Education at a Glance 2010

 

Investing in the future Education at a Glance 2010

 

Every year Education at a Glance takes stock of where countries stand with their education systems and the progress they have made towards raising performance, improving equity and enhancing value for money. This year’s edition comes out at a time when all eyes focus on the twin challenges of making public finances sustainable while building the foundations for continued long-run economic growth.

Education is a large and growing item of public expenditure in most countries, with an average of 5.5% of GDP spent on education. And it is worrying that significant increases in spending per student over the past decade have generally not been matched with improvements in the quality of learning outcomes. At a time of shrinking budgets, only systems that are shown to be effective and efficient will make the grade, so countries must look for ways to generate greater value for money.

At the same time, education is an ever-more important investment to respond to the demographic and technological changes that are re-shaping labour markets. This year’s indicators show that, during the economic downturn, young people with low levels of education were particularly hard hit, with unemployment rates for those who had not completed high school rising by almost five percentage points in between 2008 and 2009. Most serious is the situation of 15-19-year-olds who are not in education, close to half of whom (45%) were unemployed in 2008 or out of the labour-force. People with tertiary degrees, by contrast, fared much better. The increase in unemployment levels for this group was less than two percentage points. And close to three quarters of tertiary graduates found a skilled job in their first years in the labour market.

With demand for education strong, investments in education pay large and rising dividends for individuals, economies and taxpayers. This year we highlight the benefits for taxpayers, as many countries are now struggling with the question who should pay for what, when, and how in education, particularly for university education. On average, a man with a university degree will generate USD 119 000 more in income taxes and social contributions over his working life than someone with a high-school degree only. Even after taking account the cost of university education, higher tax payments and social contributions from people with university degrees make tertiary education a good long-term investment for the government. The long-term gain to the public exchequer averages USD 86 000 in OECD countries, almost three times the amount of public investment per student in tertiary education.

Countries with low tertiary attainment currently pay up to four times higher labour-costs for university graduates than for people without upper secondary education, while that ratio should typically be around two to one. In a global economy, this can only be sustainable for countries with low overall labour costs.

 

Part of the variation in labour costs for individuals with higher education is linked to supply, as a short supply of university-educated individuals in relation to rising demand typically drives up the cost to employers. As the global demand for jobs moves up the skills ladder, it will be crucial for countries to develop policies that encourage the acquisition and efficient use of these skills to retain both high value jobs and highly skilled labour. Education systems have responded with a massive expansion of tertiary education.

 

On average across OECD countries, 35% of 25-34 year-olds have completed tertiary education, compared with 20% of 55-64 year-olds. As growth rates have differed widely across countries, Finland moved from rank 11 to rank 1 since 1995 (now at 63%), while the US dropped from 1st to 14th over the same period.
Importantly, the rapidly rising supply of better educated people has not led to a decline in their labour-market outcomes, which is what we have seen at the low end of the skills spectrum.

 

The fact that labour markets have absorbed the significant increase in individuals with tertiary education shows how rapidly labour market demand for skilled labour is changing. As labour markets change, adults will also need to be able to re-enter education to upgrade their competencies or to change their professions. While, across the OECD, more than 40% of the adult population already participate in formal and/or non-formal education in a given year, this varies significantly not just between countries but also across education and age groups. For example, individuals with a tertiary level of education are almost three times more likely to participate in further education than those who have not acquired an upper secondary level of education, which means that those who need such training most are least likely to benefit from it in current education systems.

[More and more people are looking to undertake education outside their home country. This generates benefits for the students concerned as well as academic and commercial benefits to receiving countries. In 2008 over 3 million tertiary students were enrolled outside their country of citizenship, an increase of 11% increase from the year before. New players are emerging in an increasingly competitive market for international education. Over the past decade, the Russian Federation expanded its market share by two percentage points and Australia, Korea and New Zealand expanded their share  by one percentage point respectively. Over the same period, the share of the U.S. dropped from 26% to 19%, and Germany, the United Kingdom and Belgium also lost ground. China accounts for 17% of all international students enrolled in OECD countries.]

Let me conclude. The knowledge society is here to stay, and requires a capable, highly qualified and innovative labour force. Managing the growth and development of educational systems in ways that improve access, enhance quality, increase performance and boost value for money will be a formidable task for public policy. It will require traditionally supply-driven education systems to develop effective mechanisms to understand and respond to the rapidly changing economic and social demands for competencies.

 

Good policies need to be based on a solid understanding not just of the development of skills, but also of how effectively economies use their talent pool, and of how better competencies feed into better jobs, higher productivity, and ultimately better economic and social outcomes. The future will measure the success of education systems no longer by how much countries spend on education or by how many individuals complete a degree, but by the educational outcomes achieved and by their impact on economic and social progress.

 

At the OECD, we are taking the challenge by developing a new Skills Strategy to help governments to: be responsive by ensuring that education and training providers adapt efficiently to changing demand; deliver quality and efficiency in learning provision so that the right skills are acquired at the right time, right place and in the most effective mode; provide the flexibility needed to allow people to study and train in what they want, when they want and how they want; reduce barriers to entry such as institutional rigidities, up-front fees and age restrictions and to ensure a sufficient variety of entry and re-entry pathways; and, last but not least, to develop efficient and sustainable approaches to the financing of learning.