Although it did help out, Korea's writing system still incorporated many Chinese characters. Also, literacy rate didn't really go up. If you look at pre-industrial Korea, many people were still illiterate. The Yangban (양반) class were the only ones able to read as the society was really based on agriculture and the farmers had no use for studying how to read or write at the time.

However, the development of hangul made writing and learning the language much easier.