional development (OECD, 2005[25]) (see also Chapter 3). However, the benefits of decentralisation are still not fully realised.
Financial independence, the degree to which subnational governments have their own funding sources, varies significantly at the regional and local government levels. While the share of own-source revenue in regional government revenue, as measured by the financial independence ratio (see note in Figure 5.5), is 76% in the Seoul region, for the average region it is only 42%, and is even as low as 25% for regions such as Jeollanamdo and Jeollabukdo. Variation is also significant at the local government level, where up to 66% of revenue comes from own sources in some local governments, while others only have a share of 8% (Ministry of Interior and Safety, 2020[26]). Overall, most subnational governments rely heavily on large grant and subsidy transfers from the national government to compensate for their lack of revenue generating ability.
Subnational governments rely heavily on national government transfers in the form of grants and subsidies. Around 58% of subnational governments’ revenue in Korea comes from national government grants and subsidies, which is higher than the OECD average (37%) (Figure 5.6). At the same time, own-revenue generating mechanisms such as tariffs and fees, property income, social contributions, and taxes make up a lower share of the total revenue in subnational governments in Korea than in subnational governments across the OECD. Most national government transfers are earmarked, which effectively means that the national government retains control over a wide range of local policies (OECD, 2005[27]). Grants are conditional on subnational governments complying with specific operational standards, which restricts the flexibility of how they can be used. Subnational governments are also not allowed to transfer funds between grants, even though the amounts are often small and for similar purposes, which reduces their ability to respond to local conditions (OECD, 2005[27]).
Note: Fiscally unitary countries are those with low autonomous tax share, little or no tax sharing, and a high level of transfers, which can give more control to the national government. This is in contrast to fiscally federal countries, where subnational governments raise their funding with their own taxes and are free to determine their own tax rate.
Source: OECD (2020[28]), OECD Statistics (database), https://stats.oecd.org.
Note: Financial independence ratio = Subnational revenue [subnational tax revenue + non-tax revenue] / general account revenue * 100.
Source: OECD elaborations of KOSIS (2020[29]), Subnational financial independence ratio, http://kosis.kr/statHtml/statHtml.do?orgId=101&tblId=DT_1YL20921&conn_path=I3.
Note: Grants and subsidies: Investment grants and subsidies in cash or kind made by subnational governments to other institutional units.
Tariffs and fees: Revenue from local public service charges such as land or user fees for immobile resources.
Property income: Revenue generated from sale and operation of physical and financial assets.
Social contributions: Payments paid to government, such as unemployment insurance benefits and supplements, accident, injury and sickness benefits, old-age, disability and survivors' pensions, family allowances, reimbursements for medical and hospital expenses or provision of hospital or medical services.
Taxes: Subnational taxes on production, imports, income, wealth and capital, including both own-source tax revenue and tax revenue shared between national and subnational governments.
Source: OECD (2020[28]), OECD Statistics database, https://stats.oecd.org.
As noted in Chapter 3, most of the responsibility for general education (not including adult education) is devolved from the Ministry of Education to its subnational education offices at the regional and local level. These offices are independent from general subnational governments. This is in contrast to most OECD countries, where subnational governments are primarily responsible for implementing education policies (OECD, 2005[27]). Similar to the financing priorities of the Ministry of Education, which allocates only 1% of its total budget to adult learning, subnational education offices spend on average only 0.23% of their budget on adult learning. Most of the budget is allocated towards general education, which includes early childhood education and care, primary and secondary education.
In comparison to subnational governments, subnational offices of education are even more reliant on transfers from the national government, which on average account for 78% of their revenue (Figure 5.7). The remaining budget of subnational offices of education is covered by regional governments, which contribute on average 18%, and the final 4% is covered by offices’ own revenue sources, such as admission fees, tuition and local bonds (Ministry of Education, 2020[14]). Subnational education offices are expected to formulate their own budget, but their reliance on national government funding limits in practice how they can use the funding.
Source: OECD elaborations of Ministry of Education (2020[14]), Subnational Education Finance Information, http://www.eduinfo.go.kr/portal/main.do#anchor4.
Financing for adult learning is mostly dependent on subnational governments, although available resources among subnational governments vary widely. Regional governments (25%) and local governments (67%) cover most of the costs of subnational adult learning policies, while the national government (7%) and subnational education offices (1%) play only a minor financing role (Figure 5.8). Part of the reason why spending on adult learning by subnational offices of education is limited is that the Lifelong Education Act confers responsibility for adult learning to the subnational governments instead of the subnational offices of education. Subnational governments mostly fund adult learning programmes at the subnational level from their own resources. However, the additional responsibilities for adult learning policies for subnational governments has not come with additional financial resources. Given the vast variations in available financial resources across subnational governments, this has had ramifications for how much funding is available for adult learning policies at the subnational level across subnational areas. The annual budget for adult learning varies across subnational areas between USD 1 million and USD 130 million, which when adjusted by number of residents varies between USD 5 to USD 33 per resident (Ministry of Education, 2020[14]; Statistics Korea, 2020[30]).
