Education’s value rises in crisis but funding falls

The employment gap between young people who have a high level of education and those who abandon their studies earlier has widened during the economic recession, according to the latest Education at a Glance 2013 published by the Organisation for Economic Co-operation and Development, or OECD. But while the value of education has risen during the crisis, investment in the sector is falling, says the report.

Using more than 20 indicators, the report covers the national education systems from pre-primary school to doctoral level of the 34 OECD countries, plus G20 members Argentina, Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.

It includes new indicators on links between educational levels and employment; numbers of students entering and completing tertiary studies; higher education funding and tuition fees; and international student mobility. For the first time the report demonstrates how obesity and smoking rates correlate with educational attainment.

Education and unemployment

Unemployment rates across OECD countries are 13% among people who left school before obtaining an upper secondary education – nearly three times higher than for those who have a tertiary education (5%), the report says.

“Educational attainment has a huge impact on employability, and the crisis has strengthened this impact even further,” writes OECD Secretary General Angel Gurria in the report’s editorial. “Between 2008 and 2011 the unemployment gap between those with low levels of education and those with higher levels of education widened across all age groups.”

The level of education also has an impact on earnings, which, for adults educated to tertiary level, were more than 1.5 times higher than for those who left after upper secondary school. A degree clearly pays off in the long run, as the “wage premium for higher education increases with age”, says Gurria.

“A 25- to 34-year-old with a tertiary education earns 40% more, on average, than an adult of the same age who has only a secondary education, while a 55- to 64-year-old earns 73% more. Educational attainment – besides a successful start in employment – thus has long-lasting and mutually reinforcing effects over a lifetime.”

The proportion of 20- to 29-year-olds in education rose from 22% in 2000 to 29% in 2011. Across OECD countries, 39% of 25- to 34-year-olds had a tertiary qualification in 2011. In the first years of the recession changes in enrolment rates, employment rates and investment in education indicated how education and skills determined how individuals, families and societies fared “during the most challenging economic and social crisis in recent history”, says Gurria.

“Highly educated young people from fields of study in high demand found a job easily; for others a tertiary qualification did not bring the expected rewards, either because [the] labour market was contracting too much or because their chosen field of study was already saturated or not aligned with the needs of the labour market.”

Students in tertiary education

In Australia, Denmark, Finland, France, Japan and Spain more than 75% of students entering a tertiary programme graduate with a first degree, compared to less than 60% of students in Hungary, New Zealand, Norway, Sweden and the US. Doctorates represent only a small proportion of tertiary programmes but the graduation rate has doubled over the past 16 years.

The indicators showed “no clear relationship between the amount of tuition fees charged by ‘type A’ higher education institutions and completion rates”.

Social outcomes of education

For the first time, the report looks at two health indicators: obesity and smoking. On average, across 24 OECD countries, about 19% of adults are obese, and smoking is still responsible for about 10% of adult deaths worldwide in spite of a decline in rates of smoking by about a fifth over the past decade.

Findings include that adults with more education are less likely to be obese or to smoke daily. The reduction in obesity rates linked to educational attainment is much greater among women and in countries with higher-than-average levels of obesity. The reduction in smoking rates by educational attainment is much greater among men than women, and also greater in Central European and predominantly English-speaking than in other OECD countries.

Countries with high levels of obesity, such as Chile, New Zealand and the UK, showed a “particularly steep education gradient” averaging 15 percentage points, compared to an average of eight points in countries with low levels of obesity: The Netherlands, Norway and Sweden.

Across 23 OECD countries covered by the smoking indicator, 30% of adults smoked daily, with the incidence particularly high (at 37%) among those educated below upper secondary level, compared to 21% of those with tertiary education. The Czech Republic, Estonia, Hungary, Poland, Australia, Canada, New Zealand, the UK, the US and Norway showed especially high “education gradients”, with adults educated to at least tertiary level half as likely to be smoking as those with an education below upper secondary level.

Education spending

The report says OECD countries spent on average US$13,528 for each tertiary student – nearly twice the amount as that per primary school pupil – though this included research and development expenditure that represented an average of 31% per student.

But the economic crisis has ended the previous long-term trend of increasing investment in education, and public spending between 2009 and 2010 as a percentage of gross domestic product (GDP) fell by an average 1% in the OECD, says the report.

Between 2005 and 2010 public and private spending per tertiary student fell in eight of the 31 countries surveyed – Austria, Iceland, Israel, New Zealand, the Russian Federation, Switzerland, the UK and the US – as expenditure did not keep up with expanding enrolments.

Excluding R&D and ancillary services, expenditure on core education provision in higher education institutions averaged US$8,889 per student in the 31 countries, ranging from US$5,000 or less in Argentina, Estonia and the Slovak Republic to more than US$10,000 in Austria, Brazil, Canada, Ireland, The Netherlands and Norway, and more than US$19,000 in the United States.

The report says public expenditure devoted to tertiary education in the OECD amounted to less than a quarter – 23.5% – of total public expenditure on average. In OECD and G20 countries, percentages ranged from 15.8% in Korea to 35.4% in Canada.

