South Korea stands out among OECD countries for its lowest proportion of jobs in large enterprises. Good jobs, often synonymous with employment opportunities in large enterprises, are in short supply. This shortage prompts various societal issues: the overheating of college admission competition, a decline in social mobility, decreased birth rates, stagnating employment rates for women, and increased concentration in the capital area. There is a pressing need to identify and address policy barriers to company scale-up. - Despite the stronger employment preference among young adults in large enterprises, the majority of available job opportunities are actually in smaller businesses. - Larger establishments tend to offer higher wages and better working conditions. - The marked wage gap between graduates of top and bottom universities intensifies competition for admission to top-ranking schools. - The scarcity of good jobs results in both low utilization of maternity protection programs and female underemployment. - Even at the city and province levels, larger establishments are observed to have higher labor productivity. - Identifying and addressing policy barriers that impede company scaleup through targeted policy improvements is a necessary course of action.

This study explores long-term consequences of unexpected job displacement among middle-aged male workers during the 1997 Asian Financial Crisis in Korea. Utilizing datasets from the Korean Labor and Income Panel Study (KLIPS) and Korean Longitudinal Study of Aging (KLoSA), the research examines this cohort's work trajectories, socioeconomic status, and health implications. The study further investigates the intergenerational impacts of job displacement, with a spotlight on education expenditure, education attainment, and labor market outcomes of the children of the affected workers. The findings reveal that these workers could not regain their pre-crisis employment levels, and their job quality declined due to repeated cycles of unemployment and reemployment. This trend shortened their active years in the workforce, leading to decreased pension contributions and reduced income levels in their later years. Moreover, job displacement adversely influenced their mental well-being, with a marked increase in depression rates within this group. Lastly, children of displaced fathers are observed to spend less on education. They display lower enrollment rates in higher educational institutions and often lean towards majors with more direct employment prospects. Economically, these children's annual earnings are roughly 9.4% beneath those of their peers whose fathers remained insulated from job displacement during the crisis.

Job creation is now at the top position in the Korean government’s agenda. But the means for achieving this goal as well as general understanding on the issue lag behind Korea’s rapid transition to a knowledge-based economy. Direct job creation constitutes an important part of government policy, and the business calls for labor market flexibility. This reports shows that Korea’s job creation mechanism has shifted from one of a manufacturing economy’s to that of a knowledge economy, and knowledge has been the major driving force of job creation since the 2000s. Manufacturing employment has peaked as early as in 1990, and job creation thereafter has been fueled by the growth of knowledge intensive service industry jobs as in any advanced economies. If we presume two sectors in an economy, tradable and non-tradable, a knowledge intensive service job in the tradable sector creates twice as many jobs in the non-tradable sector as a manufacturing job. The knowledge intensive jobs themselves are created by innovation in manufacturing as well as in services and by business profits. Higher service to manufacturing jobs ratios, the growing share of investment on intangibles, concentration of jobs in the Seoul metropolitan area, all such major changes are phenomena in a knowledge-based economy. Job creation has been active with a rapid transition to a knowledge economy and has slowed down with its weakening. The nontradable sector is larger in numbers of jobs, but the tradable sector is the engine and the determinant of quality of jobs in an economy. Hence the focus of this report is on the latter. Paradoxically the nontradable sector is less related to the economy’s competitiveness, which allows rooms for labor market policies in the sector. This report covers firm productivity and knowledge capital, local job creation multipliers, patents and firm values, knowledge property right protection, and university-company research collaboration issues. But this list is not at all comprehensive and further research is called for in order to set up a knowledge economy jobs strategy, in areas such as place-based policies, R&D strategies for job creation, et cetera.

