[Policy Pulse] Incumbent Worker Training in the Age of AI

To Raise Potential Growth, Workforce Upskilling Is Essential
Job Training Participation Rate in Korea at 9% — Among the Lowest in the OECD
Financial Support Alone Is Not Enough — Skills Must Be Utilized for Tangible Results
In the AI Era, P

Recently, there has been a string of encouraging news for the Korean economy. From January to July this year, Korea’s cumulative export volume surpassed that of Japan, and the Bank of Korea raised its growth forecasts for this year and next year to 3.3% and 2.9%, respectively. This adjustment reflects a stronger-than-expected semiconductor cycle. But is Korea’s capacity for sustained growth improving as well? In its December 2024 estimates, the Bank of Korea assessed the potential growth rate for 2024 to 2026 at an annual average of approximately 2%, and is currently in the process of re-estimation.

To raise the potential growth rate, Korea must achieve advances in technology, improvements in resource allocation efficiency, greater capital accumulation, and both quantitative expansion and qualitative enhancement of labor input. According to the Bank of Korea’s estimates, capital input contributed about 1.1 percentage points, total factor productivity about 0.7 percentage points, and labor input about 0.3 percentage points. Within labor input, qualitative improvement accounted for about 0.2 percentage points. To achieve sustained growth and improved labor incomes simultaneously, it is essential to expand workers’ knowledge and skills, thereby improving the quality of labor input.

Human capital accumulation goes beyond merely increasing years of schooling. According to international growth accounting research, the annual average increase in Korea’s labor quality index (measured by educational attainment) dropped from 0.9% in the 1990s to 0.5% in the 2010s. As university education has become widespread, the scope for further improvements in educational composition will likely diminish. As such, in addition to enhancing the quality of formal education, emphasis should be placed on post-graduation learning that renews job skills.

However, based on the 2023 Programme for the International Assessment of Adult Competencies (PIAAC) by the Organisation for Economic Co-operation and Development (OECD), the participation rate in non-formal job-related education among Koreans aged 25–65 was only 9%, the lowest among 31 participating countries. This contrasts sharply with the average of about 36%, Norway’s 53%, and the United States’ 51%. The indicator does not include formal education for obtaining degrees or informal learning acquired on the job.

The participation rate in education is the result of decisions made by both employees and companies regarding whether to participate and provide support. Both sides weigh the costs—such as educational expenses, learning time, and potential work interruptions—against expected benefits. For companies, incentives arise only if productivity improvement is sufficiently expected. For workers, incentives depend on anticipated gains in income and career development. According to the OECD report, the proportion of companies supporting educational costs was about 35% in Korea, compared to 65–77% in Norway and the United States. The share of training conducted during paid work hours was about 48% in Korea, versus 78–87% in the two comparison countries. The share of participants who rated the training as highly useful was also about 24% in Korea, while the figure for the two countries was 48–53%. In countries with high participation rates, the perceived utility of learning and the level of company support for education costs are also high.

Domestic surveys reveal a considerable number of respondents who do not feel the need for further education. According to the 2025 Survey on Enterprise Vocational Training, about 31% of firms that did not provide sufficient training answered that their employees already have the necessary skills, while around 32% preferred to hire skilled workers rather than provide training for current employees. Approximately 21% cited cost and time constraints. In a 2012 survey of non-regular workers, about 57% of non-participants in training responded that they did not feel it was necessary. These surveys indicate that low participation rates cannot be explained only by time limitations and the burden of costs. Other main reasons for the low perceived need for additional learning may include the low utility of existing programs, a lack of tasks or authority to utilize acquired skills, and insufficient linkage between training and rewards. Therefore, in addition to developing programs and supporting costs, it is necessary to create environments where acquired skills can be applied and translated into actual outcomes.

During the current transition to artificial intelligence (AI), new approaches and more robust social support for employee training will be needed. Small and medium-sized enterprises, in particular, require consulting support to diagnose work and competency needs and to connect training with on-the-job application. Costs for program development can be shared through joint design by region and sector. Even where substantial benefits are expected, if restrictions on time and finances remain, cost support can be combined. It is also important to develop pathways through which productivity improvements translate into higher wages and career advancement for workers. Policy effectiveness should be assessed not only by participation rates, but also by real engagement on the ground, changes in productivity, employment, and wages. To achieve sustained growth and increased labor income in the age of AI, it is vital to encourage employee learning, expand opportunities to apply acquired skills, and boost the productivity of each and every worker by ensuring they reap the rewards of their efforts.

Minseong Kim, Professor of Economics at Sungkyunkwan University

This content was produced with the assistance of AI translation services.