Note: Panel B. includes national, regional and local government, as well as subnational education offices’ allocated budget for adult learning at the subnational level.
Source: OECD elaborations of Ministry of Interior and Safety (2020[26]), Subnational Governments Integrated Finance Overview 2020.
Given the vast disparities across subnational governments, the national government can play an important role in supporting the subnational governments that have fewer resources. This applies to both funding from the MoE and the MoEL to subnational governments for adult learning.
The MoE mainly supports subnational governments in lifelong learning through the Lifelong Learning City Programme targeted at local governments. The total available national budget is USD 1.2 million (2020) annually, which is then divided across five newly selected lifelong learning cities (each receiving USD 76 000), ten already designated lifelong learning cities with specific proposals (each receiving USD 42 000), and five lifelong learning cities with high performance (USD 25 000). While the MoE plans to increase the funding to USD 3 million by 2023 and expand the number of beneficiaries, the individual amount that each local government can receive will remain the same (Ministry of Education, 2020[31]). The purpose of this national fund is to provide seed funding for local governments to take a more proactive role in adult learning. The national funding has to be 100% matched by the local government and the expectation is that the local government would continue to invest in adult learning in the subsequent years. Currently, 175 out of 226 local governments have already been designated as lifelong learning cities (National Institute of Special Education, 2020[32]).
The selection process for the Lifelong Learning City Programme is based on an aggregate score from the preliminary evaluation by the regional government (30%) and the main evaluation (70%) by the National Institute for Lifelong Education (NILE) under the MoE. Criteria for the preliminary evaluation is determined by each regional government and can vary across regions. The main evaluation focuses largely on lifelong learning infrastructure and regional lifelong learning development plans. Indicators for lifelong learning infrastructure include available human resources, lifelong learning policies and programmes, performance of the regional lifelong education promotion council, and financial resources secured for lifelong education (Ministry of Education, 2016[33]). The share of cities accredited as lifelong learning cities is unevenly distributed among regions (Ministry of Education, 2020[34]).
The MoEL also financially supports the provision of adult learning by subnational governments. For instance, through the Local-customised Job Creation Support Programme (2006), the MoEL annually distributes approximately USD 28 million3 across selected subnational governments that have designed programmes aimed at promoting VET, supporting entrepreneurship and providing employment services. Participating subnational governments need to form partnerships with relevant subnational actors, including subnational MoEL offices and co-ordination bodies, to develop local, context-specific adult learning programmes. The national funding needs to be matched with funding from subnational governments. The matching amount ranges from 60% to 90% of the total budget based on the financial independence ratio4 of each participating government. The matching amount is further raised by 5 percentage points for joint programmes co-designed by two or more subnational governments (Ministry of Employment and Labour, 2018[35]; 2020[6]).
MoE and MoEL programmes that support subnational governments could target their funding more at subnational governments with fewer resources. Existing programmes disproportionately reward local areas that already demonstrate high performance (e.g. high adult learning participation rates), which may reinforce the gaps between strong and weak performers. In the funding allocation process to subnational governments, the MoE and the MoEL should consider more the characteristics of the subnational governments applying to ensure that the performance and resource gap across regions and localities is not further widened. The funding allocation process should consider relevant differences in local characteristics that determine the need for adult learning. These differences include the demographic context (e.g. proportion of school-aged, adult and older population) and the economic context (e.g. unemployment rate, industrial base).
Given that the resources and capacity of subnational governments (e.g. administrative capacity for policy implementation, tax revenue) vary vastly across subnational governments, the required matched funding from subnational governments should be adapted accordingly. Subnational governments with fewer resources and capacities should be required to provide a lower amount of matched funding. This is relevant for the MoE’s Lifelong Learning City Programme in particular, as the matched funding requirement is the same for all subnational governments regardless of available funding sources. The funding allocation process should consider these characteristics as complementary considerations to the level of performance. This would allow local governments that need the most help – i.e. those that do not have the highest performance levels and those facing a relatively more challenging local context – to receive greater funding.
Examples of funding allocation approaches that consider local contexts can be found in a number of OECD countries. For example, in Denmark the national government funds labour market policies for unemployed people, taking into account the varying rates of unemployment across regions so that areas with a higher number of unemployed people are given additional support (UNCDF, 2010[36]). Germany’s Learning Regions Promotion of Networks Programme has supported adult learning activities in over 70 regions, and takes into account local context and learning needs, with particular attention paid to vulnerable groups (Box 5.2) (Reghenzani-Kearns and Kearns, 2012[37]).
