"They Offer Twice the Salary, How Can They Refuse?... Solutions to Prevent the Outflow of Science and Engineering Talent [BOK Focus]"

42.9% "Considering Overseas Employment Within 3 Years"... 70% Among Those in Their 20s and 30s
Need for Bold, Performance-Based Incentives... Government Must Enhance Effectiveness of Tax Benefits
China Grants Both Financial Rewards and Social Author

An analysis has found that an urgent overhaul of the monetary compensation system is needed to prevent the overseas outflow of science and engineering (STEM) talent. There is a growing call to enhance the effectiveness of research and development (R&D) investments, which have so far been distributed in a routine manner, and to expand the innovation ecosystem by opening up strategic technologies such as defense.

7 out of 10 Young STEM Professionals Considering Overseas Jobs... Signs of Accelerating Brain Drain

According to the "BOK Issue Note - Determinants of Overseas Outflow of STEM Personnel and Policy Directions" (Choi Jun, Jung Sunyoung, Ahn Byungtak, Yoon Yongjun) published by the Bank of Korea on November 3, 42.9% of domestic STEM professionals among over 2,700 surveyed in Korea and abroad were considering moving overseas for work within the next three years. Additionally, 5.9% already had concrete plans to work abroad. Notably, among those in their 20s and 30s, the proportion considering overseas employment within three years reached 70%.

Choi Jun, Senior Economist of the Macroeconomic Analysis Team at the Bank of Korea, explained, "STEM professionals in Korea are moving abroad, especially to the United States. The number of Korean STEM PhDs working in the US nearly doubled from 9,000 in 2010 to 18,000 in 2021." He added, "Since 2015, the net outflow has increased, particularly in the bio and ICT sectors."

The main reason for considering overseas employment was financial factors such as salary levels. Although the average salary gap between Korea and abroad varies by years of service, on average, overseas salaries were about twice as high as those in Korea. Non-financial factors such as research ecosystem and networks (61.1%) and guaranteed career opportunities (48.8%) also played a significant role.

Need to Shift to Performance-Based Compensation... Tax Benefits Still Limited

Choi emphasized the need to: ▲innovate the monetary compensation system (incentive structure) to attract top talent, ▲expand and enhance the effectiveness of R&D investment, and ▲strengthen the foundation for technology startups and expand the innovation ecosystem by utilizing strategic technologies such as aerospace and defense industries to prevent the overseas outflow of STEM talent.

He suggested, "It is necessary to transition to a flexible wage and compensation system based on performance. The government should enhance the effectiveness of tax credits for human capital investment and expand income tax reductions for key personnel." Currently, the government provides broad support for physical capital investment through integrated investment tax credits, but the scope and intensity of tax incentives for human capital remain limited.

Choi pointed out, "For example, in the case of the tax credit for research and human resource development expenses under Article 10 of the Restriction of Special Taxation Act, a high level of credit is applied to a wide range of industries and assets for facility investment (physical capital), but for human capital, it is often regarded as 'labor cost expenditure' rather than 'investment,' so the support is limited." He added, "The system is operated mainly for manufacturing and large enterprises, so its use by the service sector and small and medium-sized enterprises is also restricted." He further noted, "The credit criteria are also designed around expenditure (cost), so there is insufficient linkage with productivity improvement or skill enhancement."

China Grants Prestige with 'Academician' Title... "Need to Provide Both Compensation and Autonomy"

Interviews with leading scholars in STEM fields revealed calls to not only provide high levels of monetary compensation to outstanding researchers, but also to grant them authority to participate in science and technology policy design and autonomy over all aspects of research activities, such as hiring researchers and managing research funds. In China, the highest authority in science and technology, selected through recommendations from academia and industry, is called an "Academician (Yuanshi)," and they receive high monetary rewards and priority research funding, as well as exert influence in national science and technology policy advisory, research institute personnel, and operations. Choi stated, "The key is to provide not only financial compensation but also social prestige and honor," and suggested, "In our context, it is necessary to first consider tax benefits for companies."

He also emphasized the need to establish career pathways so that core researchers in their 30s and 40s and master's-level research practitioners can grow stably and over the long term in Korea, as well as to strengthen exchanges with overseas researchers and expand access to cutting-edge infrastructure. He added, "It is difficult to produce results if research performance is evaluated in the short term or if R&D budgets are allocated in a distributive manner. It is also necessary to consider institutional support for a 'talent circulation' structure, in which experienced and capable scholars can return to the domestic ecosystem, by establishing flexible organizational structures and incentive systems that allow for concurrent positions and extended retirement."

Strategic Technologies Should Be Opened to the Private Sector to Expand the Innovation Ecosystem... Need for Systems Enabling Research Beyond Retirement Age

There is also a claim that opportunities for failed entrepreneurs to try again should be expanded. Choi stated, "It is necessary to strengthen exit mechanisms such as mergers and acquisitions (M&A) and initial public offerings (IPO) to facilitate the realization of investment returns. The government should take the lead as an early adopter in advanced industries to drive technology validation and market formation." He emphasized that especially in security-related strategic technology sectors such as aerospace and defense, it is necessary to establish institutional safeguards and open commercialization pathways to enhance both private innovation and industrial impact.

Choi explained, "These frontier technologies have so far been exclusively managed by the government for security reasons, and the transfer and commercialization of technology to the private sector have been limited. However, if thorough institutional safeguards and technology protection systems are established, and private startups and STEM professionals are given opportunities to participate from the R&D stage, the potential for innovative applied technologies to be commercialized could increase significantly."

In fact, Israel has gradually opened up defense technologies to the private sector to increase market accessibility, and the Defense Advanced Research Projects Agency (DARPA) under the US Department of Defense has institutionalized commercialization pathways by collaborating with the private sector from the early stages of developing high-risk, fundamental technologies. Choi noted, "These overseas cases suggest that, in Korea as well, there is a need to move beyond the government simply 'possessing' strategic technologies and to consider, from a long-term perspective, models that gradually allow private sector access under strict security and technology management systems."

Finally, Choi stressed, "There must be an institutional foundation that allows outstanding talent to continue research even after retirement age." He said, "Due to the retirement age, scholars over 60 find it difficult to even supervise doctoral students, and if they receive exceptional offers from abroad, they have no choice but to leave. This is a national loss, so institutional reform is urgently needed." Seoul National University and POSTECH have responded to this issue by extending the retirement age from 65 to 70, a measure intended to preserve accumulated research achievements and global networks built over many years.