In their September 2012 Global Employment Outlook, the International Labour Organization (ILO) drew particular attention to the plight of the young worker worldwide.  They project that the global youth unemployment rate (youth being defined as between the ages of 15 and 24) will climb from 12.7 percent in 2012 to 12.9 percent by 2017.  This is in contrast to the overall unemployment rate, which is expected to remain steady worldwide at 6 percent between 2012 and 2017.  The projected rates of youth unemployment vary, of course, by region.  In East Asia, the youth unemployment rate is projected to increase to 10.4 percent by 2017, up from 9.5 percent, while in the developed economies and the European Union, the rate is actually projected to decline from 17.5 percent in 2012 to 15.6 percent in 2017.  However, the latter figure is not actually cause for celebration – the report notes this is “principally because discouraged young people are withdrawing from the labor market and not because of stronger hiring activity among youngsters.”

We turn to additional ILO data to see what the picture looks like in some of the countries with top-performing education systems, to see if the strength of the primary and secondary systems mitigates to some degree the proportion of young people who are struggling to find work (Figure 1).  The results are somewhat surprising.  Finland, widely acknowledged as having one of the best primary and secondary education systems in the world, also has the highest unemployment rate for people aged 15 to 19 years, and one of the highest unemployment rates for people aged 20 to 24 according to the ILO data.  Singapore and the Netherlands, which have strongly integrated vocational and technical pathways available to students before the age of 18, on the other hand (and unsurprisingly), have quite low youth unemployment rates.

Figure 1

But before jumping to conclusions, it is important to dig deeper into how countries define youth unemployment, because this in and of itself can impact how well a country appears to be doing in terms of moving young people into the workforce.  For the chart above, the ILO definition of “unemployed” included people who were not in paid employment, were available for employment, and were seeking employment.  The ILO points out that these measures are difficult to compare across countries because education systems vary widely, and in some countries a young person may be considered “employed,” for example, if they are engaging in a vocational training program part-time.  In another country, the labor force may be considered as including only the youth who have dropped out of secondary school or who have earned a secondary degree.  This may result in inflated rates of “unemployment” in some countries, for example, Nordic countries, that have more modular vocational and post-secondary education programs and other strong supports for young people, resulting in young people pursuing a combination of part-time training, employment, or other activities such as international travel before settling into a career.

Fortunately, there is another international measure that allows us to compare the proportion of young people who are struggling to enter the workforce or the education sector.  That is the percent of youth not in employment, education or training, often abbreviated as NEET.  The OECD provides data on the percent of NEET youth in most of its member countries; below, we have again shown the data for the top performers (Figure 2).  The chart provides information for three different categories of young people: youth who are unemployed (that is, looking for work), and not in education or training; youth who are inactive (that is, not looking for work), and not in education or training; and the NEET rate, which includes youth who are either unemployed or inactive, and not in education or training.  The NEET rate is represented by the total length of the bar on the chart, as it is a combination of the two other measures.

Figure 2

The Netherlands, which has one of the lowest rates of youth unemployment by ILO measures, also has a very low NEET rate.  Notably, just 1.5 percent of youth in the Netherlands who are not in education or training and are actively seeking work are unable to find jobs.  This is just over 25 percent of the overall OECD rate of 5.8 percent, and significantly smaller than the EU27 (European Union) rate of 6.6 percent.  Denmark and Finland, two Nordic countries which, by overall youth unemployment measures, do not look particularly good, also have very low NEET rates.  These low rates are likely due to the fact that these countries, and particularly the Netherlands and Denmark, have very strong school-to-work pipelines, with multiple pathways for all types of students.  Students in these countries have access to various workplace learning experiences and apprenticeships, as well as a close relationship between industry and these training programs.  On the other end of the spectrum, the United States, New Zealand and the United Kingdom all have high NEET rates in addition to their high youth unemployment rates, suggesting that job training programs or pathways into the workforce in these countries are lacking.

One concern, however, is the possibility of a growing connection between youth unemployment rates and youth NEET rates.  The ILO points out in their Global Employment Outlook that as new economic sectors grow and old sectors decline, people who were either employed in or being trained for jobs in the old sectors will face the loss of these jobs with a sense of discouragement, meaning that NEET rates will rise following the rise in unemployment rates.  This is why it is so important to have education connected to current workplace skill requirements, and particularly, to ensure that vocational and technical education programs are linked closely to industry, so that youth are being prepared for the jobs of the future.

An interview with Dylan Wiliam, Emeritus Professor of Educational Assessment at the Institute of Education, University of London, on his paper entitled Optimizing Talent: Closing Educational and Social Mobility Gap Worldwide, published last year at the Salzburg Global Seminar in Austria.

Marc Tucker:  In your paper, you start out making an argument that today’s children are more intelligent than their parents and their grandparents and you combine that with an argument that the quality of teaching in government-funded schools appears to be higher than that in private schools in most wealthy countries.  Can you tell us more about the research on both points?

Dylan Wiliam:  The first argument draws on the work of psychologist James Flynn (the Flynn effect), an American living and working in New Zealand.  He found that IQ tests need to be re-benchmarked every decade, because IQs are rising, about 3 to 4 points every ten years.  So IQ norms are rising, and people are getting smarter in ways we may not entirely realize.  The average would be around 110 or 115 if we didn’t adjust it.  It has risen 15 points since World War II.  This is occurring on some tests more than others; arithmetic scores have gone up very little while spatial scores and problem-solving scores are increasing substantially.  Maybe young people aren’t using their intelligence today as well as they could be but there is evidence that they are smarter.

Tucker:  Most American teachers think about intelligence in the way they were taught to – it is a function of the genes.  Is the gene pool changing, or do we have a different idea now about what these tests are measuring?

Wiliam:  Research in genetics shows that the nature vs. nurture debate is essentially an irrelevant question.  Interestingly, what you find in that debate is the estimate depends on the variation in environment.  It is an unstable question unless you can calibrate the differences in environment, which no one can do.  Secondly it is a question of epigenetics—the study of changes in gene activity that do not involve alterations to the genetic code but still get passed down to at least one successive generation.  What we are seeing is that certain genes get switched on or switched off depending on the experience we have.  For example, there is one gene that if you have two long forms, nothing happens but if you have two short forms the likelihood of getting depression increases in an abusive environment but the likelihood decreases in a healthy environment.  So what we understand now is that the nature vs. nurture debate is completely irrelevant because different environments switch on or switch off different genes.

The plasticity of IQ is much greater than was previous imagined.  There were some experiments with orphans from Romania and they had extraordinary cognitive deficits when they were in the orphanages, but rich environments helped them to catch up very quickly.  Supportive environments really do help make-up for a lot early on.

Environments vary quite a lot.  Many people are familiar with the Hart and Risley study, Meaningful Differences: An average three-year old from a professional-class family would have accumulated experience with almost 45 million words while an average three-year old from a welfare family would have accumulated experience with about 13 million words, resulting in a 30 million word gap.  A child from a working class house that is in the top ten percent of cognitive development will be overtaken by a child from a middle class house that is in the bottom ten percent of cognitive development by age six. So there are extraordinary differences in the environment that make any kind of speculation about genetics questionable.

I have a goal that we should magnify the impact of genetic effects on IQ because if we give all students a rich environment, then the only difference would be in genetics.  The important thing is that high quality environments do seem to make a big difference.  There are debates about things like Head Start—IQs go up while in the program and decline when they leave that environment, but if they learn to read while in the program, those skills are there for life.

There is the argument that what you do with the talents you have is more important than the actual talents you have.  Teaching kids about delayed gratification, persistence, how to apply themselves— these things are important and we are finding they can be learned.  My conclusion is that there is almost certainly a genetic component to IQ, but we can’t change it so we shouldn’t worry about it and it’s probably not that important.

Tucker:  Your second proposition is that when you take everything as equal, public schools do better than private. Can you explain that in more detail?

Wiliam:  The 2006 OECD data shows that in most countries, kids in private schools outperformed kids in state schools.  In some countries, the gaps are quite large.  But the most extraordinary thing was they had a lot of background about the educational background of the students and have complied an index of socioeconomic deprivation.  When you control for the socioeconomic status of the student and the schools, there is not a single country in PISA where kids in private schools outperform kids in public schools because you are removing group effects.  The effects of the private schools outcomes are peer effects.  So if you’re a parent and can afford to send your kid to a private school you probably should because the teacher may not be good but the peer group is.

Once you control for these things, school effects are small.  By the time kids are 8-years old, one year’s progress is about .4 of a standard deviation.  So the average achievement made by one student in a cohort is very small compared to the overall spread of achievement in a cohort.  The range of achievement within a cohort is ten times the average progress made by a cohort a year.