In 2010, OECD countries spent an average of 6.3% of GDP on education institutions at all levels, with tertiary education accounting for a quarter of this, or 1.6% of GDP. But Canada, Chile, Korea and the US spent between 2.4% and 2.8% of GDP on higher education institutions.

Tuition fees and public support for students

OECD and G20 countries differ significantly in the amount of tuition fees charged by their higher education institutions, ranging from no fees in eight countries to more than US$1,500 for national students in a third of the 26 OECD countries for which data were available, says the report.

An increasing number of OECD countries are charging international students more than local students. For example, in Austria average tuition fees are doubled for students who are not citizens of the European Union or European Economic Area countries.

Canada, Denmark, Ireland, The Netherlands, New Zealand (except for foreign doctoral students), Poland, the Slovak Republic, Slovenia, Sweden, Switzerland, Turkey, the UK and the US have similar policies. In Australia international students are not eligible for the support available to nationals.

About half of the 26 countries surveyed differentiate tuition fees by field of education in first-degree programmes. Chile and New Zealand show the widest spectrum of fees with differences between the lowest and highest of up to US$2,963 in Chile (US$4,034 for a course in education, and US$6,997 for one in agriculture), and US$2,744 in New Zealand.

The main reason for varying fees in Ireland, New Zealand and the UK is the public cost of the field of studies. In Australia, differences are linked to skills shortages in the labour market and the level of salaries graduates can expect to receive; in the US, they reflect differences in tuition fees among institutions, not among fields of education within an institution.

In most countries tuition fees for second and further degree programmes are generally not much higher than those for first degrees in public and government-dependent private institutions. Exceptions are in Australia, Chile and the UK.

High entry rates into higher education in some countries that charge no tuition fees are probably due not only to the absence of fees, but also the highly developed financial support systems for students. Those that offer loans with income-contingent repayment to all students combined with means-tested grants can help to promote access and equity, while sharing higher education costs between state and students.

OECD countries spend on average 22% of public higher education budgets on student and household support, and more than 25% in Australia, Chile, Denmark, Iceland, Japan, The Netherlands, New Zealand, Norway, the UK and the US.

Only the Czech Republic, Mexico and Switzerland spend less than 7%. Iceland provides only student loans, while other countries – Australia, Chile, The Netherlands, New Zealand, Norway, Sweden, the UK and US – make available a combination of grants and loans.

The report presents four models illustrating different countries’ approaches to funding tertiary education: countries with no or low tuition fees but generous student support systems (the Nordic countries); those with high tuition fees and well-developed student support systems (Australia, Canada, The Netherlands, New Zealand, the UK and the US); those with high tuition fees but less-developed student support systems (Chile, Japan and Korea); and those, mostly European, with low tuition fees and less-developed student-support systems (Austria, Belgium, the Czech Republic, France, Ireland, Italy, Mexico, Poland, Portugal, Switzerland and Spain).

Who studies abroad and where?

According to the OECD indicators:
  • • During 2000-11 the number of foreign tertiary students enrolled worldwide more than doubled, with an annual average growth of almost 7%.

  • • Australia, Canada, France, Germany, the UK and the US receive more than 50% of all foreign students worldwide.

  • • In 2011 nearly 4.3 million students were enrolled in higher education outside their country of citizenship. In descending order, Australia, the UK, Switzerland, New Zealand and Austria enrolled the highest percentages of international students.

  • • Asian students represented 53% of foreign students enrolled worldwide, the largest numbers coming from China, India and Korea.

  • • Numbers of foreign students in higher education in OECD countries were on average nearly three times the number of students from OECD countries studying abroad.

  • • About 83% of all foreign students are enrolled in G20 countries, while 77% of all foreign students are enrolled in OECD countries – proportions that have remained stable during the past decade.

  • • International students from OECD countries mainly come from Canada, France, Germany, Italy, Japan, Korea, the Slovak Republic, Turkey and the US.

  • • International students represent 10% or more of the enrolments in tertiary education in Australia, Austria, New Zealand, Switzerland and the UK. They also account for more than 30% of enrolments in advanced research programmes in Australia, The Netherlands, New Zealand, Switzerland and the UK.
But Europe is the top destination for students abroad, hosting 48%, followed by North America with 21% of all international students. The number of international students in Oceania has tripled since 2000, although the region hosts less than 10% of the total. Asia, Latin America and the Caribbean are also seeing growing numbers of international students, reflecting the internationalisation of universities in an increasing number of countries.

The share of international students choosing the US dropped from 23% in 2000 to 17% in 2011, and the share choosing Germany fell by almost three percentage points. But those choosing Australia, Korea, New Zealand and Spain as their study country grew by at least one percentage point, and those going to the UK and the Russian Federation grew by two percentage points.

Language is one underlying factor in students’ choice of a country. Countries with a widely used language of instruction such as English, French, German, Russian and Spanish are leading destinations for foreign students. Japan is an exception; although its language is not widely used around the world it enrols large numbers of foreign students, 93% of them from Asia. Other factors for choosing a destination include quality of programmes, tuition fees, and immigration policy.