Declining Cognitive Skills among Korean Workers: Drivers and Improvement Measures

As Korea's population ages and automation reshapes job tasks, keeping workers' cognitive skills sharp deep into their careers has become an economic necessity. Yet new OECD survey data show that Korean workers' numeracy and literacy scores fall off with age far faster than in other advanced economies. Multiple factors contribute to this decline, but the primary driver appears to be a wage system that provides insufficient incentives for skills development.

Korean workers' cognitive skills fall behind the OECD average by their early 40s, and the gap widens sharply after the mid-50s. The underlying driver is compensation: a one-standard-deviation increase in numeracy raises wages by just 2.98% in Korea, less than half the 6.13% OECD average, and more recent data show Korea's return remains similarly low (2.46% versus an 8.16% OECD average). Korean wages instead climb steeply with tenure (2.05% a year, nearly triple the OECD average) and with firm size, up to 30% higher at firms with 1,000 or more employees than at the smallest firms. With 63% of establishments lacking any formal wage system, and fewer than one in ten using skill- or job-based pay, workers have little financial reason to keep learning once hired.

Pay Systems Must Reward Skill, Not Just Seniority

The study calls for broader adoption of skill- and job-based pay systems, beginning with clearer job roles and transparent performance evaluation, to give workers a financial incentive to invest in upskilling. This alone will not be enough. Without more flexible working hours, higher-quality training programs tied to career and wage progression, and workplace cultures that let employees actually apply new skills on the job, meaningful improvement in workforce competencies is unlikely. Without such reforms, Korea risks entering a period of rapid technological transformation with a workforce whose skills are deteriorating faster than in comparable advanced economies.