The overall funding distribution between national and subnational governments should also be revised. Programme-based funding support, such as the Lifelong Learning City Programme mentioned above, are relatively limited and unlikely to significantly reduce the funding disparities across subnational governments alone. Korea could thus consider providing subnational governments with greater flexibility to reallocate funding from general education to adult learning. This could be particularly helpful for subnational governments with low levels of adult learning funding, and those experiencing increasing pressures on their adult learning systems due to population ageing, urbanisation and internal migration trends.
Across Korea, the number of students in early childhood education and care, primary and secondary education has declined over past decades and is projected to further decline in the coming years, which will reduce the funding pressure on these levels of education. At the same time, the need for adult learning is increasing, largely due to an ageing population (Jo, 2019[38]). Korea’s population is ageing more rapidly than any other OECD country. The share of young people (0-14 years) has steadily declined since 1970, from 13.7 million to 6.7 million in 2018, and is projected to drop further to 6.1 million by 2030. At the same time, the share of the adult population (15+) has risen from 18.5 million in 1970 to 44.9 million in 2018, and is projected to reach 46.8 million in 2030 (OECD, 2020[28]). This trend is driven largely by Korea having one of the lowest fertility rates in the world (0.98 in 2018), and one of the highest life expectancy at birth (6th among 183 countries) (OECD, 2020[28]). The elderly population (+65) made up 14% of the total population in 2018 and is projected to make up 25% of the population by 2030 (Figure 5.9). Statistics Korea estimates that Korea will become the most aged society in the world by 2067, with the elderly population making up 46.5% of the population (Maeil Business News Korea, 2020[39]).
Source: OECD (2020[28]), OECD Statistics (database), https://stats.oecd.org.
Population ageing is occurring at different speeds across Korean regions due to urbanisation and internal migration trends. Rural and remote regions and municipalities are experiencing a faster rate of population ageing, largely due to the net emigration of young people who study and seek work in more urban areas. Recent estimates calculate that the share of population above 65 varied across Korean regions between 10% and 34% in 2020 (Kim and Kim, 2020[40]). Regions and municipalities with more rural areas tend to also be more financially constrained than regions and municipalities with more urban areas.
Given that general education at the subnational level is financed mostly through grants from the national government, the national government should explore with regions and municipalities, in particular those undergoing rapid population ageing and where funding for adult learning is relatively low, whether funding for general education could be increasingly used for adult learning. As adult learning funding at the subnational level is on average 100 times lower than general education funding, it could be significantly increased even by just a modest reallocation of funds from general education to adult learning (Ministry of Education, 2020[41]; Ministry of Interior and Safety, 2020[42]).
In order to make the reallocation of funds possible, the Subnational Education Grant Act would have to be amended, which reserves national grants for general education. There are recent movements to amend this act to increase its efficiency and sustainability, but the proposed changes do not yet involve adjusting its usage (Ministry of Education, 2020[43]; 2020[31]).
In order to facilitate the reallocation of funds from general education to adult learning, Korea could improve collaboration between subnational education offices (mostly responsible for general education) and subnational governments (mostly responsible for adult learning) (Ministry of Education, 2020[31]; 2020[41]). The Seoul Metropolitan Government and the Seoul Office of Education have taken an initial step towards collaboration by partially combining their overlapping education programmes (e.g. adult literacy programmes) and the related budgets for these programmes (Seoul Metropolitan Government, 2014[44]) (Box 5.1).
In the long term, Korea could also consider making subnational education offices part of subnational governments, as discussed in previous OECD reports (OECD, 2005[45]; 2005[25]). Making subnational education offices part of subnational governments, which is how most OECD countries devolve education responsibilities to lower levels of government (OECD, 2005[45]), would not only give subnational governments in Korea greater influence over how the general education budget is being spent, but would also allow subnational governments to reallocate more funding from general education to adult learning, if deemed necessary. Subnational governments could then determine themselves whether to prioritise funding for adult learning relative to other education spending, for example based on how quickly the population ageing process is proceeding in their location and how the need for adult learning is evolving. This would be particularly beneficial for subnational governments with fewer resources, as they are more affected by population ageing.
Seoul Metropolitan Government and Seoul Office of Education collaboration
The Seoul Metropolitan Government and the Seoul Office of Education introduced an innovative governance model of collaboration in 2014 to jointly deliver education programmes. Both actors work together to plan, implement, finance and evaluate specific education projects, such as establishing institutions that support adult literacy programmes. Between 2015 and 2018 their joint work had a total budget of around USD 59 million, with USD 23 million coming from the Seoul Metropolitan Government and USD 36 million coming from the Seoul Office of Education. This collaborative approach has been innovative as the regional government and regional offices of education have historically implemented their education programmes autonomously.