Introduction The Roh government announced a statement at the end of 2003 that “Job Creation will hereafter be the most important task.” Afterwards, the Tripartite Committee agreed on the 'Social Contract for Job Creation' and the government announced an 'All-out Plan for Job Creation' in February 2004 and the Committee for Job Creation under the charge of the Prime Minister got underway in March 2004. At the present time, as of December 2004, confirmed plans for job creation are being executed while new plans are being readied for launch. However, one can ask why a policy of job creation is so important at this time, with an unemployment rate at about 3.4% in the last three years and a natural rate of unemployment also estimated at about 3.4%. The purpose of this paper is to make a summarized report of the importance of the current job creation policy and the outline of the government's job creation plans and their evaluation. Synopsis The importance of a job creation policy should be understood in regards to the employment rate and income distribution. First, the employment rate (the number of employed/the population between 15 and 64) in Korea was 63.7% in 1997 before the economic crisis, 59.2% in 1998 and 60.0% in 2003. This rate is low compared to that of 71.2% for the US 68.2% for Japan, and 72.2% for the U.K..   The major cause of decreasing employment following the economic crisis in Korea was analyzed and can be attributed to an increase in the non-economic activating population, since getting a job has been more difficult after the crisis. The unemployment rate in Korea therefore has a propensity of being gradually under-evaluated because of the increasing number of unemployed. Second, in relation to the aspect of deterioration of income distribution, the level of income inequality and the poverty ratio have rapidly increased following the economic crisis. Before the crisis, income inequality in Korea was estimated at about the middle compared to that of OECD countries. However, after the crisis, the estimated of level of income inequality was considerably higher. The absolute poverty rate had doubled to 11.5% in 2000 from 5.9% in 1996, and the relative poverty rate also doubled from 5.9 in 1996 to 11.5% in 2000. Therefore, the level of poverty in Korea is also considered high compared to levels in OECD countries. One of the main causes for the deterioration in the income distribution structure in Korea following the crisis was because of an increase in the unemployed. The reason why income inequality and the poverty rate have not decreased despite a reduction in unemployment is that the main parts of the increased unemployed were converted to a non-economic activating population instead of being employed.    Therefore, job creation is a very important issue at this time since it is a starting point to improve the income distribution structure and increase the employment rate. Conclusion The basic focus of the government's job creation policies should be to provide a better environment for firms to do business since the main source of job creation is from firms, and to both support and enhance such a strategy one that enables growth which will create employment, which will in turn, help in fuelling additional growth. However, strategies on how to better provide a better environment for firms to do business are not clearly suggested.   Furthermore, a plan is not merely to suggest a link by which an increase in employment will result in an increase in income and a reduction in poverty. This is because details are unclear on the extent of the problems being faced and the lack of a firm direction for improving the education and job training systems.. In addition, the plans require more consideration for the quality of employment in the service sector in which most job creation will occur.   Finally, the plan should focus on a long term and comprehensive vision to help job creation in the civil sector by the government, as pointed out by the OECD in its jobs strategy recommendations below:   ⓛ Set macroeconomic policy such that it will both encourage growth and, in conjunction with good structural policies, make it sustainable, i.e. non-inflationary. ② Enhance the creation and diffusion of technological know-how by improving frameworks for its development. ③ Increase flexibility of working -time(both short-term and lifetime) voluntarily sought by workers and employers. ④ Nurture an entrepreneurial climate by eliminating impediments to, and restrictions on, the creation and expansion of enterprises. ⑤ Making wage and labor costs more flexible by removing restrictions that prevent wages from reflecting local conditions and individual skill levels, in particular of younger workers. ⑥ Reform employment security that inhibit the expansion of employment in private sector. ⑦ Strengthen the emphasis on active labor market policies and reinforce their effectiveness. ⑧ Improve labor force skills and competences through wide-ranging changes in education and training systems.