The consequence is that the differences between students are typically much larger than people imagine, and it’s hardly surprising that any differences in school effects gets swamped by this.  And the second thing is that teacher quality is one of the most important variables in the system, and if teachers are randomly distributed through the system, it diminishes school effects.  For all these reasons, school effects are quite small.  That explains why reform efforts based on changing the kinds of schools available to students are ineffective, because even if the schools are good, they are not making that much of an effect.  That is because teacher quality appears to be randomly distributed across the system.

Tucker:  In the United States, where teachers have more choice about where they teach than in other countries, what you see is teachers with more seniority and experience choosing the higher status and easier positions within a school, and teachers with better reputations preferring to teach in a school with more advantaged students.  So you would expect to see better teachers teaching in schools with more advantaged students – a systematic bias toward having good teachers in more advantaged schools and bad teachers in less advantaged schools.

Wiliam:  It might be true, but it might also be the other way around.  The fact is, those teachers with seniority may not be any better than the others.  Teachers with seniority may be able to migrate to easier to staff schools, but they aren’t likely to be any better – those decisions are made on things only weakly related to teacher quality, like experience.  So it doesn’t distort the system.

Tucker:  Your logic line begins by saying, in effect, that kids’ intelligence is steadily improving and we have every reason to believe that public schools are at least as good as private ones, so you ask, why are employers so unhappy?  And the answer is because the dynamics of the global economy are changing their requirements.

Wiliam:  People haven’t really understood how rapidly the world of work is changing, because it has happened incrementally.  In the 1980s, being able to type in bold on a word processer would increase a secretary’s salary by 25 percent, now, we expect 7-year olds to be able to do that.  What we see is an extraordinary increase in the types of skills that people are expected to have.  More jobs are being automated, so the number of jobs that can be done without basic literacy and numeracy skills has decreased.

People forget how much more skilled people are today then they were 25 or 30 years ago, let alone 50 years ago.  There is an extraordinary destruction of jobs by automation.  Before you were basically renting your physical strength to the employer.  A factory may still be the world’s largest manufacturer but it employs way less people.  What are left are the jobs that not easily automated or off-shored. There are quite a lot of manual jobs that will never be off-shored—Hairdressing and taxi driving will always be required locally.  Middle jobs such as appraising someone’s eligibility for a mortgage – that used to be a skilled job.  Now, computers can do that more reliably, cheaper and quicker.

Tucker:  I always use the example of sail making, it used to be a skilled job, but now there are algorithms that will calculate every single panel in a sail as well as the measurements of the entire sail and it will tell you the conditions you can use that sail and when it will break. And it will also cut and sew the sail automatically.  As long as the work is routine, it’s automatable.

Wiliam:  Routine cognitive jobs turned out to be easy to automate.  And they are often easier to automate than routine manual jobs because computers are simpler than robots.  Shelf stocking is still done by human beings because they can still do it cheaper than a robot.  In the auto industry, there is a woman who does a job for $25,000 a year, whereas a robot arm can do the job for $100,000 a year.  As soon as the robot arm is cheaper than the worker, she will no longer have a job.  This is the race between education and technology, as described by Claudia Goldin from Harvard.  The world of work is destroying jobs faster than we can up-skill.  We have been walking up the down escalator in the past and have been able to make progress but now the escalator is speeding up and we may fall behind.  We need to walk faster and improve our schools faster in order to progress.

America is wealthy enough to give everyone in the country a very high standard of living by redistributing the current wealth.  This will not happen.  If you are a teacher in school today you should be preparing your student for a world where the redistribution doesn’t take place as well as if it did take place—in other words, we have to prepare them for the world we will think will unfold as well as the one we hope will unfold.

Tucker:  At the end of your essay, you make the point that the job of schools used to be to identify talent and let it move to the top.  Now, schools have to be talent incubators or talent factories – we can’t just identify it, we have to create it.  What does that mean in terms of what schools look like?  How do educators have to redefine the task?  What does this change look like?

Wiliam: The talent refinery model held that some kids can learn, and others can’t, and you have to figure out the ones that you should invest time in.  In contrast, the talent factory model holds that every kid has to achieve at a high level.  And many people say that that’s an impossible goal.  I think more good things will happen if we assume that’s achievable than if we assume it isn’t achievable.  I’m not saying there aren’t differences between students – there are huge differences.  So we need a school that is designed to minimize the impact of those differences, rather than to maximize them.  Giving them more time, bringing them in for weekend tutoring – the idea that the school will do whatever it takes to make sure that every child has a reasonable shot at getting reasonable proficiency in the desired subjects.  In high school, we have that model already in athletics.  A high school football coach doesn’t just cancel the season if they only have six good players; they take the students they have and make them the best football players they can be.  We need to translate that into the academic equivalent.

Mining is by far Australia’s biggest industry. But that does not mean that it is Australia’s biggest employer. I learned that once a mine is established, most of the mining is automated. The mining itself is almost completely automated. Automated, driverless trucks deliver the ore produced by the mine to automated trains that deliver it to automated machines that take it from the trains and dump it into largely automated ships which deliver it to Australia’s dominant customer, China.

It might take 3,000 people to build one of these mines and the associated infrastructure, but only 300 to actually operate it. So it makes no sense to build big new towns for the workers who build the mines, because they won’t be there long. So the mining companies fly them in at the beginning of the week and fly them home at the end of the week, maybe hundreds of miles in each direction, for as long as it takes to construct the new mine and related infrastructure, at enormous cost.

In Singapore, I ran into a senior official from Germany who happened to know a lot about vocational education and training in China and about how the Germans are doing business in China. I asked him how companies like Daimler, the makers of Mercedes Benz motorcars, were able to get Chinese workers who were as skilled as the famed German mechanics. Oh, he said, Daimler’s operations are now almost completely automated. The numbers of highly trained mechanics they need is now so small that they can bring in a small crew of trainers from Germany and train all the workers they need themselves.

Besides, he said, Daimler is not making cars in China for export, but only for the China market. The price of making such things in China has been steadily rising, relative to the price of making them in Europe, so it no longer makes sense for Daimler to make cars in China for export.

In 1990, my organization, the National Center on Education and the Economy, issued a report, the introduction to which pointed out that industrial workers in South Korea were working for one tenth of what similarly skilled American workers were making, and those in mainland China were making one one-hundredth of what American workers made. But that is not true anymore. The average wages of American autoworkers have been falling steadily since then and those of similarly skilled Chinese workers have been rising. Wage levels for industrial workers in Shanghai are now around one quarter of those in the United States. And wages are swiftly rising in the interior of China, too.

This is to be expected in a world in which workers on one side of the world are competing directly with workers on the other side of the world, as never before. In such global markets for labor, one can expect that the prices for labor will slowly come into equilibrium, with prices coming down in the high priced countries and rising in the low price countries, for similarly skilled labor. Eventually, one could expect that these prices would be about the same from one country to another for the same skills.

For China, that will mean that their decisive price advantage in world markets will wither and die. The Chinese know that, and know that, increasingly, their growth will have to be internal, the result of their own people getting richer and demanding more goods and services from their own suppliers.

As the difference between the “China price” and the prices charged by other countries for similar goods and services becomes smaller and smaller, the United States will find that it no longer has access to the kinds of very cheap goods that has made Walmart such a success in our country and around the world. So the prices of many things that Americans have now become accustomed to purchasing very cheaply will rise, in some cases steeply. That will mean that a dollar earned by low-skill, low-wage workers in the United States will buy even less than it does now. It is also the case that the return of manufacturing to our shores will continue to pick up, partly because the difference between the cost of their labor and the cost of our labor is narrowing, but also because it is better to have suppliers who are closer than farther away, it is easier to protect intellectual property rights, and, most especially, because labor costs make up less and less of the cost of the product to the customer, because of advancing automation. So the return of manufacturing will be a blessing, but a blessing for fewer and fewer workers.

As the most advanced global companies come out of the Great Recession, many of the jobs they shed will not come back. Many have used their massive cash supplies to purchase the very latest in automated equipment to become more efficient, to automate many jobs that people did before the Great Recession, jobs that will never return. More and more of advanced industrial economy will look like the Australian mining industry. The industries will be healthy, but will employ far fewer people than before. Productivity will be high, but employment will be low. The owners of many firms in those industries will prosper. But the citizens of the countries they conduct operations in will suffer. Income disparities will grow more quickly than at present and the middle of that income distribution will get narrower and narrower as these processes accelerate.