Source: Seoul Metropolitan Government (2014[46]), Establishment of the first governance model in the nation between Seoul City and the Office of Education of Seoul, https://opengov.seoul.go.kr/press/3255323.
France: Pactes Régionaux d’Investissement dans les compétences (PRIC)
The national government of France invests in subnational skills development programmes through individual regional pacts for investment in skills (Pactes Régionaux d’Investissement dans les compétences, PRIC) signed between the national and respective subnational governments. A majority of the 13 subnational governments in mainland France have either signed or are about to sign a regional pact with the national government. These contracts are based on diagnoses of regional skills and training needs involving regional actors, and funding should be channelled to programmes that support new training programmes using up-to-date content. Programmes supported by the pact should also take into account current and future needs of the labour market. The PRIC favours programmes that guarantee access to qualification paths for the most vulnerable groups by consolidating key competences.
Source: Cedefop (2020[47]), France: Investing in upskilling and sustainable employment for the young and the unemployed, https://www.cedefop.europa.eu/en/news-and-press/news/france-investing-upskilling-and-sustainable-employment-young-and-unemployed-0.
Germany: Lifelong learning cities and regions
Germany provides two examples of adult learning funding mechanisms for subnational governments using the bottom-up approach with top-down government support to foster adult learning.
The Learning Regions Promotion of Networks Programme (2001-2008) supported over 70 regions with a total of EUR 118 million provided by the European Social Fund (ESF). To apply for the programme, cities and counties formed networks for lifelong learning with various stakeholders from formal education, enterprises, unions, employment and career guidance services, and educators and learners. The chosen networks were granted funds for the initial two years and encouraged to develop plans to increase co-contribution (up to at least 40% as a goal) while the funding phased out. Success factors of this programme included taking into account the local context and the learning needs of communities, with particular attention paid to disadvantaged groups.
In 2009, the Learning on Place Programme was initiated to support good educational management at subnational levels based on public/private partnerships. The purpose of the programme was to systematically address issues such as demographic change with an ageing population, the under-education of migrants, and skill shortages through co-ordinated learning arrangements designed by cities and counties. EUR 60 million was invested by the Federal Government and the ESF to benefit 40 projects across cities and counties. Chosen projects received funding over a three-year period, with the option of a two-year extension.
Source: Reghenzani-Kearns and Kearns (2012[37]), Lifelong learning in German learning cities/regions, https://files.eric.ed.gov/fulltext/EJ1000173.pdf.
Opportunity 2: Improving financial incentives for individuals to participate in adult learning
This section provides an overview of the financial barriers to individuals’ participation in adult learning. It then explores the existing financial incentives for individuals, how financial incentives could be better managed to target disadvantaged groups, and how financial incentives could be more effectively implemented. Relevant country examples and specific recommendations are also presented.
The cost of adult learning is a significant barrier for disadvantaged groups. According to the Lifelong Learning Survey 2019 (Figure 5.10), women were more likely to report cost as a barrier to adult learning than men. Younger and older adults were also more likely to report cost as a barrier to adult learning than middle-aged adults. Although individuals with lower levels of education could benefit from significant returns to pursuing further adult learning, they were more likely to report cost as a barrier for participating in adult learning than individuals with higher levels of education. Those with lower income levels were also more likely to cite cost as an obstacle in comparison to adults with higher income levels. Non-regular workers, many of whom are women, older adults, adults with lower levels of education and adults with lower income levels, were three times more likely to report cost as a barrier to participating in adult learning than regular workers (Ministry of Education and KEDI, 2019[22]).
The COVID-19 crisis has adversely affected disadvantaged groups as they have been more likely to lose their jobs, and thus have even less disposable income to cover the cost of adult learning (OECD, 2020[48]). These disadvantaged groups require targeted funding support to reduce inequalities and ensure that all individuals, regardless of ability to pay, are able to develop and maintain the skills required to adapt in a changing working environment, as well as succeed in a dynamic society (OECD, 2020[49]).
Source: OECD elaborations of Ministry of Education and KEDI (2019[22]), 2019 Lifelong Learning Survey.
In Korea, there are various incentives to help individuals participate in adult learning. Financial incentives include loans, scholarships and study/training leave, and individual learning schemes (Table 5.2). Incentives vary in terms of target, purpose and implementing institution. Loans and scholarships target a relatively narrow range of beneficiaries. Loans are beneficial for individuals in a position to be able to pay back the loan eventually. Although there are loans that target unemployed and non-regular workers, the prospect of having to eventually repay the borrowed amount with interest may act as deterrent for these individuals to participate, as such groups have uncertain future income streams. Scholarships are only available to those already enrolled in adult learning institutions and favour high performers and those already employed. Study/training leave benefits are also only available to individuals who are currently employed. Individual learning schemes such as the National Tomorrow Learning Cards (MoEL) and the Lifelong Education Voucher (MoE) provide significant amounts of funding for adult learners and also have a wide coverage of beneficiaries.
