Sélecteur de langues
Brussels, 8 September 2006
In a Communication to the Council and to the European Parliament adopted on 8 September, the Commission underlines that across Europe, in the context of public budget constraints, greater emphasis is being placed on improving the economic dimension of education and training, but the social dimension of learning is often ignored with a high cost e.g. in terms of crime, health and other social expenditures.
The communication is not an evaluation of Member States’ systems. Instead, based on evidence from economic and social research, the Communication makes clear that education and training policies must, and can, combine the twin objectives of efficiency and equity in seeking to maximise their economic and social potential. There is no necessary trade off between them. The Communication considers each level of the lifelong learning continuum in turn and sets out key messages about what is needed to strengthen efficiency and equity throughout the system.
1. What do you mean by ‘equity’ and ‘efficiency’?
The Commission and the Member States have agreed on the following definitions for these terms:
Equity is viewed as the extent to which individuals can take advantage of education and training, in terms of opportunities, access, treatment and outcomes. Equitable systems ensure that the outcomes of education and training are independent of socio-economic background and other factors that lead to educational disadvantage and that treatment reflects individuals’ specific learning needs. Inequity in relation to gender, ethnic minority status, disability and regional disparities etc. is not the prime focus here, but is relevant as far as it contributes to overall socio-economic disadvantage.
Efficiency involves the relationship between inputs and outputs in a process. Systems are efficient if the inputs produce the maximum output. Relative efficiency within education systems is usually measured through test and examination results, while their efficiency in relation to wider society and the economy is measured through private and social rates of return.
2. Why is the Commission adopting this Communication?
The 2005 Spring European Council stressed that lifelong learning is central to the achievement of the Lisbon objectives, confirming that investing more and better in human capital is at the heart of the Lisbon strategy.
Following from this, the 2006 Spring European Council concluded that: “Education and training are critical factors to develop the EU’s long-term potential for competitiveness as well as for social cohesion.... Reforms must...be stepped up to ensure high quality education systems which are both efficient and equitable. ... Investments in education and training produce high returns which substantially outweigh the costs and reach far beyond 2010. They should be targeted on areas where economic returns and social outcomes are high”.
Today’s Communication is the Commission’s contribution to the debate.
3. To what extent are the issues of equity and efficiency already taken into account by Member States?
While equity is a strong underlying principle of all education systems, there is evidence that current reforms are placing the primary emphasis on efficiency and a search for greater cost effectiveness. There is a risk that equity may tend to be left to one side. Where equity is considered it is not seen in combination with, or as mutually reinforcing of, efficiency. However, recent research - presented in detail in the Staff Working Document that accompanies this Communication - shows that policies can be both equitable and efficient.
The present Communication and its accompanying Staff Working Paper draw on research and research projects from across Europe and beyond. Each of the policy recommendations is based on examples of policies which have worked well in practice (see the table with the country positions in the appendix). Indeed, various Member States perform well on equity and efficiency at different levels of the education system.
The Commission stresses that education and training bring positive effects to growth and employment. There are many measurement methods that show this to be true. One common way is to estimate the private, fiscal and social rates of return of investing in human resources. The internal rate of return (ROR) on investment in education is the discount rate that equates the stream of benefits to the stream of costs. The private ROR refers to costs and benefits realised by the individual. The fiscal ROR considers the costs of, and benefits from, education in terms of public finances. The social ROR includes public costs and benefits in terms of growth rates of education. According to research, the rates of return for an individual and society from one additional year of education are around 6-10%. This implies that the benefits of investing in education outweigh the initial costs and give a higher rate of return than investments in physical capital and most financial assets.
Figure 1 helps visualise the concept. It shows that efficiency and equity can be complementary, particularly when investment and reform is concentrated at the earliest stages of life. Evidence suggests that the link between efficiency and equity is less strong when interventions take place later in the lifecycle and policy-makers face more difficult choices as the costs of policies to improve equity are much higher. Of course, those individuals who have been let down in the past by compulsory education systems may need educational interventions at a later age, but policies should concentrate on eliminating the need for remedial action as much as possible.
