[Viewpoint] Untact Business and Workforce Development

The novel coronavirus infection (COVID-19) is rapidly resurging. Experts from national research institutes and other organizations have predicted that due to the resurgence of COVID-19, South Korea's economic growth rate this year could fall to as low as minus 2.2%.

In this crisis situation, the challenges faced by small and medium-sized enterprises (SMEs) are even more severe, especially in terms of workforce acquisition. Most workers in our country are employed by SMEs. As of 2016, the proportion of workers employed by SMEs compared to the total workforce was 82.2% in South Korea, 42.4% in the United States, 53.5% in Japan, and 63.3% in Germany, showing that South Korea’s figure is significantly higher than other OECD countries. An even bigger problem is that the proportion of workers employed at micro-businesses with fewer than 10 employees is 43.9%, which is far higher than the United States’ 10.1% and Japan’s 19%.

Within this economic structure, SMEs are struggling to secure technical personnel and lack the capacity to overcome this challenge. According to the Korea Standards Association, the per capita investment cost in human resource development for domestic SMEs is 157,000 KRW, which is significantly lower than the 537,000 KRW for large enterprises with over 1,000 employees. Considering welfare expenses and salaries, it is fair to say that securing excellent personnel for SMEs is nearly impossible. More often than not, the trained workforce is poached by large enterprises.

After COVID-19, securing workforce for SMEs is expected to emerge as a very important policy issue. The government seems to be focusing policies on this area to secure industrial competitiveness centered on untact technologies after COVID-19. New government startup support projects, such as supporting the initial startup package of the Ministry of SMEs and Startups through supplementary budgets, are concentrating on untact businesses. However, the problem lies in the workforce capable of handling these tasks.

The workforce shortage in SMEs is not a new issue, but the shortage in new fields is expected to be even more severe. Many experts predict that untact technology will become the main business stream in the future. South Korea’s policies for SME workforce training and acquisition mainly focus on Meister high schools, junior colleges, and R&D personnel training for some SMEs. In this regard, active cooperation between industries and universities in workforce training is necessary, and the author proposes the following suggestions.

First, retraining of existing SME personnel is necessary. We have already experienced the painful restructuring not only in large enterprises but also in SMEs during the IMF foreign exchange crisis. After overcoming the IMF crisis, during the venture boom, we also experienced a shortage of technical personnel in new fields including IT. To overcome the management crisis caused by COVID-19, SMEs now need retraining of existing personnel in new business areas. Of course, it is difficult for companies to bear the financial burden alone in such cases. Active government support and cooperation from universities will be required.

Second, active cooperation from large enterprises in SME workforce training must be encouraged. To this end, it is necessary to create win-win contract departments between large enterprises and SMEs. Recently, the value of personnel in the untact business field has skyrocketed, making scouting difficult. Although it is called scouting, it is often a case of large enterprises poaching personnel. Large enterprises are not free from workforce issues either. Efforts for mutual growth are needed. Large enterprises, SMEs, and universities should discuss and operate curricula together.

Third, talent development through retraining of women is necessary. South Korea still has insufficient female economic participation, and especially in SMEs, women account for about one-third of all employees. The untact business field mainly consists of software areas such as big data based on artificial intelligence (AI). Through retraining in these fields, active participation of women should be encouraged.

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