There will be employers in each of those countries who will tell government that the way to be competitive is to keep the price of labor low, to waive environmental regulations because regulations make their products uncompetitive, to cut back on health care and retirement benefits for the same reason. They will argue, in effect, that the only route to competitiveness for those countries is to pollute the environment, endanger public health and lower ordinary workers’ standard of living.

But there is another possibility. You can see it in Singapore. With a combination of determination, persistence and smart policy, the Singaporeans have been investing wisely in their future for half a century. When other countries in the East saw their future in offering cheap labor to global companies, Singapore was trying to figure out how to raise the cost of their labor—and therefore the standard of living of their people—by providing higher educated and better-trained labor. They made life difficult for their low-value added producers and made it very attractive for their high value-added producers. They made very close partners with the world’s leading high tech companies, figured out just what kind of skills they needed most and made sure that they could get those skills in Singapore. They paid very close attention to every segment of their workforce. They built a very high floor under the entire workforce by providing a world-class academic curriculum to all their students and creating a world-class teaching force to teach that curriculum. They built a system of polytechnics as good as any in the world to provide very highly skilled senior technical workers for a wide range of industries. Perhaps most impressive, they created a set of post-secondary vocational schools for the bottom quarter of their students as fine as any I have seen anywhere in the world, with facilities that rival those of many American universities. They turned vocational education and training from a dumping ground into a sought-after alternative that attracts more and more students every year.

And little wonder. Ninety percent of the graduates of their vocational schools have job offers in their chosen fields within six months of graduation. Singapore has one of the lowest rates of youth unemployment in the industrialized world. When I was there, I heard the head of Rolls-Royce Asia (which makes jet engines, not motor cars) explain that they decided to make Singapore their Asia manufacturing headquarters in no small measure because of the high quality of Singapore’s work force.

The distribution of income in the United States and many other advanced industrial countries is getting to look more like an hour glass every day, hollowing out the middle class and endangering their political stability as a result. That is not happening in Singapore, and that is true because Singapore had a strategy for improving the lives of their people, a strategy that married economic policy to education policy in very explicit ways. Singapore has created both a basic education system and a vocational education and training system that can sustain an economy that is shaped not like an hour glass but rather like a flattened diamond, with a big fat middle. Singapore’s population is about five million, right in the range of many American states and some European countries.

Here in the United States, educators and training organizations look to our Bureau of Labor Statistics to produce data about employers’ projected demand for labor as the basis for their own planning. They try, in other words, to produce the profile of skills and knowledge in the workforce that the economy will need. The Singaporeans have not done that. They have imagined the kind of economy they want, the kind of economy that will provide a good income and a decent life and rising standard of living for their population. And they have then worked very hard;mdash;and successfully—to produce a workforce with the skills needed to realize that dream.

In a world in which global employers can get the labor they need anywhere in the world and will seek to get that labor at the lowest possible price, it no longer makes sense for a country to base its education and training policies on projections of companies’ domestic human resources needs. The question should be not what domestic companies want to be more competitive (lower wages, fewer regulations, less restrictive labor practices, less concern about pollution), but what will attract global companies to produce services and goods in your country and pay high wages to the people who do that. Singapore bet that supply would create demand, as long as other government policies were carefully crafted to support its larger aims. Nations need not be helpless in the face of the changing dynamics of the global economy.

Automation is steadily taking over more and more of the routine work done in high wage economies. This is a good thing. What that leaves is interesting, challenging, creative work. Will it do that only for a few people, leaving increasing numbers unemployed or underemployed and desperate, or will these changes lead to full employment economies in which more and more people do interesting, challenging and creative work? The answer to that question does not depend on companies’ projections of what they will need. It depends on public policy, on what the people of a country decide they want for themselves, and it depends on whether a country invests in developing the skills, knowledge and capacity of their people in such a way as to make their country an attractive place to do business for the kinds of global companies that will offer interesting, creative and challenging work to enough people in enough occupations to provide full employment at high wages.

No country will be able to offer that kind of broadly shared prosperity if it is offering first class education and training only to its elites. Singapore realized that it could only get to broadly shared prosperity if it built a first class system of education and training for everyone. They put as much effort—perhaps more—into building their vocational education system as they did into their university system. They built an education and training system that would offer global employers not just highly educated and trained professionals and senior managers but highly trained and educated workers at every level, for all the work that needs to be done, in both manufacturing and services.

When I was in Australia, I was discouraged to hear some of my friends dismissing Singapore’s achievements on the grounds that Singapore is not a “liberal democracy,” just as I have heard some of my friends in the United States dismiss Singapore because its government does not tolerate either drug users or those who throw chewing gum on their sidewalks.

This, in my view, is a kind of cultural arrogance we can ill afford. Singapore is only half a century old. I have met many officials there with degrees from Harvard, Stanford, MIT, Oxford and Cambridge whose parents were illiterate and poor. These officials are sophisticated, worldly in their ambitions for themselves and their children. As the conference I was at in Singapore got underway, it featured a band of polytechnic students that included a young man with scarlet hair and others who found other ways of declaring their independence from the cultural commitments of their parents. These young people did not grow up with the sense of existential threat to the very existence of their country that made their parents quite willing to trade restrictions on their political freedoms for the chance to build a decent life for themselves and their children. There is every reason to believe that these young people will find a way to make the transition to liberal democracy just as their parents found a way to build a brilliantly successful economy. Our best hope for China is that the country continues to look to Singapore for inspiration. Many others could learn a thing or two from Singapore if they want a country with broadly shared prosperity, a strong middle class and the kind of freedoms that only a broad and prosperous middle class can guarantee.

Marc Tucker interviews Ray Marshall on the links between immigration policy and education policy.  Marshall is Professor Emeritus and Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, and former U.S. Secretary of Labor.  Marshall, a labor economist, is an expert on international education and immigration issues.  Recent publications include 2009’s Immigration for Shared Prosperity: A Framework for Comprehensive Reform and 2011’s Value Added Immigration: Lessons for the United States from Canada, Australia and the United Kingdom.  Marshall is Co-Chairman of the Board of Trustees of the National Center on Education and the Economy.

Tucker: Why should education policymakers be interested in immigration policy?


Marshall: Education policymakers should pay attention to immigration policy for a number of reasons.  In almost all advanced economies, immigrants will be an increasingly important part of the population and the workforce.  This means that all of these countries will have many students who are also immigrants, depending on the extent to which they rely on immigration to add to their populations and their workforces.  So if schools want to educate all children to a high standard, they will have to pay particular attention to the characteristics of immigrant students.

Countries’ experiences with immigrant students have been very different.  For example, if you have a good immigration selection system as the Canadians do, then you will have immigrants who are strong students.  The Canadians, in fact, claim to have the highest-achieving second-generation immigrant students in the Western world.  Part of that is due to the way they select immigrants, and part of it is due to the vast improvements they have made to their education system since the 1970s.  They understand, when selecting immigrants, that they are choosing future Canadians.

Other countries have immigration policies that are producing large numbers of very hard-to-educate students which has important consequences for the cost of education and for the quality of the national workforce and for those countries’ competitiveness, especially when immigrants will constitute the main source of growth in the national workforce, as will in fact be the case in many industrialized countries.

Tucker: In writing your new book, why did you choose to study the immigration systems in Canada, Australia, and the United Kingdom?

Marshall: For some time, Canada and Australia have been widely viewed by experts in this arena as setting the benchmark for national immigration policies.  The UK has been catching up rapidly, by building on their experience, and may be ahead of them in some areas.

All three countries had long had policies heavily favoring immigrants who had family connections.  However, the intensive globalization of the economy in the 1980s changed that in Canada and Australia.  When the closed economies of the former Soviet Bloc countries, as well as China and India joined the global economy, they doubled the workforce involved in the global trading system—now about 3 billion workers—almost overnight.  These new workers were suddenly in both direct and indirect competition with workers around the world, including Australia and Canada.  That had a profound significance, because the countries entering the global trading system had very large numbers of well-educated, highly motivated people who could either migrate to the developed countries, or be employed where they were by global firms.  Almost overnight, what had been the globalization of product markets suddenly became the globalization of labor markets.  People with high skills were willing to work for below-market wages.  They were eager to have the standards of living available in industrialized countries, and were willing to work very hard to do that.