Figure 1: Returns to investment at different levels of education
[ Figures and graphics available in PDF and WORD PROCESSED ]
Source: EENEE’s adaptation of Cunha et al. (2006).
Unemployment rates can also be used to show the benefits of education and training both to individuals and to society. Education makes a strong positive contribution to employment prospects, and research shows that the EU-25 unemployment rate ranges from 12.6% for people with less than upper-secondary education to 5% for people with tertiary education. Productivity figures also reveal the benefits of education, since individual knowledge and skills raise productivity and increase a society’s ability to develop and adapt to new technologies. Evidence shows that, in the EU, the short-term impact of one year of additional education would be an increase in aggregate productivity of 5-6%, with another 3-5% in the long-run as a result of the impact of higher education on technological progress.
Moreover, improving the distribution of educational outcomes through redistributive and targeted policies towards the most disadvantaged, as is done in the Nordic countries for example, can make an important contribution to social cohesion by reducing income inequality and enhancing intergenerational social mobility.
5. What are the financial costs of inequities in education and training?
It is important to recall that too often existing education and training systems unfortunately reproduce or even reinforce existing inequities.
The costs of not ensuring that there is equitable access to and treatment in education and training can be enormous. In financial terms, by ignoring equity concerns, society loses out on the benefits of education (forgone costs) and incurs direct costs for the state. These costs consist of income tax losses, increased health-care expenditures, higher crime and delinquency costs, and greater demands on public assistance funds. The most socio-economically disadvantaged are the most likely to have the lowest levels of education and they are, therefore, at increased risk of unemployment and social exclusion. Inequity in education therefore entails costs in terms of higher state insurance/health payments and welfare benefits.
Research results can illustrate the extent of the problem. In the US, the average gross cost over the lifetime of one 18-year-old who has dropped out of high school is an estimated 450,000 US dollars (350,000 euros). This includes income tax losses, increased demand for health-care and public assistance, and the costs of higher rates of crime and delinquency. In the UK if 1% more of the working population had A-levels rather than no qualifications, the benefit to the UK would be around £665 million per year through reduced crime and increased earning potential.
A more equitable education and training system implies a more efficient welfare system and more sustainable public finances.
6. Why is the Commission encouraging Member States to develop a ‘culture of evaluation’?
The ‘culture of evaluation’ refers to the need for evidence-based policy making. When formulating their policy priorities, Member States need a full understanding of what is happening in their education and training systems. However, the results of investment in education and training only build up over time, so they will need a statistical infrastructure capable of collecting appropriate data, and mechanisms to assess progress and measure success.
7. Why does the Commission stress the importance of pre-primary education?
Research evidence shows that participation in high-quality and free pre-primary education as in Belgium, Spain, France, Italy and Hungary has long-lasting benefits in terms of achievement and socialisation during individuals’ schooling and careers because it facilitates later learning. Repeatedly, studies have shown that early intervention programmes, especially those targeted at disadvantaged children, can produce large positive socio-economic returns which persist well into adulthood.
8. Why is early tracking detrimental to equity?
One policy with a substantial impact on the equity of opportunity in a school system is the timing of the “tracking” of students into different kinds of schools based on their ability. Early tracking is taken to mean the segregation of children into separate schools based on ability before the age of 13. Whilst this does not necessarily involve a division into academic/general and vocational tracks, in practice this tends to be the case. This definition does not include “streaming”, which involves tailoring the curriculum to different groups of children based on ability within one school.
Research shows that early selection into different tracks is wasteful and inequitable. Early tracking, i.e. at ages ten to twelve, is common in several European school systems as in Germany, Luxembourg, Netherlands, Austria and Liechtenstein but has an especially negative effect on children from families with low socio-economic status. It leads to segregation where (socio-economically) disadvantaged learners are led towards the more vocational tracks early in life. This prevents them from building up the more general key competences required in a knowledge-based economy. Therefore, postponing tracking to a later stage in the educational process can act as a policy to increase equity of opportunity at the school level.