Among these various financial incentives, individual learning schemes (ILS) are seen as a potential solution to support the participation of disadvantaged groups in adult learning. ILS can be designed so that they are accessible irrespective of employment or unemployment status, and thus offer greater coverage, which is particularly relevant for non-regular workers. ILS can raise the capacity of individuals to progress in their career and make professional transitions as they do not have to rely on an employer to support their adult learning and are able to think beyond their current job and employer for their adult learning needs. This enables them to participate in adult learning that their employer may otherwise have been reluctant to support due to fear of poaching or leaving (OECD, 2019[52]). ILS also do not require repayment (in contrast to loans), demonstration of already high skills (in contrast to scholarships), and employer support (in contrast to training leave subsidies), and are therefore particularly relevant for disadvantaged groups.
Defined broadly, ILS give individuals the rights and finances to participate in adult learning. The individual, the government and in some cases the employer can contribute to ILS accounts. If the finances are accumulated over time, the ILS are considered individual learning accounts. Otherwise, they are individual saving accounts for training or voucher schemes (Table 5.3). ILS can attach the finances for adult learning to the individual, rather than the job, and therefore make it possible for the individual to use this fund irrespective of their labour market status (OECD, 2019[52]). The financial incentives provided by the MoE and the MoEL in Korea are closest to the voucher schemes as they are funded by the government, paid directly to the individual and do not allow individuals to accumulate finances over time.
The MoEL’s main individual learning scheme is the recently introduced National Tomorrow Learning Card (NTLC) (Table 5.4), which integrates the previously distinct financial incentive programmes for the employed and the unemployed and aims to provide financial support to individuals (irrespective of employment status) participating in training for employment reasons (KRIVET, 2019[53]). Around USD 2 520 to 4 2002 (KRW 3-5 million) is typically available over five years, which can cover between 40% to 100% of the training fees.5
The system caters to both employees and jobseekers. Beneficiaries among employees are: 1) employees of large firms who are 45 years or older and have received a monthly average income of less than USD 2 525 (KRW 3 million) in the last three months; 2) non-regular workers; 3) self-employed workers; and 4) employees on unpaid leave (Ministry of Employment and Labour, 2017[54]). Beneficiaries among jobseekers are: 1) unemployed individuals who have registered themselves as jobseekers on Work-net6; 2) students in the last year of secondary or tertiary education who are ready to work; 3) self-employed individuals with an annual revenue below approximately USD 126 100 (KRW 150 million); and 4) workers in agriculture and fisheries willing to transition to other industries (Ministry of Employment and Labour, 2017[54]). Individuals can apply to benefit from the NTLC through the MoEL’s Vocational Skills Development Account, and are selected based on whether they fit the beneficiary categories described above, their need for training and their level of motivation. Once selected they can enrol in MoEL approved training programmes by using the allowance and paying the designated co-payment amount for each course.
The MoE’s main individual learning scheme is the Lifelong Education Voucher (Table 5.4), which aims to increase participation in adult learning for low-income adults over 19 years of age and below the 65th percentile in the income bracket (Ministry of Education, 2019[55]). Due to funding limitations, there were only about 10 374 recipients in 2020, but in 2021 support will be expanded to 15 000 recipients. Around 40% of recipients also receive the national basic livelihood guarantee subsidy. The value of a lifelong education voucher is around USD 290 (KRW 350 000) annually. It can be used to pay for fees and/or learning materials for approximately 6 439 courses at 610 institutions designated by the MoE and listed on the Lifelong Education Voucher website (NILE, 2020[56]). Individuals can benefit from the voucher through the MoE’s Lifelong Learning Account.
In comparison to other countries, Korea provides higher levels of funding in the case of the MoEL’s NTLC, and lower levels in the case of the MoE’s Lifelong Education Voucher (Figure 5.11).
Note: The Korean Average Annual Wage for 2018 was approximately USD 30 547. The percentages expressed here consider the standard case under each scheme. Since the available amount of Korea’s NTLC is available over five years, it was adjusted to an annual basis.
Source: OECD elaborations of OECD (2019[52]), Individual Learning Accounts: Panacea or Pandora’s Box?, https://doi.org/10.1787/203b21a8-en.
The two main challenges influencing the effectiveness of ILS examined in this section are: 1) support for disadvantaged groups; and 2) connection of the two ILS.
ILS need to support disadvantaged groups more to meet their specific needs
The ILS of the MoE and the MoEL need to be reformed to better support the needs of disadvantaged groups, such as those with lower levels of education and lower levels of income. Support could include improving the targeting of ILS to disadvantaged groups, providing complementary financial support to cover indirect costs, and raising awareness and access for disadvantaged groups.