2024 KDI-World Bank Study Tour on Enhancing Employment Support Services and Workforce Training in Nepal   The ‘2024 KDI-World Bank Study Tour on Enhancing Employment Support Services and Workforce Training in Nepal’ was jointly organized by the Korea Development Institute (KDI) and the World Bank (WB) from June 3rd to 7th, 2024. The KDI Global Knowledge Exchange and Development Center (GKEDC) organized a study tour to assist the Nepalese government in establishing an employment support service system and workforce training programs to increase the youth employment rate in Nepal. Representatives from key government ministries and agencies in Nepal participated in the study tour, including joint secretaries and officials from the Ministry of Labor, Employment, and Social Security, the Ministry of Industry, the Ministry of Commerce, the Ministry of Finance, the National Planning Commission, the Employment Service Center, and the National Academy of Vocational Training. Additionally, experts from the World Bank's Social Protection and Jobs Global Practice, responsible for employment sector projects in Nepal, also took part. The five-day study tour included lectures, meetings with government ministries, public institutions, and private firms involved in South Korea's workforce training and employment policies, and a debriefing session.   Day 1 (June 3rd): Employment Information System and OJT-related Programs/Systems by Industry-Academia and Public Institutions On June 3rd, the participants attended a lecture by the Korea Employment Information Institute on South Korea's national employment information system and measures to address job mismatches. Following the lecture, they had meetings with the Human Resources Development Service of Korea  and Tech University of Korea to discuss South Korea's work-study dual program and the enhancement of job skills through on-the-job training (OJT) and off-the-job training (Off-JT) programs.   Day 2 (June 4th): Best Practices of SMEs Implementing OJT and Employment Services of Public Institution On June 4th, the participants visited MAPAL HiTECO and HEAD Co. to learn about the best practices of SMEs implementing work-study dual programs in South Korea. They also visited the Siheung Employment Welfare Plus Center to understand its integrated network of employment support services, and the Korea Labor and Employment Service to discuss labor relations in Korea and explore potential solutions to enhance companies' innovation competitiveness.   Day 3 (June 5th): National Employment Portal Service and Vocational Skill Development/Employment Service Policy On June 5th, the participants held meetings with the Skills Development Policy Division and the Employment Services Policy Division of the Ministry of Employment and Labor (MOEL), as well as the Korea Employment Information Service (KEIS). They discussed the current status of Korea's vocational skills development policies, employment service delivery system, and the WorkNet system. Additionally, they visited the Daejeon Employment Welfare Plus Center (EWPC) to learn about its one-stop employment welfare services.   Day 4 and 5 (June 6th, 7th) A Cultural Event and a Debriefing Session After a cultural event on June 6th, the participants had a debriefing session on June 7th. During the debriefing session, they discussed how to benchmark South Korea's practices for application to Nepal's policies.   The Nepalese participants expressed their deep gratitude to the KDI GKEDC for providing the study tour, which helped them strengthen their practical knowledge and policy-making capabilities. Dr. Dong Soo Kang, the Executive Director of KDI GKEDC, stated his hope that this study tour will contribute to the development of Nepal's employment support system and enhance bilateral cooperation.   Written by Yerim  Kim, Head of Global Knowledge Cooperation Team 2 , 02-6312-4088, kimyerim@kdi.re.kr

2023 GKEDC-Saudi Arabia-Algeria-Kuwait Capacity-Building Workshop on Promotion of Startup/SMEs The 2023 GKEDC-Saudi Arabia-Algeria-Kuwait Capacity-Building Workshop on Promotion of Startup/SMEs was held in South Korea from November 20th to 24th. The event was hosted by the Ministry of Economy and Finance (MOEF) and organized by the Global Knowledge Exchange and Development Center (GKEDC), Korea Development Institute (KDI). Background In the era of digital transformation, sometimes, methods for productivity increase tend to yield returns on capital by decreasing jobs. In some cases, a dramatic increase in jobs may not be likely with the existing industries. The recent global supply chain crisis due to external shocks including pandemic disease, further flagged up the importance of the creation of high-value-added businesses and diversifying industries through the promotion of innovative startups and SMEs. Recognizing the importance of the agenda, GKEDC organized the 2023 capacity-building workshop on the promotion of startups and SMEs.   Overview The workshop specifically targeted Saudi Arabia, Algeria, and Kuwait, which have long kept a close relationship with the Republic of Korea. As the countries place emphasis on implementing national policies for the promotion of startups and SMEs to diversify industries and create high-value-added businesses, GKEDC organized a 5-day capacity building workshop for the relevant government officials and private sector participants from the countries.  * The Participating Ministry/Institutions and Startups: The Ministry of Industry and Mineral Resources of Saudi Arabia, the Small and Medium Enterprises Bank of Saudi Arabia, the Saudi Export Development Authority, the Small and Medium Enterprises General Authority (Monsha'at) of Saudi Arabia, the Ministry of Investment of Saudi Arabia, the Embassy of Saudi Arabia in the Republic of Korea, the Algerian Startup Fund of Algeria, the Embassy of Algeria in the Republic of Korea, the Embassy of Kuwait in the Republic of Korea, and the Startups (Agromart, Techmology, Vandista) of Algeria   Purpose The 5-day workshop aims to enhance capacity/knowledge on how to promote startups and SMEs through 10 lectures, site visits, and seminars with relevant Korean government ministries and public institutions. Business meetings with 11 private firms including startups/SMEs and Venture Capital (VC) firms provided know-how on developing business models and network-building opportunities. Further, the workshop identified follow-up Knowledge Sharing Program (KSP) projects by developing the proposals based on customized consultation per each sector.  