South Korea’s Education System Is Not Producing the Workers Its Economy Needs

South Korean fifteen-year-olds placed second among developed countries on the latest Program for International Student Assessment (PISA), the OECD’s test of reading, mathematics, and science, released last month. No other country has ranked in the top five each time the test has been given since 2000.

But the intense competition for places at top universities imposes costs on firms and families. Small and medium-sized enterprises struggle to hire workers with the skills they need, and youth employment trails the OECD average. Parents spend roughly 10 percent of household disposable income per child on after-school tutoring, a burden more than a quarter of them cite as a major reason for Korea’s extremely low fertility rate. A greater role for technical and vocational education and training (TVET) would help address both problems.

Korea Ranks Among the Top Countries in PISA

PISA assesses the knowledge, skills, and attitudes of fifteen-year-old students to determine how well students can solve complex problems, think critically, and communicate effectively. Since 2000, it has provided insights into how well education systems prepare students for real-life challenges. In the 2025 assessment released last month, Korea ranked second among OECD countries (Figure 1) and sixth among the ninety-one countries and regions participating in PISA. Korea is the only country to rank among the top five OECD countries in each of the nine PISA assessments (Table 1), based on the average score across the three subjects tested.

Korea also has a large share of high-performing students and a small share of low-performing students. In mathematics, 23 percent of Korean students attained Level 5 or 6, compared with the OECD average of only 8 percent (Figure 2). At these levels, students can model complex situations mathematically and select, compare, and evaluate appropriate problem-solving methods. Similarly, in science and reading, Korea has a relatively large share of high performers and a small share of low performers.

However, Korea’s reading scores fell significantly in 2025, down fourteen points (Figure 3). A South Korean Ministry of Education official said that the decline “appears to be a result of increased use of digital devices like social media and declining interest in reading.”

The drop in reading scores is a global phenomenon—the OECD average score fell by twenty-eight points between 2015 and 2025, which is equivalent to losing about one and a half years of formal schooling. The 2025 OECD PISA report expressed concern about “declining reading skills, particularly in the abilities that matter most in the AI age, including distinguishing fact from opinion, navigating ambiguity and evaluating information critically.” It also noted that high-performing students tend not to use AI, though the overall impact depends heavily on how and how often AI is used.

Korea’s Education System Produces Equitable Results

In addition to outstanding scores, Korea’s PISA scores show a relatively high degree of educational equity. In 2025, students from families in the top quartile of socioeconomic status scored sixty-nine points higher in science than students in the bottom quartile, below the OECD average of eighty-five (Figure 4). Korea promotes equitable outcomes by allocating additional resources to disadvantaged areas and reducing their student-teacher ratios.

The large share of government education spending on primary and secondary schools also drives Korea’s outstanding PISA results. Expenditures, in terms of GDP per capita, amounted to 28 percent for both primary and secondary students in 2021, compared with the OECD average of 20 percent and 22 percent, respectively (Figure 5, Panels A and B).

In contrast, government outlays at the tertiary level in Korea were far below the OECD average (Panel C), reflecting the fact that around 80 percent of university students attend private institutions. Consequently, outlays per primary school student are nearly double those for tertiary students (Figure 6).

Challenges Facing Korean Education

The emphasis on higher education and intense competition to enter highly ranked universities create several problems. With around three-quarters of high school graduates advancing to higher education, Korea faces a mismatch between graduates’ skills and what firms demand. Consequently, small and medium-sized enterprises face chronic and severe labor shortages, while the youth employment rate (ages fifteen to twenty-nine) was 44 percent in 2021, well below the 53 percent OECD average. 

This mismatch is partly due to the decline in the share of students attending vocational high schools from 42 percent in the mid-1990s to 20 percent in 2024. Moreover, around half of vocational high school students go on to tertiary education. The emphasis on tertiary education puts secondary teachers under pressure to focus on the university entrance examination rather than creativity, critical thinking, collaboration, and communication.

As in other East Asian economies, after-school education, notably in hagwons, is prevalent in Korea. In 2023, 78.5 percent of primary and secondary school students participated in after-school education, according to the Ministry of Education. One of the main objectives is to gain a head start in preparing for the College Scholastic Ability Test and gain admission to the top universities, which can lead to a “golden ticket”—employment in large corporations or government.

However, after-school tutoring has several negative effects. First, it tends to exacerbate socioeconomic inequalities as children in higher-income families tend to receive more and higher-quality after-school education (Figure 7). Second, long study hours can harm student well-being, a multidimensional concept that looks beyond traditional economic measures, including GDP, to evaluate what truly matters in people’s daily lives. Third, students may prioritize after-school education, thus reducing their engagement in school-based learning.

After-school education also imposes a severe financial burden on parents. Monthly average expenditure for private tutoring per student has increased since 2015, reaching KRW 434,000 (USD 324) (Figure 8), roughly 10 percent of average household disposable income in 2023 (Figure 7). Consequently, parents with three children could spend nearly a third of their income on after-school education.

International comparisons indicate that the prevalence of after-school education is negatively associated with a country’s total fertility rate. Nearly half of Korean parents say the cost of after-school education is very burdensome, and 27 percent cite it as one of the major reasons for Korea’s extremely low fertility rate.

Conclusion

Korea’s education system has led to outstanding results, driven by its emphasis on primary and secondary schools. Looking forward, it must adapt to the business sector’s demands for skills. Overcoming the mismatch requires convincing parents and students that admission to prestigious universities is not the only path to success. A greater role for TVET would help meet labor shortages and reduce the heavy financial burden that parents bear for after-school education. 

Randall S. Jones is a Non-resident Distinguished Fellow at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

This material is distributed by KEI on behalf of the Korea Institute for International Economic Policy. Additional information is available at the Department of Justice, Washington, DC.