When that happened, both Canada and Australia took action.  In a competitive market, wages will tend to converge.  The question was in which direction would the convergence go?  The Australians saw that the most likely outcome would be that their wages would move in the direction of the wages in the low-wage countries.
But the Australians thought there was another possibility, one in which everyone’s positions could improve, but in which wages in the developing countries would improve faster than those in the developed countries.  I call this a “value added competitive strategy,” which was an alternative to a direct cost competitive strategy.  In this model, countries like Australia would not compete on the price of labor, a game they could only lose, but on the quality of their products and services, the productivity of their workforce and their capacity for innovation.  This would earn them a premium in the market, because they were producing things that could not be produced everywhere.  To do that, they needed a world-class education system, but also a value added immigration system in which they would import highly skilled workers to fill jobs that domestic workers could not fill.  That became Australia’s basic strategy.

To do this, they dramatically reduced the proportion of visas allocated for family reunification, and greatly increased the proportion allocated for highly skilled workers and entrepreneurs who had skills not readily available in the Australian marketplace.  They also had to coordinate education policy, workforce development policy, economic policy and immigration policy.  This is important because otherwise what is being done in one area can diminish what is being done in the other areas.

Tucker: What Australia did was very different from what countries like Germany did when they brought in low-skilled guest workers to fill economic gaps.

Marshall: Yes.  The immigration world learned some big lessons from the Bracero program in the United States, which brought in low-skilled Mexican workers for agricultural work, and the German guest worker program.  Low-skill guest workers are never temporary.  It is extremely hard to prevent guest workers from becoming illegal immigrants, especially if there is a vast different in the living conditions in your country and their home country.  Legal low-skill temporary workers quickly become illegal permanent workers because they do not want to go back to the poor conditions in their home country.  Many employers preferred these workers for their hard-to-fill jobs that pay low wages. They make very good workers because they work hard and are scared.

When you have unauthorized workers unable to protect themselves against their employers, or even authorized workers willing to work for low wages, they undercut the wages for all workers in the country.

Tucker:  In Value Added Immigration, you write that the initial response to globalization in Canada and Australia was to establish a minimum level of education required for all immigrants.  Why did they choose this strategy, and why did it fail?

Marshall: They chose this strategy because the economists argued that, with a high level of education, immigrants could adjust to any type of economic environment.  But first Australia and then Canada discovered this was not true.

In the late 1990s, the Australian government made dramatic changes in the system. There was a fairly large burden on their welfare system because they had selected immigrants who were unable to support themselves due to the mismatch between their skills and the skills and characteristics that employers were looking for in the workforce.

Both countries had strong data and research – much better than what is available in many other countries, and were able to use this information to discover which types of immigrants were most likely to succeed in the long run.  They knew they were not importing workers; they were importing future citizens.  What they found after doing a great deal of study was that the most successful immigrants were people who had skills that were in high demand in the economy, and people who had a high command of the language.  There was a direct and strong correlation between the degree of language competence, as measured by an international language test, and how well people did in the economy.  Command of language was most important for highly skilled professionals.

Those who came in with highly skilled family members were much more likely to succeed than those with low-skilled family members.  Age, too, made a lot of difference; it was possible to be either too young or too old to succeed in the economy.

A points system was developed in Canada in the 1960s in which immigrants earned points for various characteristics to allow them entry.  This system was adopted by Australia in 1989, and has since been adopted by several other countries.  The points system is a way to quantitatively calibrate the characteristics that help immigrants be successful in the economy.  That was a valuable selection device for a number of reasons.  First, prospective immigrants could go online and determine whether they were qualified to enter the country.  This decreased the number of applications.

It is also a very flexible system, because if you have too many people immigrating to your country, you simply raise the total score necessary to make a successful application.

It is flexible because it is research-based.  Just this past year, for example, Australia eliminated all points awarded for a master’s degree, because their research showed them that immigrants with a master’s degree turn out to be no better off, economically, than immigrants with only a bachelor’s degree.  So they decided not to award points for that.

The research showed that, if a prospective immigrant had a firm job offer, their chances of success were much greater, so Australia, Canada and the United Kingdom decided to award them a large number of points for that.  But the offer had to be for a job that was first offered to residents of the country, or it had to be on the shortage list.  In the British system, an immigrant needs to have 10 points for command of language, and 10 points for demonstrating that they can support themselves.  You need 70 points overall to be admitted.  If you have a job offer from the shortage list, you automatically get 50 points.

In all countries, however, just being qualified will not get you in.  The test they have all learned to apply is what in Britain they call the “sensibility test.”  That is, they ask whether immigration is the best way to fill that particular vacancy.  They look at employers, and if they are not making a good-faith effort to recruit and retrain domestic workers, they cannot import the immigrant.  That prevents immigration from substituting for the domestic workforce.

Australia now has over 20 years of longitudinal data on the characteristics that help people succeed.  This data shows that, over 10 years, most of the immigrants they have become positive contributors to the economy.  The only ones that fail to do so are the uneducated family members of immigrants – This is particularly true of uneducated parents who come in with skilled immigrants.

Tucker:  We are seeing very severe voter backlash against immigrants in many industrialized countries.  What has been the story in the countries you are describing, those with value-added immigration systems that emphasize high skills in their selection process?

Marshall:  In all of these countries, the population is generally supportive of the immigrant population.  This is largely because the selection system is designed to bring in people with skills that complement the skills of the native population, so the immigrants do not compete with the native population for jobs.  It is also because the immigrants are much less likely to become a drain on the country’s welfare system, because they are much more likely to have jobs and pay taxes.  And it is also because, especially in the cases of Canada and Australia, immigration policy is designed to deal with the kinds of cultural conflict from immigration that is now a burning political issue in Europe.  Canada and Australia require immigrants to pledge that they understand that their new host country has certain values that an immigrant is expected to agree to, knowing that the failure to do so would be a violation of the pledge. Few have ever been penalized for violating it, but the pledge has created an environment in which immigrants respect the rule of law and such values as the equality of men and women, that all creeds and religions are expected to be tolerant of others and so on.

Tucker: In your book, you talk about two stages of temporary workers and how that relates to the higher education system. Can you tell us more about that connection?

Marshall:  One of the best sources of value-added immigrants for any developed nation is the foreign students who come to study in that nation’s higher education system.  This is true both because they are a source of revenue for that country’s education industry, but mainly because they typically come with language proficiency, high skills and strong cultural knowledge.  So they developed a two-track system.  Immigrants could come in through the regular points-based system or another system that allowed people who both earned a degree from an Australian or Canadian university and had the other required characteristics to apply for status as a permanent resident.  But they didn’t want people to use the higher education system as a way to gain permanent residency, so they required such people to go home first and then apply.  Eventually they decided that process was self-defeating if they wanted highly qualified people who knew the language and were familiar with the values and customs.  So they let qualified graduates of their institutions apply directly.  In Canada, such people could get permanent residence without going through the points system, either for skilled workers or students.  At first, they were reluctant to take skilled workers on the basis of their vocational qualifications, but they found those people actually had better economic performance than regular university students so they started taking them.

It is important to view the children of immigrants as future Canadians, Americans, Australians.  You are building your future with those kids.  That’s the reason you need to pay attention to their education and to the selection of their parents.  The United States does not do this and has the lowest level of literacy in our foreign-born population of any OECD country as a result.  We are building future problems for ourselves with such policies.

The countries with value-added immigration policies, unlike our country, are using their immigration system for the same purpose as their education system—to produce a highly educated, highly skilled population that will be able to support themselves and to contribute to increasing the wellbeing of the entire population.  In doing so, they are not only bringing in adults who can contribute personally, but they are also bringing in children who will be far easier to educate to a high standard.  In an era in which all industrialized countries are going to have steadily increasing proportions of immigrants in their populations, immigration policy might be thought of as an extension of both education policy and economic policy.  All three are vital elements of successful competitiveness policies, which will by definition determine whether the incomes of the citizens of the industrialized countries will rise or fall in the years ahead.

Indeed, economists know that deep recessions are typically occasions for transformations in national economies, and it looks as though this one is no exception.  Companies facing stunted demand and plenty of cash have used the opportunity to make major investments in automation.  That means that many of the jobs requiring relatively routine skills are never coming back and many of the jobs that are created as demand comes back will call for considerably higher skills.  This was the general direction before the Great Recession, but that trend, it seems, as been greatly accelerated by those events, ratcheting up skills requirements considerably.

The 2012 issue of Education at a Glance focuses, in particular, on the relationship of compulsory and higher education investments by nations to their economic outcomes noting that, despite the financial constraints on governments because of the recession, spending on education (both public and private) has, in many cases, increased across OECD countries.  The OECD considers secondary education to be the “baseline” qualification needed in today’s economy, with many of their indicators measuring the proportion of the population who hope to achieve or have achieved education beyond this baseline.