Day 1 (Nov 20th): Startup/SME Financing Policy and Business Models/Cases of  Startup/SMEs The first day of the workshop was composed of three sessions: 1) the Startup/SME financing policy and the Korea VC market, 2) the business models of the startup/SME invested by KFoF, 3) the incubating program of a MNC with cases. In the first session, Dr. Seunghyup Lee, an associate fellow, the Department of Macroeconomic and Financial Policies, KDI, delivered a lecture on startup/SME financing policy and the role of government in the Korean VC Market. During the second session, speakers for the Korean startups, Yaejung Joo, manager of Angelswing, and Sukjin Young, COO of Mobiltech shared their experiences in developing their business models and receiving funding from the KFoF. In the third session, Jun Kim, Principal Professional, Samsung Electronics Creativity & Innovation Center introduced Samsung C-Lab as an example of MNC’s incubating program. Sangmin Lee, CEO of Neubility, and Jongheon Lee, CEO of Foel, introduced the business models that they developed with the support of C-Lab. Day 2 (Nov 21st): SME Financing/Supporting Mechanism of Korean Public Institutions, and VC Firms’ Investment Decision-Making Process The second day of the workshop was on ‘SME Financing/Supporting Mechanism by Korean Public Institutions, KDB and KVIC, and VC Firms’ Investment Decision Making Process’. Through the site visit to the Korea Development Bank (KDB), the delegates learned about the global and domestic accelerating programs of KDB. Korea Venture Investment Corporation (KVIC) provided a lecture on KVIC’s role in the VC market and governance of KFoF. For the seminar with the VC firms, Weventures, Lighthouse Combined Investment, and Enlight Ventures participated, providing insights on investment decision-making factors.   Day 3 (Nov 22nd): Policies for Promotion of Startup/SME of Korean Ministry and its Affiliated Organizations Including Technology Credit Guarantee System The third day of the workshop was on ‘Policies for Promotion of Startup/SME of Korean Ministry and its Affiliated Organizations Including Technology Credit Guarantee System’. The meetings with the Ministry of SMEs and Startups (MSS) and the Korea Institute of Startup & Entrepreneurship Development (KISED) introduced the governance, policies, and programs to support the promotion of startups and SMEs including the incubating programs. The seminar with Korea Technology Finance Corporation (KOTEC) discussed the technology appraisal and credit guarantee system for startups and SMEs.   Day 4 (Nov 23rd): Accelerating Programs for Startup/SMEs by Provincial Institutions and Startup Models/Cases in Gwangju and Busan The fourth day of the workshop was on ‘Accelerating Programs for Startups/SMEs by Provincial Institutions and Startup Models/Cases in Gwangju and Busan’. The delegates visited the Busan Center for Creative Economy & Innovation (BCCEI) and learned how the provincial public institution can support the local SMEs and how it is different from state-level support. BCCEI introduced its accelerator program which collaborates with MNC, Lotte for the local startups in the region. If Day 1’s seminar was on business models of the startups in Seoul, Day 4’s seminar was on business models/cases developed in provinces. The startups in Busan and Gwangju, Sendy, Return Box, and OTOM, which received funding from KFoF participated and shared their business models and know-how.   Day 5 (Nov 24th): Introducing Knowledge Sharing Program (KSP) Cases on Startup/SMEs and Developing KSP Project Concept Proposals   The fifth day of the workshop was on ‘Introducing Knowledge Sharing Program (KSP) Projects on Startup/SMEs and Developing KSP Project Concept Proposals’. The first half of the workshop discussed the KSP in general and KSP projects of Vietnam and Belarus on startups/SMEs. During the second half of the workshop, each delegate developed their own KSP project concept proposals with customized consultation. All developed proposals* will be officially submitted through the diplomatic channel. * Attracting Global Startups & VCs to Saudi Arabia (Saudi Arabia Ministry of Investment), Simulation Training program using Metaverse technology for Human capital development (Saudi Arabia Ministry of Industry and Mineral Resources), Understanding of South Korea's efforts and methodologies in developing the capabilities of SME’s businesses to penetrate and expand in export markets (Saudi Exports Development Authority), Integrative Support and Ecosystem Collaboration for Saudi Startups through financing and non-financial initiatives (Saudi Arabia SME Bank), Developing a Technology Rating System (Saudi Arabia Small and Medium Enterprises General Authority), Valuation and financing mechanisms of early-stage startups (Algerian Startup Fund)   Private Sector Engagement and Opportunities for Expanding the market to Middle East/North Africa While the main emphasis of the workshop was enhancing the knowledge/ know-how on how to promote startups and SMEs, the workshop provided business network-building opportunities. Further, it led discussion of opportunities for expanding the markets to the Middle East or North Africa as the delegation showed keen interest in Korean startup technologies such as autonomous delivery robots and cooling technology without the use of electricity.   Opportunity for Follow-up Economic Cooperation Projects with Tangible Benefits Regarding the Workshop, Dr. Dong Soo Kang, the Executive Director for the GKEDC, KDI, stated as follows:  “I believe that the capacity building workshop contributed to enhancing Korea’s cooperation with Saudi Arabia, Algeria, and Kuwait. Through the workshop, I hope that Korea’s development experience in the field can contribute to developing policies for the participating countries and lead to follow-up economic cooperation projects with tangible benefits.” Written by: Yerim Kim, Head of Global Knowledge Cooperation Team 2,  02-6312-4088, kimyerim@kdi.re.kr