Greater targeting of the ILS to disadvantaged groups is necessary. Among the beneficiaries of the MoEL’s NTLC, individuals with lower education levels at the primary (2%) and lower secondary level (4%) benefited significantly less from the card than those with higher education levels at the upper secondary (37%), polytechnic university (22%) and university (33%) level (KRIVET, 2019[53])s. Given that individuals with higher levels of education are more likely to have pursued adult learning in the absence of NTLC financial support, this is an inefficient use of financial resources (OECD, 2019[52]).
Although the Lifelong Education Voucher programme (MoE) specifically targets low-income individuals (adults below the 65th percentile in the income bracket), 21% of the lowest income group (monthly income below USD 1 260) still cite cost as a barrier to participating in adult learning. This is in contrast with higher income groups, where only 12% (monthly income USD 1 260-2 520), 9% (monthly income USD 2 520-4 200) and 8% (monthly income USD 4 200 and higher) cite cost as a barrier (Ministry of Education and KEDI, 2019[22]). In addition to covering direct costs through the ILS, it would also be necessary to consider complementary financial support mechanisms to cover the indirect costs for low-income individuals. This is particularly relevant when low-income individuals with lower levels of education want to pursue long-term formal adult learning programmes that lead to an increase in educational qualification level. In France it is possible to combine the ILS with the Congé Individuel de Formation, which allows employees and jobseekers with past social contribution records to undertake training while receiving replacement income for up to one year (Box 5.4).
In order for disadvantaged groups to benefit from ILS they need to be informed about them and guided to use them. Sufficient information through guidance and counselling services is particularly relevant for ILS as, in contrast to employer-led financial incentives, they rely more on individuals to take initiative and decide for themselves which adult learning to choose from among the various options (KRIVET, 2019[53]). Given that adult learning providers compete to enrol participants, they heavily market their courses to individuals. Without sufficient counselling, individuals may thus take courses that are well marketed, without necessarily being the most relevant for their needs. Comprehensive guidance and counselling services for all adults, particularly those from disadvantaged groups, need to assess their skills, develop an individual career development plan and identify relevant adult learning opportunities. Participation in counselling services is not yet mandatory for individuals to benefit from the MoE’s ILS.
Some initiatives provide guidance and counselling services to disadvantaged groups. For example, in cities such as Goyang, Asan and Bucheon, non-regular worker support centres provide non-regular workers with aptitude assessments and free individual and group counselling sessions (Box 5.3). However, these initiatives are still relatively small-scale, especially considering the large and growing number of non-regular workers (see Chapter 4). Common challenges with existing counselling services include the limited availability of face-to-face guidance and counselling sessions due to a shortage of staff (KRIVET, 2019[53]). Guidance and counselling services are also not yet available in the evenings and weekends, which would expand access for disadvantaged groups (KRIVET, 2019[53]).
Korea could consider the example of career guidance centres (BerufsInfoZentren, BIZ) in Austria, where public employment services offer career guidance in 72 of its 100 regional units. Through these centres, all people living in Austria are eligible to receive, and can easily access, guidance and counselling services, regardless of whether they are employed, self-employed, unemployed or inactive. The Estonian public employment service provides career counselling as a mandatory requirement to participate in the Work and Study programme, which is designed for employed individuals who need support in changing job or staying employed (OECD, 2020[57]).
Connecting the two individual learning schemes with a single access account would reduce administrative burden and simplify access for users
Currently, the two ILS provided by the MoE and the MoEL are managed completely separately. This means that individuals who are eligible for both ILS are required to apply for them separately, which is administratively burdensome to manage and cumbersome to access. There have been discussions to co-ordinate and connect the two ILS in the long term to simplify administration, better track how individuals are using the two ILS, and simplify access for users, (Ministry of Education et al., 2018[58]; Job Council, 2017[59]). Simplicity of access is particularly important for disadvantaged groups who are otherwise less likely to benefit from the ILS (OECD, 2019[52]).
Korea could consider connecting the management systems of the two ILS (the MoE’s Lifelong Learning Account and the MoEL’s Vocational Skills Development Account) through a single user access account called the Lifelong Vocational Skills Development Account (Ministry of Education et al., 2018[58]; Job Council, 2017[59]). ILS funding would still be dispersed separately through the MoE’s Lifelong Education Voucher and the MoEL’s National Tomorrow Learning Card, but the administrative benefit would be to have a more simplified and unified way of managing, documenting and analysing an individual’s participation in ILS. It would also reduce the administration costs of running two separate management systems. Access for users would be simplified as they could access the funds through a single application. Simplicity is particularly important for widening access for low skilled individuals who tend to be in non-regular work arrangements, self-employed and economically inactive, and may find it more challenging to understand and deal with the administrative burden of multiple financial incentive platforms.
