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Economic ForumSt. Petersburg18 June 2011

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Graduates matter... For individuals

because skills have an increasing impact on labour market outcomes and social participation

For economies because failure to ensure a good skills match has both

short- term consequences (skills shortages) and longer-term effects on economic growth and equality of opportunities

…but more graduates do not automatically translate into higher incomes and higher productivity

Success with converting skills into jobs and growth depends on whether

– we know what those skills are that drive economic outcomes– the right mix of skills is being taught and learned in effective,

equitable and efficient ways– economies and labour-markets fully utilize their skill potential– Governments build strong coalitions with the social partners to find

sustainable approaches to who should pay for what, when and where .

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

1995Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

Graduate supply

Cost

per

stu

den

t

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

1995Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

United States

Finland

Graduate supply

Cost

per

stu

den

t

Japan

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2000Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

Australia

FinlandUnited Kingdom

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2001Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2002Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2003Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2004Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2005Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

AustraliaAustriaCzech RepublicDenmarkFinlandGermanyGreeceHungaryIcelandIrelandItalyJapanNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenUnited KingdomUnited States

0 10 20 30 40 50 60 700

5000

10000

15000

20000

25000

30000

2006Ex

pend

iture

per

stu

dent

at t

ertia

ry le

vel (

USD

)

Tertiary-type A graduation rate

A world of change – higher education

United States

Australia

Finland

United Kingdom

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The increase in the number of graduates has not led to a decrease in their pay

…which is what happened for low-skilled workers

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Net present value in USD equ.

Denmark

New Zealand

Sweden

Turkey

Norway

Spain

Australia

Netherlands

Korea

Belgium

Finland

Germany

OECD average

Canada

Austria

United Kingdom

Poland

Hungary

Czech Republic

Italy

Portugal

-350,000 -150,000 50,000 250,000 450,000 650,000

20,867

50,544

52,411

64,238

79,580

83,385

100,515

104,499

113,951

114,944

130,213

136,563

145,859

149,373

158,074

207,655

213,382

217,845

244,117

308,299

366,728

Foregone earnings Income tax Social contributions Transfers

Gross earnings benefits Unemployment effect Net present value in thousands of equivalent USD

USD equivalentC A8.2

Components of the private net present value for a male with higher education

1414 E

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Taxpayers are getting a good return too

1515 E

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Turkey

Korea

Spain

New Zealand

Sweden

Norway

Canada

Denmark

Czech Rep.

Australia

OECD average

Italy

United Kingdom

Poland

Portugal

Netherlands

Finland

Austria

Hungary

Belgium

Germany

0 50,000 100,000 150,000 200,000

21,753

23,994

26,808

31,144

44,990

43,419

62,141

81,017

83,236

84,538

86,404

86,599

95,318

95,867

96,585

103,461

107,507

117,246

161,347

167,759

179,199

Public cost and benefits for a male obtaining tertiary education

Public benefits

Public

costs

Net present value, USD equivalent

Chart A8.5USD

1616A

ndre

as S

chle

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r16

Sep

tem

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2009

Imp

act

of

inte

rnat

ion

al A

sse

ssm

en

ts

Making investment in skill development and utilisation more

efficient

Who should pay for what, when and how?Which is the right level of intervention

(regional and local dimension)?

How should financing and incentives (to employers and individuals)

be structured?

What are good models of policy evaluation to ensure efficiency/continuity of skills policies?

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Who pays for tertiary qualificationsExpenditure on tertiary educational institutions

as a percentage of GDP

Fin

lan

dD

en

ma

rkC

an

ad

aS

we

de

nS

wit

ze

rla

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Au

str

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No

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ran

ce

Ne

the

rla

nd

sIc

ela

nd

Isra

el

Ire

lan

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Sta

tes

Cze

ch

Re

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...

Slo

ve

nia

Po

lan

dN

ew

Ze

ala

nd

Po

rtu

ga

lG

erm

an

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pa

inH

un

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ryE

sto

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Un

ite

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in..

.R

ussia

n F

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...

Slo

va

k R

ep

u..

.M

exic

oA

ustr

ali

aT

urk

ey

Ita

lyK

ore

aJa

pa

nC

hil

e0.0

0.5

1.0

1.5

2.0

2.5

3.0

Public expenditure on educational institutionsPrivate expenditure on educational institutionsOECD average

% of GDP

B3.2

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Not just about more of the same

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Changes in employment shares by occupation

1960-2009, selected OECD countries

Australia, Austria, Belgium, Canada, Chile, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and United States.

Prof. and Tech.

Admin. and Manag.

Clerical Sales Service Farm Prod. and labour.

-30

-25

-20

-15

-10

-5

0

5

10

15

20

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Skill use by occupational groups

Source: PIAAC Field trial

Problem solvingTeamwork

Oral communication

Influence others

Plan own time

Plan others time

Fine motor skills

Gross motor skillsRead prose type texts

Read document type texts

Write

Advanced numeracy

Basic numeracy

Internet use

Computer use

-1.00

0.00

1.00

Total Service (low-skill) Goods Information (low-skill) Information (high-skill)

Managers Knowledge (expert)

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How the demand for skills has changedEconomy-wide measures of routine and non-routine task input

(US)

1960 1970 1980 1990 200240

45

50

55

60

65 Routine manual

Nonroutine manual

Routine cognitive

Nonroutine analytic

Nonroutine inter-active

(Levy and Murnane)

Mean t

ask

inp

ut

as

perc

en

tile

s of

the 1

960

task

dis

trib

uti

on

The dilemma for universities:The skills that are easiest to teach and test are also the ones that are easiest to digitise, automate and outsource

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HIGH-SKILL MATCH

MISMATCH-SKILL SURPLUS

LOW-SKILL MATCH

MISMATCH-SKILL DEFICIT 0%

10%

20%

30%

40%

50%

60%

Goods Service (low-skill) Information (low-skill)

Information (high-skill) Managers Knowledge (expert)

Skill mismatch by occupational groups

Source: PIAAC Field trial

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Thank you !