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Publications:Focus on: Education budgets at a time of crisis: how much can make a difference?

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Focus on: Education budgets at a time of crisis: how much can make a difference?

Date of publication: 12 July 2013

'Europe needs well-educated highly skilled staff to boost economic growth' echoes a familiar mantra from the European Commission. But how much investment in education is actually needed for an economy to thrive? And how much of a priority should educational spending be at a time of crisis? Although the prevailing orthodoxy is that educational investment is the best catalyst for economic growth, there are dissenting voices. Indeed some very prominent thinkers consider that education will never solve underlying structural problems in society, and spending on education could create new problems. So what are the key points of this debate, and how have countries actually reacted to the economic crisis?

In line with the strongly held conviction that education and training play a crucial role in driving economic growth and jobs, the European Commission has repeatedly called on Member States not to cut their spending for growth-friendly policies such as education. This message has been repeated and intensified despite, or perhaps because of, the economic crisis. In a perspective where education is viewed as key to rebooting the economy, the call for increased investment seems logical.

Dirk Van Damme, Head of the OECD’s Innovation and Measuring Progress division, also believes that the evidence supports this view. In his article Education: the best protection against an economic crisis, he recognises that at the onset of the current economic crisis in 2007-2008, no one was truly in a position to predict its impact on education. Now however, taking findings of the 2013 Education at a Glance publication into account, he says that the message is clear: 'it is a person’s education that determines whether he or she will be extremely or only moderately exposed to the economic and social risks in times of crisis'. For Van Damme, increasing education investment at times of economic crisis is therefore simply common sense.

Expert opinions on the topic, however, are not uniform. Paul Krugman, a Nobel prize winner in economics, stated in a recent New York Times article that today 'highly educated workers are as likely as less educated workers to find themselves displaced and devalued, and pushing for more education may create as many problems as it solves'. The reasons for this pessimistic point of view lie, among others, in the view that the skills acquired through education are increasingly short-lived: '…what will happen to us if, like so many students, we go deep into debt to acquire the skills we’re told we need, only to learn that the economy no longer wants those skills?', he asks, making reference to fast-paced technological change and to persisting inequalities in US society despite increasing education levels.

According to Krugman investment in education is secondary to the real challenge: redressing inequality in society. This viewpoint is also echoed in the 2009 book, 'The Spirit Level' by epidemiologists Richard Wilkinson and Kate Picket, that provides evidence across a range of societal areas to show that more equal societies fare better. They identify inequality as a particularly important factor in educational performance and early school leaving.

Whatever the merits of these arguments, how has investment in education changed in European countries as a result of the crisis? According to a new Eurydice Overview, there have been significant cuts in expenditure between 2008 and 2011 in several countries, notably Bulgaria, Greece, Ireland, Italy, Latvia and Lithuania. Sometimes these cuts have been accompanied by a decline in the proportion of spending on education compared with other sectors of the economy. It remains to be seen what the long-term impact of these cuts will be.

Nevertheless the majority of EU countries show a different picture, with slight increases in public education expenditure between 2008 and 2011. In addition, spending on education as a proportion of total public expenditure remained rather stable across the EU.

The facts from the Overview and the recent Funding of Education in Europe 2000-2012: The Impact of the Economic Crisis report clearly show that many European countries have tried to safeguard investment in education budgets during the early years of the current economic crisis, and they are being urged by the European Commission to keep it that way. And if indeed, as Van Damme states, the value of education increases during an economic crisis, this message seems to make sense. For, as Derek Bok, a former Harvard President put it: 'If you think education is expensive, try ignorance.'

Authors: David Crosier and Andrea Puhl