Korea could consider the example of the Singaporean ILS, SkillsFuture Credit System, where employed, self-employed, jobseekers and economically inactive individuals can access a single financial incentive system. The financial incentives can be used for a variety of programmes, which may be relevant for the labour market or for personal reasons. The aim is to foster innovation through supporting personal interests and potential, which may not always be in line with current labour market demands. The SkillsFuture Credit System is co-managed by the Ministry of Education and the Ministry of Manpower (equivalent of Korea’s MoEL) through the SkillsFuture Council (Box 5.4) (OECD, 2019[52]). In France, the Individual Learning Accounts (Compte Individuel de Formation, CPF) are funded exclusively by a training levy (like the Employment Insurance Fund in Korea), and the same platform is accessible to employed, self-employed and unemployed individuals through a mobile application for further ease of access. The CPF also groups both training funds and paid training leave into one unified account. (Box 5.4) (OECD, 2019[52]). Flanders is also moving towards a comprehensive Individual Learning Account from 2020, which involves grouping all training incentives into a single account, while reaching out to vulnerable groups with information and guidance to increase their participation (Box 5.4).
Non-regular worker support centre in Goyang City
Goyang City provides non-regular workers with a variety of career guidance and counselling services. These include counselling about training opportunities, aptitude tests, legal advice about their work status and rights, and guidance in case of work accidents, discrimination and abuse. The centre can be accessed in person, via phone or online, and is available on weekdays from 9 a.m. to 6 p.m. The centre also conducts various outreach campaigns and events to reach and raise awareness among non-regular workers (e.g. youth, women) about the centre’s services. Within the centre, there are a number of social networking activities to support a community for non-regular workers.
Source: Goyang City (2021[60]), Non-regular worker support centre, http://www.gyiwc.or.kr/.
France: Compte Personnel de Formation, CPF (Individual Training Accounts)
The French CPF is exclusively funded through a training levy on all French firms (firms with up to ten employees pay a smaller amount). A training levy collected by sectoral training funds to finance workplace-related training had been in place for a long time in France, and part of it was redirected towards the CPF when it was created in 2015, so that employers are only indirectly involved. The French CPF is the only example of a scheme funded out of a dedicated/earmarked social contribution. The rationale for the CPF is to bridge the gaps in training participation rates among contractual employees. The French scheme is the only system that used to provide credits in hours (rather than money) to account for the fact that training costs can vary significantly by training programme (e.g. more technical programmes tend to cost more). The scheme also allowed training funds to provide more training support for the skills most needed in each sector. However, the motivation of greater clarity for users and better transparency for regulators has pushed the system towards providing accounts credited in monetary terms. The CPF used to be able to be redeemed with the Congé Individuel de Formation (CIF), which was a right to financed training leave for upskilling or reskilling. The CIF was replaced by the transitional CPF (CPF de transition) in 2019 as a professional retraining tool for employees, which is managed by a newly created regional body, the Commissions Paritaires Interprofessionnelles Régionales (CPIR). When an employee wishes to change jobs, they are able to mobilise their CPF to finance the necessary training, while benefitting from specific paid leave. Unlike the CIF, the transitional CPF leave is not capped and depends on the training time. The new CPF from 2020 will also try to simplify the administrative process, making it much easier for individuals to access training. Moreover, jobseekers can now individually access their CPF, without going through their counsellors at the local employment offices (pôle emplois). A newly developed CPF mobile application launched by the Ministry of Labour facilitates direct access by individuals to their account and easy registration for training sessions.
Source: OECD (2019[52]), Individual Learning Accounts: Panacea or Pandora’s Box?, https://doi.org/10.1787/203b21a8-en.
Singapore: SkillsFuture
In Singapore, SkillsFuture Credits have been introduced to depart from the traditional employer-centric approach to training and provide individuals with some autonomy in choosing and customising their training paths. Contrary to the French CPF, this system is funded through general taxes. Every citizen aged 25 and above is eligible for this programme, where the government allocates around USD 366 (Sinagporean Dollars 500) in the form of lifetime vouchers which are periodically topped up. The government agency running the scheme needs to approve the training programme. The SkillsFuture Credit can be used, in principle, in combination with other generous training schemes, in particular the Workforce Skills Qualifications scheme, which is accessible to all workers and subsidises 50% to 90% of course fees and provides an absentee payroll compensation to the employer. The SkillsFuture Credit in practice is more of a voucher scheme as there is no formal accumulation of rights over time. Focusing more on the lifelong learning aspect than job market relevance, there are no strict requirements for the courses to be relevant to the labour market. SkillsFuture Credit aims to foster innovation through pursuing personal interests and developing personal potential, which may not always coincide with current labour market demand. The Ministry of Education, which is the responsible authority for this programme, also takes care of its management. Besides the actual delivery of the programme, considerable ancillary support is provided in terms of awareness workshops, hotline assistance, career counselling, etc. The participation rates are relatively high compared to other countries and regions with similar schemes.