There are also a host of new indicators included in this year’s Education at a Glance.  Two are specifically directed at the relationship between the global economy and the education level of a population: how education influences economic growth, labor costs and earning power; and the extent of social mobility in each country studied.  The former supports the growing body of evidence about the importance of workers having some post-secondary education:  the OECD found that labor income growth among highly educated people has contributed to more than half of GDP growth in OECD countries, whereas workers with less than a secondary education actually serve as a drag on labor income growth.

As policymakers around the world have turned their attention to increasing post-secondary education attainment rates, students, too, seem to grasp the increasing importance of higher education in most OECD countries, with educational attainment levels on the rise across the board.  Across all OECD countries, an average of 31 percent of adults have completed a post-secondary education.  Canada is the only country where more than half of all adults (people aged 25-64) have some higher education.  While many countries have steadily increased their percentage of adults with a college degree, some have increased at a much faster rate.  From 2000 to 2010, Canada’s average annual growth rate was 2.4 percent, the United States’ was 1.3 percent, and Finland’s was 1.8 percent.  But, during the same time frame, Ireland, Luxembourg, and Poland experienced growth rates ranging from 6.9 to 7.3 percent. The OECD average growth rate is 3.7 percent.  South Korea is also moving up fast with an average annual growth rate of 5.2 percent and they lead the world in higher education attainment rates for their young adult population, with 65 percent of their people aged 25-34 years completing post-secondary education.  In other high performing countries, like Japan, students who hope to enter higher education are hobbled by high tuition and low student supports.

Another new indicator in this year’s edition of Education at a Glance asks to what extent does parents’ education influence access to tertiary education?  Not surprisingly, the data shows that if at least one parent has completed post-secondary education, students are more than twice as likely than the average student to attend higher education themselves, while students whose parents did not complete upper secondary education have a 44 percent chance of attending post-secondary education.  Some countries are better than others in creating a pipeline to post secondary education even for students whose parents did not complete upper secondary school. Students whose parents have low education levels have greater chances of attending higher education in Iceland, Turkey, Portugal, Ireland, the United Kingdom, Denmark and Sweden, where the odds of attending are greater than 50 percent.  While not all students in this group who attend higher education actually graduate, some of these countries are also adept at ensuring fairly high rates of completion.  In Australia, the tertiary attainment rate of students without highly educated parents is more than 40 percent; in Ireland, Iceland, Sweden, and Finland, about 30 percent of students from this group attain tertiary degrees.  The OECD average for this group is just 20 percent.  Many of these countries employ a number of strategies to strengthen the educational pipeline for students whose parents are less educated including providing equal access to high-quality K-12 educational experiences, offering robust student support systems such as college and career counseling, and maintaining reasonable college and university tuition costs.  Australia, perhaps the most successful country when judged by the metrics of both the participation and attainment of students whose parents have low levels of education, has annual tuition fees at public institutions of $4200 US per year (fairly high compared to other OECD countries, though not as high as in the United States or the United Kingdom), but more than 75 percent of students receive financial aid.  Sweden, which also has high rates of tertiary participation among students whose parents have low education levels, and a fairly high rate of completion among this group, takes a different tack, not charging tuition fees at all.

In the United States, the odds of a student going on to college if his or her parents have not finished high school is just 29 percent.  The odds are lower in just two countries, Canada and New Zealand (figure 2).  However, the figures may not be as dire as they seem at first reading.  In his webinar presentation prior to the launch of this year’s report, Andreas Schleicher, Deputy Director for Education and Special Advisor on Education Policy to the Secretary-General of the OECD, points out that the OECD did not count associate’s degrees in their analysis. When the definition of higher education is expanded, the United States most certainly will improve in this category; however, this still brings into question the quality of the post-secondary credentials that many young people in the United States acquire compared to those in other OECD countries.

Schleicher also mentioned that OECD researchers had initially hypothesized that high tuition would be a barrier to disadvantaged students attending higher education.  However, the evidence shows this is not always the case.  In countries with high tuition rates and strong student support systems (for example, widespread access to loans and grants and manageable debt repayment plans), high tuition does not generally seem to prevent students from pursuing higher education.  Schleicher highlighted the system in the United Kingdom, which bases student loan repayments on salaries.  If former students do not meet a certain income threshold, they are not required to repay their loans.  Therefore, pursuing higher education is less of a gamble for low-income students; when students do not have to worry about repaying their loans if they cannot find a job, more students are willing to continue their studies.  This is a notable lesson for other countries with high tuition rates and less forgiving repayment programs – Schleicher stated that the UK government has found that the social returns of investing in getting more students into higher education are worth the risk.

Other new indicators ask:

• What is the difference between the career aspirations of boys and girls and the fields of study they pursue as young adults?
• How well do immigrant students perform in school?
• How do early childhood education systems differ around the world?
• Who makes key decisions in education systems?
• What are the pathways and gateways to secondary and tertiary education?

A few highlights from these new indicators tell us that key decisions in education systems are least commonly made at the intermediate level of governance; 16 of 36 countries allow schools to make key decisions (and half of those decisions are made within a framework created by a more centralized structure), and 12 countries fall at the other end of the spectrum, with key decisions made at the central level.  The Netherlands is the most autonomous system in the OECD, with 85 percent of decisions made at the school level.  However, school autonomy does not necessarily predict student performance; the top performers are scattered across the spectrum.

Another indicator looks at secondary and post-secondary gateways in education systems.  Twenty-three of the 36 OECD countries require students to take examinations at the upper secondary level and 22 make those examinations a requirement for passing a grade, graduating from school or earning a certificate.  Very few, however, require national examinations in elementary school, with the United States, Indonesia and Turkey being the only exceptions.  This suggests that most OECD countries value mastery of content and skills at the upper secondary level as an essential component of their education systems.

Some of the top-performing countries in primary and secondary education seem to be slightly behind the curve when it comes to early childhood education – at least early childhood education supported by government expenditures – a point which was driven home in three of the four country notes.  Three countries rely on private investment to drive their systems.  In South Korea, for example, more than 80 percent of four-year-olds are enrolled in a preschool program, but the vast majority (79 percent) attend private preschools, whereas across the OECD, just under 16 percent of students attend private ECE programs.  In Japan, preschool attendance for four-year-olds is nearly universal (97.2 percent), but spending on ECE is among the lowest in the OECD, and household spending makes up nearly 40 percent of all spending on ECE.  In Australia, both enrollment and spending lag; enrollment is the fourth lowest in the OECD at just 52 percent, and spending on ECE as a proportion of GDP is also among the lowest.

The annual publication of Education at a Glance once again serves as the go-to source for up-to-date information on the measurable features of education systems in OECD countries.  New indicators on higher education certainly make this year’s issue the most comprehensive yet.

Recently, the World Economic Forum (WEF) released their 2012-2013 Global Competitiveness Report.  In this report, the WEF ranks 144 countries based on a global competitiveness index; their definition of competitiveness encompasses “the set of institutions, policies, and factors that determine the level of productivity of a country,” with the understanding that productivity directly influences prosperity.  The index is based on 12 “pillars,” including institutions, infrastructure, macroeconomic environment, goods market efficiency, financial market development, labor market efficiency, technological readiness, market size, innovation and business sophistication.  All of these pillars speak to a country’s ability to promote both stability and growth among their institutions and workforce, strengthening their position in the global economy.

We have always believed that education is one of the most important factors affecting a country’s economy, and the WEF is in agreement.  Two of the twelve pillars used to calculate the overall score deal with a country’s ability to provide education for its children from the primary level through the postsecondary level, with one of the pillars also factoring in the health profile of a country.

So who came out on top?  Unsurprisingly, several of the countries with the strongest education systems as measured by the OECD’s PISA program cracked the top ten, with both Singapore and Finland in the top three.  The Netherlands, Hong Kong and Japan placed slightly lower but still performed well, coming it at fifth, ninth and tenth, respectively, though Japan did slip one spot from last year.  Hong Kong moved up two spots from the last ranking to enter the top ten, displacing Denmark, which slid from eighth place to twelfth.  Other PISA top performers’ results were mixed; Canada, Korea and Australia all made the top twenty (fourteenth, nineteenth and twentieth, respectively), while New Zealand came in at twenty-third, rising two places from last year, and China at twenty-ninth, dropping three places from last year (though it is important to note that China is not itself a PISA top performer – Shanghai is).  However, even twenty-ninth place in a field of 144 is fairly impressive.

