Effectiveness of government's occupational skills development strategies for small- and medium-scale enterprises: A case study of Korea

Abstract

In many developing countries, small- and medium-scale enterprises (SMEs) account for a large part of national employment and income. Therefore, governments have used various strategies/policy instruments to develop human resources for SMEs and improve their productivity and national welfare. In the literature, however, there has been little effort to assess their effectiveness. The government of Korea has adopted various policies including financial incentives to encourage private enterprises in general and SMEs specifically to undertake training of their workers voluntarily. It has been proved, however, that various financial incentives alone did not make much impact on SMEs, and only large enterprises benefited from them. To redress this regressive situation in human resources development, the private sector, in collaboration with the government and non-governmental organizations, undertook a pilot SME training consortium project, which resulted in successful achievements. The pilot project provided SMEs with, in addition to the financial incentives, institutional and technical assistance for their human resources development activities. SMEs actively participated in training of their workers and benefited from productivity increases. The pilot project has already been replicated on a national scale, and many other developing countries would also be able to benefit from the lessons learned. © 2005 Elsevier Ltd. All rights reserved.