9. The Commission argues that ‘free’ university education is not necessarily equitable — why?
It is commonly thought that a “free” system of higher education (one funded entirely by the state) is, of itself, just and equitable.
However, the opposite may prove to be the case. So-called “free” higher education systems imply direct public subsidies to higher education institutions so that the costs of higher education are borne by the state, not the user. Such systems can be regressive, however, if they benefit mostly middle and higher income families and reduce the progressive nature of the overall tax-transfer system. While fully publicly-funded higher education systems can have smaller redistributive impacts and partly compensate for their regressive nature, this occurs only in countries where a very progressive tax system exists.
Furthermore, while overall participation in higher education has increased in Europe over recent decades, this increase has not enhanced equity. While it has improved the absolute prospects of those from less advantaged backgrounds, it has not improved their relative prospects. The average annual increase in the participation rates of young people from low socio-economic groups has in most cases failed to keep up with the increase in the total participation rates.
Research shows that the main determining factor in participation in higher education is socio-economic background. The participation of young people in tertiary education has a strong correlation with the educational attainment of their parents and the socio-economic background of their families. In many countries, those whose parents have completed some tertiary education are twice as likely to participate in tertiary education as those whose parents lack upper secondary level qualifications.
10. What will be the follow-up to this Communication?
Member States clearly have the main role in tackling the challenges set out in this Communication. Nevertheless, in addition to the recommendations addressed to them, action is also necessary at EU level. The added value of a European approach is that diverse education and training systems can benefit from mutual learning and exchanges of best practice.
Within the framework of the revised Lisbon Strategy and the “Education and Training 2010” Work Programme, the EU supports Member States in the design and implementation of their education and training policies by facilitating the exchange of information, data and best practice through mutual learning and peer review. Efficiency and equity will be a priority theme in this work and the EU will provide particular support to develop a culture of evaluation and to exchange best practice on, for example, pre-primary education.
The Finnish Presidency is organising a major Conference “Lifelong
learning, equity and efficiency” on 28-29 September in Helsinki to discuss
the Communication. The Conference will highlight the relationship between equity
and efficiency in a lifelong learning perspective and look for good practices
and ways to address these aspects of education policy concurrently.
Communication on “Efficiency and Equity” - Country positions
 The Spring 2005 European Council underlined that “human capital is Europe’s most important asset”.
 Staff Working Paper, pp. 13-14
 Staff Working Paper, pp. 12-13
 Source: Eurostat (UOE data collection), 2004
 Source : Eurostat, 2003
 Source : Eurydice, Key Data on Education in Europe 2005, p. 163
 Source : Eurydice, Key Data on Education in Europe 2005, p. 99
The listed countries show a full degree of school autonomy for a majority of criteria (more than 22 of the 44 parameters included in this indicator).
 Source : Eurydice, Key Data on Education in Europe 2005, p. 85
 Source : Eurydice, Key Data on Education in Europe 2005, p. 289 (in Poland since 2005).
 “Public and private expenditure in educational institutions” (2002) covers all expenditures within an educational institution as transferred by the public sector (all government levels), the private sector (households, enterprises or other private organisations) or from abroad (international agencies and other foreign sources). Transfers from the government sector to the private sector which are subsequently spent on education in an educational institution are included once (for example public scholarships given to students who subsequently spend them on fees for attending education at a given educational institution). Expenditure on education outside educational institutions (purchase of books or stationery by households) is not covered.
 Tuition and/or registration fees payable by full-time students attending daytime courses for a first qualification
Source : Eurydice, Key Data on Education in Europe 2005, p.180
 Source : Eurydice, Key Data on Education in Europe 2005, p.178
(1) doesn’t apply for Scotland