The WEF, in addition to producing an overall ranking based on the 12 pillars included in their index, also provided rankings within each of the 12 pillars, making it possible to compare their education top performer lists with the PISA top performers.  In the health and primary education category, six of the top ten PISA performers made the top ten in the WEF analysis (Finland, Singapore, New Zealand, Netherlands, Canada and Japan).  Rounding out the category were European nations known for their ability to provide wide scale and equitable healthcare and basic education: Belgium, Iceland, and Switzerland, and one surprise, Cyprus, which is ranked fifty-eighth overall.  However, in the category of health and basic education, Cyprus received a score of 6.5 out of 7, primarily, it appears, due to a primary enrollment rate of 98.7 percent of children, a relatively high life expectancy (79.4 years) and a low incidence of certain diseases.  Indeed, the health and primary education category is much more focused on health than on primary education, with eight of the ten indicators within the category related to health, and just two, quality of primary education and primary education enrollment rate, related to education.

The other pillar dealing with education – higher education and training – does take into account many other factors that actually speak to the quality of the education system.  The indicators are secondary and tertiary enrollment, quality of the education system, quality of math and science education, quality of management schools, Internet access in school, availability of research and training services, and the extent of staff training.  In this category, four of the PISA top performers (Finland, Singapore, Netherlands and New Zealand) were rated among the WEF top ten.  The other countries included Switzerland, Belgium, Germany, Sweden, the United States and Taiwan.  The United States is world-renowned for its university system, and the European countries all have some of the strongest vocational and training systems in the world.  Taiwan has extremely high enrollment in both secondary education (100 percent) and tertiary education (83.4 percent, ranked seventh of all countries), as well as a high quality math and science education (ranked sixth of all countries).

Clearly, the countries that perform the best on PISA are among the most economically competitive in the world, for a variety of reasons.  But the WEF report, and their index, suggest that there are other factors beyond student performance worth considering in evaluating both competitiveness and education systems.  Their rankings place more emphasis both on the context of education – particularly the health of children and the workforce – and on the strength of non-academic education, and particularly workforce training.  Both of these factors are hugely important to the overall strength of the education system and can be clearly brought to bear on many of the other factors that add up to a competitive economy, including pillars like labor market efficiency, technological readiness and innovation.  Taken together, the PISA results and the WEF rankings indicate the continued predominance of systems like Singapore, Finland, the Netherlands and Hong Kong, who top the rankings in many respects, while more established advanced industrial economies like the United States appear, conversely, to be on the decline.

Starting well: Benchmarking early education across the world

At the outset, the report’s authors take care to point out the differences between preschool and childcare.  They point out that there is a growing understanding of the importance of the developmental phase of a child’s life between the ages of three and six, as well as research indicating that preschool programs help with child development and school readiness and serve to help level the playing field among children of different socioeconomic backgrounds.  At the same time, enrolling a child in preschool has been shown to save money on schooling down the road, as children with a strong preschool foundation are less likely to need remediation or to repeat a grade.  Another economic benefit of preschool programs is that they facilitate female participation in the workforce.  The report cites James Heckman’s work on the economic benefits of preschool education; he has found that government investment in preschool yields an annual return of 7 to 10 percent in the form of lifetime wages.  Preschool also yields other lifetime social benefits such as reduced crime rates, lower welfare and education costs, and increased workforce productivity.  Thus the report, and the index used to measure the strength of early childhood education systems, takes the perspective that a universally available, high-quality preschool system is the goal that governments should be working toward.

The index is broken down into four main categories: social context, availability, affordability and quality.  These are weighted and the scores in each category are combined to make up the final score for each country.  Quality carries the most weight, and accounts for 45 percent of the final score.  Availability and affordability each account for 25 percent of the final score, and social context accounts for the final 5 percent.  Within each category, there are several sub-categories indicating how the authors of the report arrived at the final score for each category.  Social context measures the prevalence of malnutrition, the under-five mortality rate, the DPT immunization rate, the gender inequality index and the adult literacy rate of each country.  Availability measures the preschool enrollment ratio at age five or six and for the relevant age group, early childhood development and promotion strategy, and the legal right to preschool education.  Affordability measures the cost of private preschool programs, government spending on preschool education, available subsidies for underprivileged families, and subsidies for preschools that encourage including underprivileged children.  The quality category is comprised of the teacher-student ratio, average preschool teachers’ wages, curriculum guidelines, the training of preschool teachers, health and safety guidelines, data collection mechanisms, the links between preschools and primary schools, and parental involvement and parent education programs.  The scores for each country are derived from a combination of quantitative data and “unique qualitative assessments.”

By these measures Nordic countries fare best, and European countries in general tend to outperform Asian, North American, Latin American and African countries.  The report explains the predominance of Europe in the top 20 countries on the league table (16 of the top 20 places, in fact) by pointing out that, “it is culturally and politically accepted in Europe that the government will assume a significant role in delivering preschool education.”  Thus, the top countries are all countries that have, for the most part, been investing in preschool education for decades: Finland, Sweden, Norway, the United Kingdom, Belgium, Denmark, France, and the Netherlands.  New Zealand and South Korea round out the top ten performers.  In addition to finding that Europe commands the majority of places at the top of the league table, the report finds that the average income per person in any given country correlates strongly with the overall ranking – rich countries perform better than poor countries, for the most part, even within Europe.  That being said, there are several countries, including the United States, Japan, Canada and Australia, that are ranked in the middle of the pack, despite being wealthy.  Many of these countries, while having some very high-quality preschools according to the index, do not have good policies in place to ensure fair and equal access to these programs, thereby accounting for their relatively poor performance.

Of course, the authors acknowledge that every country has its own particular challenges in achieving a universal, high-quality preschool system.  Some have a diverse population made up of students of varying language, cultural and socioeconomic backgrounds.  Others may suffer from lack of funding.  Still others have large proportions of the population living in rural areas where it is difficult to establish programs.  Less wealthy countries typically have to make a choice between expanding access and improving quality at the outset, and, when that is the case, find that it is particularly important to educate parents on the importance of both early child development and early learning.

The report provides policy recommendations in the areas of both access and quality.  In terms of access, the authors and the experts interviewed recommend putting a system of subsidies into place, either in the form of “demand-side” subsidies (money or vouchers flowing directly to families) or “supply-side” subsidies (funds provided directly to preschools to incentivize enrolling children who cannot otherwise afford to attend).  Although most of the top-performing countries generally pursue supply-side policies because the government provides universal preschool, the authors find that many countries might find it feasible to use a combination of supply and demand strategies to ensure access.

On the quality side of things, the report recommends several important policy changes: improving teacher training and teacher quality, establishing clear curriculum guidelines, managing the transition between preschool and primary school, improving teacher-student ratios, increasing parental involvement, having clear health and safety guidelines in place, and collecting data with “robust data collection mechanisms.”  Teacher quality is perhaps the most centrally important component of providing quality preschool education, and varies widely from country to country, with Finland requiring a bachelor’s degree (many preschool teachers also have master’s degrees) and other countries hiring “literally anybody who is physically able and interested in working with children.”

This report makes clear that in order to establish a quality preschool education system, it must be treated, for the most part, like the primary and secondary education system, with the same types of policy levers and quality assurance mechanisms.  Indeed, the report often relies on well-established primary and secondary best practices in order to draw policy recommendations for early childhood education.  The authors mention, for example, Finland and South Korea’s practices of recruiting teachers from the top of the high school cohort, suggesting that this is a way to manage quality (though they do point out that this is not strictly enforced in either country when it comes to choosing preschool teachers).  They suggest working to build a profession able to attract high-quality recruits by compensating preschool teachers at a fair and living wage, reducing the teacher-student ratio to make the job more attractive, and establishing regulations and specific skill sets that are required of teachers in order to enter and remain in the profession.  They furthermore suggest working to build strong leadership in preschools, which would further contribute to the sense of preschool teaching as a profession while also encouraging the leaders to serve as innovators in the field.  Apart from improving teacher quality, putting curriculum guidelines and learning expectations into place can help bring lower-quality teachers up to a higher standard, and help all preschools provide the type of education expected of them.  Ultimately, the report’s authors and the interviewed experts argue, when funds are limited, human capital development—that is, the preparation of the preschool teachers—must absolutely be prioritized over things like technology and infrastructure.  However, one policy to “improve” early childhood education programs—using standardized tests to measure student performance and holding teachers accountable based on the test scores—which has been growing in favor in countries like the United States is not part of any of the recommendations found in the report, nor is it a tool used by any of the top performers.

