Smart policies matter in education

by Dirk Van Damme
Head of the Innovation and Measuring Progress division, Directorate for Education and Skills

Education policies are meant for the future, they target society-wide outcomes in the next generation. But constructing these policies demands foresight and planning, while simultaneously dealing with difficult trade-offs in the present. Take Korea, a remarkable success story of fast increasing educational attainment which made the country one of the highest educated nations in the world: 64% of its 25-34 year-old population has a tertiary qualification. And the PISA and Survey of Adult Skills data show that this incredible educational revolution did not cause any decline in the quality of learning. Clearly, Korea is successful in preparing its young workforce for a highly-skilled technological economy. How did they do that? A new issue of Education Indicators in Focus sheds some light on the policy trade-offs that countries face when they want to raise the tertiary attainment rate in the young generation.

Korea has invested heavily in education in the second half of the 20th Century. All levels of education combined they spent 6.1% of GDP on education already in the year 2000, climbing to 7.6% in 2010, well above the OECD average of 6.3%. On tertiary education, they spent 2.6% in 2010, a full percentage above the OECD average of 1.6%. But, due to the many students that were served, the per student expenditure was quite moderate, as can be seen in the graph above, just under USD 10 000. The graph shows that there are many countries spending a lot more, but failing to produce a high number of graduates in the young population. Korea demonstrates huge value for money from investments in tertiary education.

Money clearly matters, but there are wide differences between countries in the efficiency on how it is spent. Raising budgets for tertiary education is a hard thing to do, especially in times of economic crisis, fiscal consolidation and austerity. The considerable increases in educational expenditure seen in the past ten years will not be repeated again. And shifting the cost for tertiary education to students and families is a popular alternative, but faces resistance and drawbacks. No doubt, the imperative for efficiency resounds.

Is having more students a good strategy? The number of students as a percentage of the 20-29 year-old population is a good indicator. It combines the effect of participation rates and the time spent in education to earn a degree. Korea only has an average number of students in the 20-29 age cohort. So, probably they are very successful in their studies and they complete them in a short time. Canada, another country with a highly-skilled young population, has even less, with 25% students among the 20-29 year-olds. In contrast, Germany, a country with relatively few tertiary graduates (less than 30% in the 25-34 year-old age group) has close to 32% of students among the 20-29 year-olds. Spending a lot of time in universities is not a good way to produce more graduates.

Investing in the future comes at a high a price, and not only in monetary terms. Is the labour market following? For the time being, Korea seems unable to absorb the entirety of its well-qualified youngsters in skilled professions. With 75%, graduate employment among their 25-34 year-olds with a tertiary qualification in Korea are among the lowest in OECD countries (average 82%). It could be questioned as to whether  the inclusion of employment in Korea was  sufficiently integrated into the educational policy mix. Whereas, the small country of Belgium appears to have been able to combine the policy trade-offs better: spending is average, student participation is slightly above the average, however, it has a high tertiary attainment and high graduate employment rate.  Sometimes, ‘middle-of-the-road’ policies combined with a smart policy mix offer the best prospects.