Source: OECD (2019[52]), Individual Learning Accounts: Panacea or Pandora’s Box?, https://doi.org/10.1787/203b21a8-en.
Flanders: Opleidingscheques (voucher scheme)
Opleidingscheques in Flanders operates as a voucher scheme that supports training through direct governmental payments to individuals. Citizens are provided with USD 148 for training fees in the standard case. The training covered by the voucher must be vocationally oriented, and participants can receive career counselling services to make their choices post-training. The scheme explicitly excludes individuals undertaking training during working time or training that is financed by employers, to avoid substituting one for the other. While most individual learning schemes only cover tuition fees, the Opleidingscheques also finance skills assessment services. Since 2015, only low- and medium- educated workers can access the Opleidingscheques, as before this restriction was introduced almost half of the participants were highly educated employees. The scheme targets priority groups by modulating the amount of support provided – active individuals with less than upper secondary education benefit from a higher rate of support of USD 296. An additional allowance of an unspecified amount is available for those with less than tertiary education undertaking tertiary education training. Low-skilled foreigners, persons over 50 years of age, and disabled individuals are also eligible for up to USD 296 for training fees. To further minimise financial barriers to training, the Opleidingscheque can be combined with paid educational leave. Learners can undertake up to 125 hours of training per year for programmes linked to occupations with labour shortages. During this period, the employee will continue to receive their wage up to a ceiling, while their employer can be compensated by the regional government, the responsible implementation authority for the programme.
Source: OECD (2019[52]), Individual Learning Accounts: Panacea or Pandora’s Box?, https://doi.org/10.1787/203b21a8-en.
4.3. Tailor individual learning schemes to meet the specific needs of disadvantaged groups. The funding support that disadvantaged groups are eligible to receive should be increased to provide them with greater adult learning options, such as longer courses that lead to an increase in educational qualification. Beyond covering the direct cost of adult learning (i.e. tuition), complementary financial measures should be considered to also cover the indirect costs of adult learning participation (i.e. loss of income during adult learning programme) for disadvantaged groups, particularly when pursuing long-term formal adult education programmes. Disadvantaged groups should also be informed about how to benefit from ILS through comprehensive guidance and counselling services that include a skills assessment, the development of an individual career development plan, and the identification of relevant adult learning opportunities and financial incentives.
4.4. Simplify access to individual learning schemes in Korea through creating a single user access account. The management systems of the two ILS (the MoE’s Lifelong Learning Account and the MoEL’s Vocational Skills Development Account) could be connected through a single user access account called the Lifelong Vocational Skills Development Account. ILS funding would still be dispersed separately through the MoE’s Lifelong Education Voucher and the MoEL’s National Tomorrow Learning Card, but the administrative benefit would be to have a more simplified and unified way of managing, documenting and analysing an individual’s participation in ILS. This would also simplify access for users who could access the funds through a single application, regardless of whether for employment purposes or personal reasons.
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Notes
← 1. All employees are covered in principle, but there are some exceptions when specific conditions are met, for example in the agricultural, forestry, fishery or domestic service industry (Article 2 of the Enforcement Decree of the Employment Insurance Act). In general, employers bear the entire costs of the insurance premium for employment security and vocational skills development programmes, while the insurance premium costs for unemployed benefits are shared between employers and employees, with employers covering 0.8% and employees 0.8% (as of 2020) (Article 12 of the Enforcement Decree of the Insurance Premiums Collection).
← 2. The Human Capital Corporate Panel (HCCP) is an annual survey conducted by the KRIVET targeting enterprises in order to produce quantitative and qualitative data on Korea’s human resources.
← 3. 33.4 billion Korean Won as of 2020.
← 4. The financial independence ratio is calculated by determining the share of the subnational government budget that comes from its own revenue sources apart from the national government.
← 5. The NTLC covers 100% of the costs without any co-payment requirements when individuals are: 1) low-income individuals whose contribution to the National Medical Insurance is below a designated amount; 2) disadvantaged groups including beneficiaries of the National Basic Livelihood Guarantees, individuals with disabilities, youth not in employment, education or training (NEET), etc.; 3) self-employed with annual sales of USD 126 000 or below; and 4) non-regular workers with a monthly salary of USD 2 100 and below.
← 6. A platform created by the Korea Employment Information Service (KEIS) in 1999 to improve employment stability by connecting jobseekers with prospective employers.