It is interesting to note where the world’s top performers in primary and secondary education fall in this ranking, given that preschool is increasingly seen as an important foundation for high student performance in later years.  Four of the top primary and secondary performers crack the top ten in this early childhood education league table, with Finland ranked first, the Netherlands eighth, New Zealand ninth and South Korea tenth.  Hong Kong, Japan, Canada, Australia and Singapore are in the middle of the pack, rated at nineteenth, twenty-first, twenty-sixth, twenty-eighth, and twenty-ninth, respectively.  China fares very poorly, ranked just three steps up from the bottom.  It is interesting to note that Asian countries fare, by this ranking, generally worse than their European and commonwealth counterparts.  It is telling to compare the quality rankings to the overall rankings.  When looking at quality alone, several of the top-performing Asian countries actually fare much better.  South Korea is ranked tenth, Hong Kong eleventh, and Japan thirteenth.

We wonder whether the relatively low rankings of the Asian countries is a function of the perspective from which the data was gathered and analyzed.  More women have been in paid employment outside the home in Northern Europe than in Asia for decades now.  No doubt, that fact goes a long way toward explaining why Asia has not developed anything like the infrastructure for supporting very young children outside the home that Europe now has.  That fact by itself does not mean that children are less well cared for, but it does mean that the observer will see less formal infrastructure there for taking care of very young children.  But women are now entering the paid workforce in Asia in greater numbers than previously and the governments in those countries may find that they are more interested in European-style policies in this arena than was previously the case.

As workforce demographics change and the importance of early childhood education shifts away from daycare alone, we may see some countries, already performing well in quality measures, begin to climb the overall rankings.  Singapore, clearly, as evidenced both by this report and another recent report from the Lien Foundation, Vital Voices for Vital Years, has begun to invest a great deal of support into improving the quality of preschool education, perhaps because Singapore has long encouraged the entry of women into the paid workforce.  As they improve, it seems clear that countries will need to follow, for the most part, a roadmap set by the top performers in primary and secondary education.  At the same time, they will need to take into account some of the important differences at this life-stage, including the need for increased parental involvement outside of school, and quality healthcare for young children.

Source: Accenture. (2011). No Shortage of Talent: How the Global Market is Producing the STEM Skills Needed for Growth; McKinsey Global Institute. (2012). The world at work: Jobs, pay, and skills for 3.5 billion people.

Judging by the headlines in many developed economies—especially the United States and the United Kingdom—there is growing concern that they are not producing enough STEM workers (people with degrees in science, technology, engineering or math) to meet the growing need for such people.  We often hear of a global “skills mismatch”; millions of new workers are entering the labor force every year, and millions of new jobs are being created, but many jobs are going begging because the available workers do not have the skills for the new jobs.  A recent report from Accenture, “No Shortage of Talent: How the Global Market is Producing the STEM Skills Needed for Growth,” refocuses this argument, contending that the skills mismatch is one of location, rather than overall supply and demand.  The authors of this report argue that while jobs requiring STEM knowledge and skills are growing at nearly twice the rate of other occupations in the United States, just 13 percent of American college students choose a STEM major.  In China, on the other hand, more than 40 percent of college graduates have STEM degrees; this figure is nearly 50 percent in Singapore (see figure 1).  In addition to the East and South Asian power players in the STEM field, countries like Brazil are also experiencing a rapid increase in the number of students who choose to pursue STEM degrees; by 2016, Brazil will have surpassed the United States in the number of engineering PhDs produced every year.  Furthermore, countries like Germany, with strong vocational education programs at the secondary level, are holding their own in terms of STEM degree production, with more than a quarter of students in higher education choosing a degree in these fields.

The benefits of producing a strong STEM workforce are myriad.  In another recent report, “The world at work: jobs, pay and skills for 3.5 billion people”, the McKinsey Global Institute found that in the United States, a STEM worker will earn, on average, $500,000 more over a lifetime than a non-STEM worker.  However, despite the benefits to both STEM workers and to national economies, the authors of this report also found that countries approach the issue of creating STEM workers very differently.  In the United States, there is a laissez-faire approach; students are free to choose their majors or specializations after being admitted into a university, and the vast majority of students do not choose STEM majors.  Many other countries, by contrast, require students to apply for places within a college or a university in a specific specialization in order to be admitted, thereby allowing the country to have a greater degree of control over degree production.  In Singapore, for example, the government estimates the fields in which workers will be needed and the number that will be needed in each field and then allocates the slots in its first year classes in its higher education institutions accordingly, in an effort to align supply and demand as closely as possible.  Individual students can still choose freely among careers for which they want to train, but the government controls the number of slots available in any given field.  This policy clearly has a bearing on the Singapore’s position on the league table above.  This capacity to align supply and demand this way is associated with countries that pay all or most of the cost of higher education—which happens in some countries but by no means all.  Several countries that have such policies, including Singapore, also have in place bonding schemes where the government pays for a student’s higher education in exchange for the student’s agreement to work in the country, sometimes in the public sector, for a certain number of years following graduation.

Source: McKinsey Global Institute. (2012). The world at work: Jobs, pay, and skills for 3.5 billion people.

The issue of a skills mismatch does not end with STEM degrees.  The McKinsey report estimates overall future job shortages and worker surpluses for the global workforce in 2030.  They suggest that there will be an overall shortage of nearly 40 million high-skill workers, or 13 percent of the global demand for people with higher education, as well as a shortage of 45 medium-skill workers (15 percent of the total demand) and a surplus of about 95 million low-skill workers, all of which means large number of people out of work and employers unable to fill positions unless more is done to raise the skills of low-skilled workers, entice more students to enter STEM and other high demand fields, and match employers with the workers they need.  The same countries that are producing high numbers of STEM workers, particularly China and India, are also adding the majority of new workers to the workforce.  China and India alone added enough new workers between 1990 and 2010 to represent 37 percent of the total workforce growth of 706 million; between 2010 and 2030, China’s workforce growth is expected to decline slightly to just 13 percent of all new workers, while India’s workforce growth is expected to grow to 28 percent of all new workers.  Young developing economies including Bangladesh, Pakistan and many African nations, along with young middle-income economies (such as Brazil, Mexico, Vietnam and Indonesia) added half of new workers between 1990 and 2010, while advanced economies (for example, the United States, Japan, Hong Kong and Australia) contributed just 11 percent (see figure 2).  The primacy of developing economies in workforce growth will continue through 2030; in this period, advanced economies are projected to add just 5 percent of new workers to the global workforce (see figure 3).

Source: McKinsey Global Institute. (2012). The world at work: Jobs, pay, and skills for 3.5 billion people.

Of course, not all degrees – STEM or otherwise – are created equal.  A separate 2005 McKinsey report, “The emerging global labor market: The supply of offshore talent in services – Part II” found that just 10 percent of Chinese engineers and 25 percent of Indian engineers are educated to a global standard – that is, suitable for hiring by a multinational corporation, whereas about 80 percent of engineers educated in the United States are considered globally suitable.  This finding is corroborated by the 2011 Aspiring Minds National Employability Report, which found that the majority of Indian engineering degrees are not awarded from the top 100 universities, which tend to be the main institutions that large, multinational corporations recruit from.  Other datasuggest that large portions of these degrees are what the world would consider “sub-baccalaureate.”  However, despite the concerns over the quality of some of the millions of STEM degrees being awarded in China and India, Accenture calculates that even if just 20 percent of Chinese STEM graduates are qualified to a world standard, this would represent more than 700,000 graduates by 2015, as compared to just 460,000 in the United States.  Additionally, while both McKinsey and Accenture recommend putting policies in place to facilitate the immigration of STEM workers to the countries with large STEM shortages, this strategy seems unlikely to address the skills mismatch in the long term.  Developing economies that want to progress by creating successful technology-driven companies within their own borders, must invest in raising the quality of their own education systems and do this while providing the vast majority of their populations with the opportunity to excel in high quality learning environments.  Countries with historically strong economies must work to produce STEM majors at a much higher rate by giving students the knowledge, skills and tools they will need to succeed in STEM courses in compulsory

Source: McKinsey Global Institute. (2012). The world at work: Jobs, pay, and skills for 3.5 billion people.

education.  However, as Marc Tucker has written in his Education Week blog, Top Performers, it is virtually impossible for a country to produce large numbers of high quality STEM graduates from mass education systems that were designed to produce mainly relatively low-skilled graduates overall.  It may be useful to think about the developed world as containing two categories of countries.  In one category there are nations with education systems that are still designed to produce large numbers of students with little more than a basic education and relatively small numbers of students who have what could be termed elite skills, the United States and the UK are in this category.  In the other category are countries that have redesigned their systems to educate all their students to the elite skills standard.  Countries like Finland, Japan, Korea and Singapore are in this category.  Countries in the first of these two categories will find it very difficult to greatly increase the proportion of high quality STEM graduates without redesigning their education systems using the strategies employed by the countries in the second category to provide elite skills to all their students.  This is a tall order for developing countries, and that is the reason that the highly industrialized countries, though small in population relative to the largest developing countries, are likely to have a disproportionate number of high-quality STEM graduates for a while.

