KCCI Human Resources Development Institute Sees Enrollment Drop Due to COVID-19... Government Subsidies Reduced Again

Exterior view of the Korea Chamber of Commerce and Industry.

[Asia Economy Reporter Dongwoo Lee] Some of the Human Resources Development Centers operated by the Korea Chamber of Commerce and Industry (KCCI) are highly likely to undergo additional temporary closures this year, following last year. This is due to the annual decrease in government subsidies and the depletion of their own reserves that have been covering costs so far.

According to the business community on the 23rd, the government subsidy allocated to KCCI's Human Resources Development Project Team this year is known to be around 25 billion KRW, which is less than initially expected. The government subsidies paid by the Ministry of Employment and Labor to KCCI have decreased from 45 billion KRW in 2017 to 34.8 billion KRW in 2018, and 26.6 billion KRW last year.

This is because in 2017, the Ministry of Employment and Labor introduced the 'Vocational Training System Reform Plan,' evaluating private consignment operators based on performance indicators such as employment rates and providing differentiated subsidies accordingly. Until then, KCCI had received a certain budget as an institution under the Ministry of Employment and Labor but changed to a private consignment operator from 2011.

The Ministry of Employment and Labor has allocated 2.1 trillion KRW for vocational training this year, a 10.5% increase compared to the previous year. Of this, amounts excluding those for Korea Polytechnic University (about 45 billion KRW) under the Ministry and the National Competency Standards (NCS) development costs (about 1 trillion KRW) will be paid to domestic private consignment vocational training institutions.

The problem is that due to the spread of the novel coronavirus infection (COVID-19), the number of trainees has decreased, which is expected to reduce subsidies for private consignment operators including KCCI. The Ministry of Employment and Labor provides subsidies to private consignment operators differentially, considering training hours, training cost support unit price, and the number of trainees. Especially this year, the training cost support unit price was frozen at last year's level, making the number of trainees a major variable in determining subsidies.

KCCI postponed the opening of its Human Resources Development Centers to June 6 next month and is recruiting trainees, as the number of applicants has significantly decreased compared to initial expectations due to the spread of COVID-19.

KCCI operates Human Resources Development Centers in a total of seven locations: Seoul, Incheon, Gyeonggi, Busan, Chungnam, Jeonbuk, and Gwangju. The operating cost requires about 60 billion KRW annually. Excluding government subsidies, more than half of the costs are covered by their own reserves, resulting in worsening deficit operations.

KCCI plans to consider additional operational suspensions this year following the temporary closure of two centers last year. A KCCI official said, "Due to COVID-19, the number of trainees is expected to decrease, leading to a slight reduction in government subsidies this year," adding, "Currently, a single Human Resources Development Center incurs an annual deficit ranging from 1 billion to as much as 2 billion KRW, so urgent measures need to be prepared."

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