78597 Quality Education Counts for Skills and Growth June 2013 1 Authors: This material has been prepared by Clark Matthews, under the supervision of Harriet Nannyonjo and Peter Holland of the Education Unit of the Latin America and the Caribbean Region of the World Bank. The content draws mainly on the following key literature: World Bank (2003). Caribbean Youth Development: Issues and Policy Directions; World Bank (2007). Education Quality and Economic Growth; World Bank (2011). Skills Strategy Options for the OECS; World Bank (2012). Education to Increase Productivity, Growth, and Social Development in the OECS; World Bank (2013). World Development Report: Jobs (2013). The Caribbean Knowledge Series is an occasional series that presents World Bank knowledge in an accessible format. It is meant to assist knowledge sharing across the region and trigger policy dialogue on topics relevant for the Caribbean. This note was prepared to support the participatory policy dialogue in the context of the Caribbean Growth Forum (CGF). The CGF is an initiative facilitated by the Compete Caribbean Program, the Inter-American Development Bank, the World Bank and the Caribbean Development Bank, with the support of the Canadian International Development Agency, the United Kingdom’s Agency for International Development, CARICOM Secretariat, the University of the West Indies, the European Union and Caribbean Export. It aims to facilitate a multi-stakeholder dialogue to identify practical solutions for the growth challenge in the Caribbean. To learn more about the CGF methodology and progress in each Caribbean country visit: http://caribgrowth.competecaribbean.org/ Disclaimer: The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development / The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Visit the entire “Caribbean Knowledge Series” collection at: http://worldbank.org/lac Design & Concept by Room Grupo Creativo | www.room.com.do Cover Photo: World Bank Photo Library 2 3 Quality Education Counts for Skills and Growth The quality and relevance of education are manufacturing and agriculture sectors, which have paramount to achieve economic growth. historically been the main drivers of economic International research shows that the subject matter growth and employment, are quickly giving way to learned and skillset developed in the classroom is services. Today, the services sector (comprised of the foundation for future success in the work place, tourism, financial services and government) is the and serves as a superior predictor of economic largest source of employment, accounting for 80 growth compared with the number of years of percent of the workforce in OECS countries3 and school1. One recent study, using a database of a comparable level in other Caribbean countries4. comparable test scores for over 50 countries, finds that a single standard deviation difference in Caribbean countries have taken significant strides tests scores between countries equates to roughly to increase enrollment in primary and secondary 2 percentage points in annual long-term GDP education and have allocated considerable growth2. These findings hold true across high- public resources to the education sector. For income, middle-income, and low-income countries many years the focus of the international education and all geographical regions. Despite significant community was on ensuring access to and duration investments in formal education, economic growth of studies. Caribbean countries perform well on in the region has slowed in recent years and there these dimensions. Since 1960 the average years is a need for improved labor productivity. of educational attainment of the adult population has increased from 4.3 to 10.3, a rate today that is Achieving sustained economic growth through comparable with the South American average and enhanced productivity requires quality education approaching the average of OECD countries. Many that prepares students for the labor market. The of the Caribbean countries have achieved near labor market, together with the economic landscape universal enrollment at the primary and secondary of the Caribbean, is changing fast. Falling trade level (such as Aruba, Belize, Barbados, Grenada, barriers, shifts in global production patterns and and Guyana). Access to higher education remains technological change have fundamentally altered low with less than fifteen percent of secondary the nature of production in all areas of economies. school graduates going on to post-secondary In so doing, they have radically modified the education. structure of occupations and skills, and thus the demands on education. In the Caribbean, the 1 See: World Bank (2007). Education Quality and Economic Growth; and World Bank (2013). Education to Increase Productivity, Growth, and Social Development in the OECS. 2 Hanushek, E. A., & Woessmann, L. (2007). The role of education quality for economic growth. Policy Research Working Paper Series 4122 3 The Organization of Eastern Caribbean States (OECS) consists of seven member countries (Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Lucia, St. Kitts and Nevis, and St. Vincent and the Grenadines) and two associate members (Anguilla and the British Virgin Islands). 4 Blom and Hobbs (2008) in World Bank (2011). Skills Strategy Options for the OECS. 4 Average Educational Attainment of the Adult Population, 1960-2010 1960 1970 1980 1990 2000 2010 Barbados 5.5 9.5 9.9 10.0 9.6 10.5 Cuba 5.0 7.8 9.9 11.8 10.3 13.1 Dominican Republic 3.3 4.6 6.1 7.7 7.8 9.0 Haiti 1.2 1.8 3.0 5.4 6.4 6.3 Jamaica 4.3 5.5 7.8 8.8 10.9 12.0 Trinidad and Tobago 6.6 7.5 8.1 9.7 10.7 11.1 Belize 8.8 8.2 8.9 9.8 8.9 10.1 Caribbean Average 4.3 6.1 7.5 8.9 9.3 10.3 South American 4.5 5.9 7.2 8.3 8.9 10.5 Average OECD Average 7.7 9.0 10.1 10.8 11.3 12.1 Source: Barro and Lee, 2010 in World Bank 2013 (forthcoming)   The strong commitment to education is clear when communication technology and other disciplines looking at the high level of education expenditure deemed critical for success in the work place. Even relative to GDP, which compares favorably to more worrisome, are the reports of poor student the OECD average of 5.2 percent of GDP. St. CSEC performance on test items that require Kitts and Nevis is amongst the highest relative critical thinking, analysis or communication. spenders in the region allocating 9.3 percent of Despite having received up to 11 years of formal GDP to education. St. Lucia and Barbados spend education, school leavers often struggle greatly 6.6 percent and 6.9 percent of GDP on education, to find employment. This fact is most pronounced respectively. Antigua & Barbuda is at the other end amongst the youth cohort – inclusive of 15 to 29 of the spectrum, allocating 3.9 percent of GDP. years olds – where the rate of unemployment is double to quadruple that of adults in the region. Despite the high level of investment, quality of education in the Caribbean remains low. In this dimension, Caribbean countries have significant room for improvement. The average pass rates for standardized tests in core subjects such as English and Mathematics are less than 50 percent, and many students lack basic skills in information and Education expenditure as % of GDP AnGgua  &  Barbuda   3.9   Dominica   5.0   Grenada   5.2   OECD  Average   5.2   St.  