Singapore skyline

In 2011, Singapore was ranked the best country in the world to do business by the World Bank and was also ranked first in the world in investment potential in the 2011 Business Environment Risk Intelligence report.  Singapore receives high marks from both the World Economic Forum (ranked second in global competitiveness) and INSEAD (ranked third in their global innovation index).  Working hard to be the center for commerce in Southeast Asia, Singapore’s business leaders understand that the education system must produce a workforce that can keep up with global demands to continue as a top performer economically and to continue to enjoy a rising standard of living for its citizens.

During a recent trip to Singapore, CIEB Director Betsy Brown Ruzzi along with NCEE President Marc Tucker and CIEB Advisory Board member Vivien Stewart, met with a group of business leaders from a variety of industries in Singapore.  Each are on the front lines of managing the recruitment, hiring, training and evaluation of the Singapore workforce in their particular industry.  All have had experience not just in Singapore, but in a number of other countries in Asia and around the world, building human capital systems for their companies.  They shared their thoughts about how Singapore’s education system affects hiring practices, what they have observed about how Singapore’s workforce compares to that of other countries, and how Singapore is innovating in order to remain globally competitive.

Among the companies participating in this business roundtable was a global organization that employs 127,000 people worldwide with 1,700 employees based in Singapore.  In that company, ninety-five percent of the Singaporean workforce is recruited directly out of university, with the company providing them with the training they will need to be promoted from within.  That company also told us that they maintain a global selection standard when vetting future employees.  Their employees are made up of sixty-one different nationalities in Singapore alone.  They told us that they are able to attract the best from around the world, because people are willing to move to Singapore.  Singapore, they said, “…has a good infrastructure for foreign workers and their families, with international schools and assistance with moving to and from the country”.  It helps a lot, they said, that Singapore is an English-speaking nation and provides all of the modern conveniences and amenities these employees might want.  They told us that they seek out people with intelligence, people skills and agility for their firm.

Another corporate leader we talked with from the services side of the economy employs a local workforce of 9,000 people, seventy percent of which are Singaporean.  She told us that the Singapore government prefers local hires and has imposed a quota on foreign hires.  This poses some problems for the company, because Singaporeans do not generally like shift work, and so they look to the Philippines and China for functions requiring this type of work.  She said that they are working very hard to figure out how to make service-industry work more attractive to Singapore’s job candidates.

Another business leader whose firm sources, develops and trains talent to match employer requirements in Singapore and across the world including Australia, Japan, Africa and the United States works with Fortune 500 companies who have offices in Singapore and other parts of Southeast Asia.  He told us that many research and development groups have been moving to Asia in order to produce locally driven innovations.  Asian populations are growing, and they have different needs from Western populations.  There is fierce competition for international business between China, Singapore and Hong Kong.  Although international companies do not see Singapore as a big consumer market due to its fairly small population, the talent it can offer makes it a big draw.  The competition between Hong Kong, China and Singapore is based on business leadership, legal infrastructure and the ecosystem of suppliers.  Right now, he said, Singapore is ahead in all of these respects.  Even the mining industry is considering establishing a base in Singapore, because they need access to the banking system and to the kind of talent Singapore can provide.  Singapore can be used as a hub for that industry, with buyers and sellers based there and refiners nearby.  He added, “Singapore is also attractive because of the language abilities of its population.  Many customers are from places like Indonesia.  Singaporeans are more likely to speak their languages than people in Hong Kong or Shanghai, for example.”

A representative from the finance industry, whose global firm has its South East Asian headquarters in Singapore, said that its workforce is very mobile – employees often move around the world over the course of their careers.  When recruiting employees, they target students from the Ivy League as well as top universities in the United States, the United Kingdom, Australia and Singapore.  Their priority is to keep their employees for the long term, and to that end, they have a talent reassignment program to help employees remain employed during economic downturns.  In this particular company, many of its employees are from the United States and the United Kingdom who want to work in Singapore because of the strong market, compared to the economy in their home countries.  However, at the same time, she told us that her company is trying to decrease costs and has realized that they can hire local talent for the jobs traditionally reserved for expatriates, without having to spend money on the benefits expatriates require.  Singapore, she said, also has advantageous tax policies for corporations; corporations are taxed at a rate of 17 percent, as compared to 32 percent in China.

One member of the group mentioned that consumption and growth is stabilizing in markets like Western Europe and North America, while Latin America, China, India and Vietnam all have large populations and growing consumer bases.  Those different markets require different innovations due to culture and resource availability.  In his company they want to create an environment where the business can grow with local talent, and particularly people with high skills and the ability to meet future needs.  Singapore, he said, is in a unique position, competing with Hong Kong and Shanghai as an emerging East Asian business hub, as compared to places like Seoul and Tokyo, which have reached a plateau.  The Singaporean government has thought ahead to attract international business by providing excellent infrastructure.  He sees Singapore as a well-oiled machine, particularly in the realms of finance and commodities.  He told us that it is the number one country for bright people who have the ability to think ahead, plan and orchestrate development, and it is unique in Asia.  While not perfect, Singapore is much more advanced in these respects than anywhere else.  His company is moving one of its largest manufacturing units to Singapore to base the business close to the fast-growing Asian market.

“The talent in Singapore is as good as in any other market that we work in,” said another business leader.  “While workers in Korea tend to be good with analytics, employees in Singapore are good at operating with discipline, rigor, depth and follow-through.  Recent university graduates are top-notch, and creativity has really picked up in the last ten years.  However, the younger generation is missing drive, which is really present among workers in China.  This seems to become a problem as any economy strengthens.  The biggest employment challenge in Singapore, though, is volume.  Singapore is a small country with a workforce of only about four million people and 40,000 new graduates a year.  There is also competition from foreign workers, since a lot of companies bring in employees from other countries.”  Comparing Singapore’s workers to those of other countries, he classified them as, “having strong power of mind — intellectual capacity — and strong collaborative skills, with slightly weaker agility and leadership skills.  In Japan, China and Hong Kong, power of mind is very high, and in Korea, agility is very high.  In the United States, intellectual power is ok, but agility and leadership skills are very high.”

The service industry representative talked to us about the local talent in Singapore as “…having strong project management and multi-tasking skills.  They work hard; people in Japan, China and Korea may work longer hours than Singaporeans, but can be less productive.  Their weakness is in their aversion to doing shift work, and their high expectations for what they should be doing can be an issue.  They tend to expect immediate promotions, and are less willing to take on less challenging positions or to do administrative work, but this is an issue with all high growth, developed economies.”

In our discussion about the Singapore education system’s contribution to the Singapore economy, one member of the group said, “The streaming system in Singapore’s schools can be a self-fulfilling prophecy.  The students who are considered the best and the brightest get a disproportionally high investment from educators, and generally are groomed to go into government.  Due to the high levels of early investment in their education, these students are some of the best in the world.  But we see a big drop when we begin to look at the middling and lower-level students, who are the ones who go into middle and lower management jobs.  The system would be better off investing in traits like risk-taking and creativity.”

Another company told us that they hire a small number of graduates from Singapore’s polytechnics.  These hires have good qualifications, although that company generally prefers university graduates.  He mentioned that some polytechnic students use that experience as a steppingstone to university, and after graduation are often hired for management positions.  One of the other company representatives at our meeting said that her company hires a large number of employees from polytechnics, and gives them 18 months of training after graduation.  The government, she said, has recently been working to raise the status of polytechnics by promoting them as a good route to universities and careers.

As we finished up our meeting, one business leader summed the conversation up by saying, “Singapore will continue to reinvent itself.  Over time, it hopes to become a headquarters hub for international business and for research and development centers, and it will continue on the path to becoming a leisure and entertainment destination.  It is easy to attract people to work in Singapore, and though entrepreneurialism is weak, creativity among workers is on the rise and will continue to grow.”  “Singapore is branding itself as an education hub now, too,” said another member of the group.  “Asians from other countries are choosing Singapore for their studies, and there are numerous agreements and institutions in place to facilitate this development.  In terms of creativity, the government has been making strides in this arena, and opened up the entertainment, art and culture scenes to attract creative types.”