Gareth Morgan, Director of Gareth Morgan Investments
70% of French 18 year olds are in full time education or off-the-job training; in West Germany 81%, in the US 79%, in Japan 77%, and in Australia 60% of 18 year old youth are in education. But in Britain only 35% are – comparatively pathetic and a ratio which bodes ill for that country’s chances of reducing the permanent level of unemployment. All the developed countries are facing the prospect of unskilled jobs being exported to low labour cost countries. The greater international mobility of capital following on from the deregulation of the early 1980’s, continues to displace unskilled jobs from the expensive producers, shifting them to South America, Asia, and possibly Eastern Europe and Africa in future. This inevitability presents policymakers in developed economies with a substantial challenge to redesign their education systems, raising skill levels in appropriate areas, so the economic and social cargo that high permanent unemployment burdens a society with, will be avoided.
And New Zealand ? In 1991 only 26% of 18 year olds were doing University or Polytech training ! We are even less prepared to deal with the international competitive pressures on our labour force. These pressures will mount further over the next decade as the full force of international capital deregulation matures. Forecasting that our permanent level of unemployment is set to be at least 8%, is not unrealistic.
It is relevant then to consider our recent policy changes in the higher education arena and how far they go towards rectifying the surplus of low skilled labour. The most dramatic change recently has been the adoption of user charges, raising the direct cost of those wanting to improve themselves. While such a move isn’t all bad, providing an incentive to minimise waste of education facilities, it doesn’t solve the problem of average education standards being too low. The reform of education so far, (1) doesn’t give incentives for excellence – an ‘A’ bursary entitles the recipient to $200 pa-what a joke. Replacing universal entitlement to fees subsidies by significant scholarship rewards, like $5000 pa for an A bursary, is long overdue. (2) by imposing user charges biases access to education toward the children of the rich.
Poverty begets poverty, and low education levels become entrenched for such groups, so policy needs to smash this enslavement. The way is not for politicians to biff other peoples’ money at education via higher government expenditure, but rather to provide parents of these kids an compelling incentive to get them educated. That is, tie the parents’ disposable income levels to the education levels they push their children to. Lower their tax burden or alternatively, raise their universal entitlement to welfare payments in proportion to the success they have getting their kids up the education ladder. Smash t anti-education attitudes.
Sustainable solutions require bold supply responses, not wage and apprenticeship subsidies financed via vague promises of expenditure savings somewhere else. That option is licence for government spending to get further out of control. Reform of universal entitlement to welfare and targeting tax burdens must be at the forefront of the policy response.