Ladies and gentlemen,
Thank you very much for your kind invitation.
I have been asked to address a delicate issue: the financing of education.
I shall do this from my perspective as European Commissioner, which is of course somewhat different from that of a Member State politician. Let me be clear: the organisation and financing of education and training systems are an exclusive responsibility of the EU Member States. The Commission's role is to support national governments in their reform efforts, and to help them to cooperate and learn from one another's experiences.
But let us start with the first question you put to me, which is about further increasing budgets for education, training and youth.
Let us first establish some facts.
Today, virtually all EU governments are reducing their education spending – at best they maintain current levels. The latest data from Eurostat tells us that hardly any government is actually increasing education spending.
Many governments have cut their expenditure in absolute terms. In 2011, it was 10 governments, to be precise. Another 20 governments reduced the relative share of GDP spent on education. On average, in 2009, Member States spent 5.5% of GDP on education. In 2011 it was 5.3%. This shows that the overall trend within the EU to reduce expenditure.
I must say that I find this trend extremely worrying, and in the long term, it may well prove to be very damaging. Let me tell you why.
We can make a clear and straightforward case for education, based on economic arguments.
Investing in education, training and skills is one of the best ways to improve the growth and innovation potential of an economy, as well as the employability and productivity of the workforce. It is an investment in the knowledge and skills of our workforce.
But these investments yield much more than purely economic benefits: they help to promote personal development and active citizenship; they go hand in hand with better health; they help to improve intercultural relations and social cohesion.
Investing in skills helps to combat poverty and social exclusion, by increasing people's chances of finding a well-paid job, and by breaking the cycle of disadvantage between the generations.
But good skills do not come cheap.
If we are not willing to pay for the investment, we might save some money in the short-run, but sooner or later we will pay a much higher price.
Cutting investment in education will undermine the skills-base of our workforce and, in the end, lead to a loss of competitiveness. Cutting education budgets to save money is short-sighted – and it becomes expensive.
In conclusion, I am tempted to turn your initial question around. Maybe we should ask ourselves: is it viable not to invest in education?
Let us now take a step back, and look at the broader political context. The European Union has developed a roadmap to respond to the crisis – the Europe 2020 strategy.
A major part of this work is to assess each Member State and the challenges it faces. On the basis of its own analysis, the European Commission offers advice to each Member State on how best to address those challenges. The last time we adopted such recommendations was in summer 2013, when we encouraged 18 countries to pursue growth-friendly fiscal policies.
The Commission has a clear idea of what we mean by "growth-friendly". We believe that some policies, such as research and education, are policies that help to strengthen a country's growth potential and its capacity to innovate.
Let me be clear again. We do not question the need to repair public finances and reduce debt over time. We know that this needs to happen. But we have said time and again that cutting education budgets is not the right way to go about it. And this is why the downward trend in education spending worries me deeply.
This brings me to your second question: is education not the safest investment in the future, especially in times of crisis and mass unemployment?
My answer is a resounding "yes".
A good education is still one of the best insurances against unemployment and social exclusion. Even in the recent crisis, people with good skills and higher qualifications fared much better than people who only had low skills and qualifications.
The EU as a whole invests more than 5% of GDP in education. This means that in 2011, 674 billion euros were spent on schools, vocational education and training, universities and so on.
But the real question is: did governments spend the money wisely? Or, in other words, are our education and training systems delivering?
The answer, I am afraid is – "not entirely."
One key task of education and training systems is to equip people with the right mix of skills. This means the full range of skills they need to enjoy life and work to the full.
This applies to different types and level of skills: not only the basic skills, which everybody needs for all circumstances throughout life, but also the transversal skills that are crucial to the ever-changing world of work.
From the results of the latest PISA survey, we know that about a fifth of all pupils have only very low skills. From the results of a similar survey on adult skills – which was completed for the very first time in 2013 – we know that about 20% of the working-age population displays a similar low level of basic skills.
This means that a large share of our working age population has such low levels of basic skills as to render them virtually unemployable.
The point is this: across the EU, we all have plenty of room to improve the performance of our education systems. Most Member States have come to this realisation and are implementing wide-ranging reforms. The EU is there to help and support their efforts.
So far, I have spoken about education and training in general. But standing here in this venerable institution, it is only appropriate that I turn to the specific challenges confronting European governments when it comes to investment in higher education.
The first, and most crucial, point I want to make is that higher education – or perhaps more accurately, the activities of higher education institutions – contribute hugely to our collective social and economic well-being.
The rationale for substantial public investment in higher education is clear.
Europe needs graduates with the kind of advanced knowledge and refined analytical, communication and problem-solving skills that only good quality higher education can provide. And our advanced industrial and services companies, as well as modern, well-functioning public sector institutions need more of them than ever before.
The basic and applied research undertaken in universities and other institutions of higher education is crucial not only for the advancement of our collective knowledge, but for our future economic and social development.
The talent that resides in our institutes of higher learning across all disciplines helps to fuel the innovation that we need to promote social and economic development and tackle key challenges we face as a society – from climate change to demographic aging.
Of course, no-one would claim that today's higher education systems are perfect. And let me be clear. By no means do I under-estimate the numerous challenges facing higher education institutions and their staff. The challenge of delivering high quality and relevant education to a more diverse cohort of students. The challenge of exploiting new technologies in an effective way to enhance all the core missions of higher education.
The challenge of conducting important fundamental research in the face of increased pressure for immediate results. The challenge of working usefully together with business and civil society to further common goals.
Responding to these challenges clearly requires investment. The question for government is where and how to target public resources, how to bring in additional private sector income and when – as in England – to call upon additional resources from students and their families.
When it comes to public funds, governments – as representatives of taxpayers – have a legitimate interest in ensuring efficiency in higher education, as they do in other sectors. It is a question of getting the most from every pound, euro or dollar invested.
In this respect, we see a growing trend toward performance-related funding systems across Europe and other advanced economies. Such systems, with their focus on specific outcome targets, related indicators and binding agreements with institutions are an interesting and potentially valuable policy tool.
The risk is that the targets set are the not the right ones or that institutions become fixated with progress on specific indicators to the detriment of other vital goals.
The question of how to design effective performance funding systems is one of the urgent topics being addressed together by EU Member States in their dialogue with the European Commission. By bringing together experiences from different countries, we hope to draw lessons of relevance to all higher education systems.
Another divisive question is cost-sharing in higher education. On many levels, the argument that students who can afford to should contribute towards their cost of higher education is persuasive. The private returns for the average higher education graduate are considerable. And in a context of finite resources, there are convincing social and educational reasons to prioritise early childhood education and care over higher education.
But charging high fees for higher education also brings clear risks in terms of participation from more disadvantaged groups and the debt burden faced by tomorrow's graduates. This is another area where the EU is seeking to support Member States with more detailed analysis of the impacts of cost-sharing models.
In this respect, the new funding regime introduced in England is of great interest. The first indications are that the impact of the new system on participation has been limited, but the nature of the reform means that we will have to wait until the first generations have graduated before making a fuller assessment. I can assure you that we will follow the situation with interest.
So, I hope I have answered your questions – and perhaps added a few more of my own – because ultimately the future of education is the responsibility of all of us. We all have our part to play.
Thank you for your attention, and I look forward to your comments.