Lucia   6.6   Barbados   6.9   St.  Ki0s  and  Nevis   9.3   0   2   4   6   8   10   Source:  UNESCO  Ins1tute  for  Sta1s1cs,  2008.   5 Caribbean Secondary Education Certificate (CSEC) Pass Scores, 2006-2009 From a formal education standpoint, these less are considered to be in high demand (i.e. Sciences, than satisfactory outcomes point to systemic Engineering, Mathematics). issues at each level of the education system. Using a systems approach5 to analyze sector issues, •Unqualified teachers: Recent international the following emerge as the four key areas in the evidence shows that the quality of teaching is Caribbean context: the most important determinant of cognitive achievement. A chronic challenge in the Caribbean •Early childhood development: Early childhood is attracting and retaining qualified teachers. This is education and care interventions are essential particularly pronounced in core subject areas. On to build a foundation in the early years to ensure average, 21 percent of Mathematics and English the full cognitive, socio-emotional, linguistic, and teachers are unqualified in the subject matter, physical development of a child. Access to these and this rate is over 80 percent amongst Science interventions varies across the region, with those teachers in OECS countries. in rural and lower socio-economic classes least likely to attend. As a result, some children lack •Poor accountability: International evidence shows the foundational skills when entering the primary that the level of local autonomy, which empowers school stream. schools to make appropriate educational decisions that reflect their local environment and situation, is •Higher education: Higher education is key to correlated with quality. Education systems in the improvement in growth and productivity because Caribbean tend to be very centralized, providing it provides high level skills and research to schools with minimal decision-making authority. apply to current technologies and develop new technologies, both of which are key to growth. Quickly evolving skills demands require new The recent global economic and financial crisis has responses from training and education systems created urgency to focus on areas for improvement alike. Addressing the skills gap is a priority. The of productivity, and improve competitiveness in sectoral shift experienced by Caribbean countries, the global economy. Tertiary education has a big together with the digitization of business processes role to play in addressing this challenge in the and production technology, has rendered many Caribbean. Less than 15 percent of students attend repetitive, manual jobs obsolete, while increasing post-secondary education in the OECS. Of this the profile for jobs that require non-routine group, only a small portion enrolls in programs that skills. Coupled with the increasingly competitive 5 For more on a systems approach to education analysis and reform, see World Bank, Education Strategy 2020 6 landscape, the foremost implication of this shift As work places continue to be transformed, is the demand for employees with vastly different employees will require constant skill upgrading. All skillsets. Employer surveys in the region show a types of businesses and organizations are tasked high demand for skills that increase trainability of with recruiting employees and upgrading their employees. These skills are acquired, developed, skills in line with their operational needs. This is a and honed in the education system from ECD cost that employers must manage in order to be through secondary school. These are in large part competitive in a global economy. The absence appropriate workplace skills; non-routine skills such of the required skills and competencies amongst as team work and problem solving; and including a employees has resulted in high costs to employers strong grounding in numeracy, literacy, and social and under training of employees. The evidence skills. In some countries, such as Grenada, enterprise shows that employers would do more training if surveys have shown that the lack of appropriate entry skills were better and costs lower. skills by workers is a fundamental constraint on business. Along with the direct economic costs to International experience demonstrates that private firms and society, the misalignment of skills when employers have strong voice in curriculum will, if unaddressed, continue to hinder economic and school management they will enter into growth and lead to higher unemployment and partnerships that lead to significant impact on the higher migration rates for highly skilled individuals. employment chances of graduates7. Improved synergies between the public and private sector A multi-pronged approach between the public are key to develop human capital in the Caribbean. and private sector is required to achieve effective The private sector is more attuned to the skills and high quality skill development. Contributions and changing market conditions that affect the from both the public and private sector are critical Caribbean economies. For these reasons, a more to foster and sustain skill development at the nuanced, participatory approach in which the different stages of a worker’s career. The formal private and public sector work in collaboration education system is best placed to provide the to share knowledge, identify the types of skills, foundational cognitive, non-routine, and soft skills and determine a cost-effective, quality approach that employees require to excel in the labor market. through which they can be developed is required. This approach could include employers Top 10 Skill Priorities Identified by contributing to the design and enrichment of Employers 6 the curriculum, with integration of career and academic courses and providing work-based 1 Positive Work Habits learning opportunities for students. 2 Communication Enhancing education quality, skills, and labor 3 Technical productivity requires robust data collection systems. Accurate, comprehensive, and timely 4 Writing data are required to promote effective policy- 5 English making. Currently data are insufficient to effectively assess the skills gaps and inform policy 6 Mathematics makers and private sector partners as they work to enhance the education system. More information 7 Problem Solving is required regarding the depth of the skills 8 Reading mismatch and the factors contributing to it. As the Caribbean economies continue to evolve, accurate 9 Computer employment surveys and administrative data are 10 Team Work needed to identify the industries of the future and the skillsets and expertise that will be required to fill these jobs. 6 Hickling Corporation (2008). Grenada Skills for Inclusive Growth Project: Employer Needs Survey. 7 World Bank (2011). Skills Strategy Options for the OECS. 7 worldbank.org/lac 8