Restoring and sustaining growth in Eastern Europe and Central Asia requires reforms to Managing Education for Results in Eastern EuropeSkills, and Central Not Asia Just Diplomas boost competitiveness and increase labor productivity. Among the required changes are reforms to education. In surveys conducted immediately before the economic crisis, companies in the region reported shortage of skills as one of the most significant bottle- necks in their operations, suggesting that education systems in Eastern Europe and Central Asia— with a reputation for high enrollment rates and well-trained teachers—still need to improve their performance. In fact, international test results show that many students—outside of a handful of coun- tries in the region—are failing to acquire more than the most basic literacy and numeracy skills. Anecdotal evidence also indicates that the rapid expansion in higher education has led to a decline in the quality and relevance of education provided. At the same time, there are few opportunities for adults to retrain, upgrade, or acquire new skills—the life-long learning needed for employability. As Skills, Not Just Diplomas suggests, the shortage of skills is a wake-up call to reform education and training systems to provide higher quality education with the flexibility for students and training institutions to better respond to market signals. Such deep reform will have to center on the following: DIRECTIONSINDEVELOPMENT • Focusing more on measuring whether students learn and graduates find jobs, and Human Development using this information to actively improve teaching and learning. • Using incentives across the education system, including granting greater autonomy to institutions on curriculum, teaching methods, resource use and institutional mission, and increasing accountability for learning. • Addressing the huge inefficiencies in the sector by downsizing the school network Skills, Not Just Diplomas in response to dwindling student numbers, and using freed-up resources to restore with the attractiveness of the teaching profession, expand adult education and training, and Managing Education for Results measure learning outcomes. Abu-Ghaida, Bodewig & Rutkowski in Eastern Europe and Central Asia Only by embracing and seriously pursuing such difficult and long-term reforms will the countries in Eastern Europe and Central Asia substantially improve their education outcomes and support the competitiveness of their economic systems. Sondergaard & Murth Lars Sondergaard and Mamta Murthi with Dina Abu-Ghaida, Christian Bodewig, and Jan Rutkowski ISBN 978-0-8213-8096-3 i SKU 18096 Skills, Not Just Diplomas SNJD.indb i 9/27/11 10:10:01 PM SNJD.indb ii 9/27/11 10:10:03 PM Skills, Not Just Diplomas Managing Education for Results in Eastern Europe and Central Asia Lars Sondergaard and Mamta Murthi with Dina Abu-Ghaida, Christian Bodewig, and Jan Rutkowski SNJD.indb iii 9/27/11 10:10:03 PM © 2012 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved 1 2 3 4 :: 14 13 12 11 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www .copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. ISBN: 978-0-8213-8096-3 eISBN: 978-0-8213-8097-0 DOI: 10.1596/978-0-8213-8096-3 Library of Congress Cataloging-in-Publication data has been requested. Cover photo: The graduating class of 2007, Alexandru Ioan Cuza University, Ias¸i, Romania, march to their commencement ceremony. © Mediafax Foto/Liviu Chirica. SNJD.indb iv 9/27/11 10:10:03 PM Contents Foreword xv Acknowledgments xix Abbreviations xxi Overview 1 The Skills Challenge 2 Why Are Skills an Emerging Problem if Education Systems Are Delivering? 4 Priority Areas for Action 7 Managing Education Systems for Results 9 Build the Foundations of Adult Learning Systems 14 Conclusion 14 Notes 15 Chapter 1 The Demand for Skills in ECA 17 Background: The Demand for Highly Skilled Labor in the Global Knowledge Economy 18 Demand for Skilled Labor Has Risen in the ECA Region 20 Unemployment Patterns in ECA Countries Confirm the Demand for Skilled Labor 25 v SNJD.indb v 9/27/11 10:10:04 PM vi Contents Wages Have Risen for Skilled Labor 31 Lack of Needed Skills Is Impeding Enterprise Growth 36 Skills Mismatch in the ECA Region 39 Summary 41 Notes 43 Chapter 2 Education and the Supply of Skills to the ECA Market 47 Background: The Global Knowledge Economy Requires Lifelong Learning 48 Formal Education in ECA Countries: High Attainment and Good Quality Relative to Current Income Levels 50 Why Are Skills Emerging as a Problem if Education Systems Are Delivering? 52 Students May Not Be Acquiring the Right Skills 63 Adult Learning Is Limited in the Region 65 Summary 77 Annex 2A: Education Systems in ECA Today 80 Notes 87 Chapter 3 Resolving the Skills Shortage in the ECA Region: A Policy Framework 89 Operating in the Dark: Ministries Know Too Little to Effectively Manage the Education Sector 90 Legacy of Central Planning 96 Inefficient Use of Funds 103 Addressing the Skills Challenge 108 Summary 111 Notes 112 Chapter 4 Managing for Results at the Pre-University Level of Education 115 Track Student Learning and Employment Outcomes 116 Expand Autonomy in Exchange for Accountability for Results 120 SNJD.indb vi 9/27/11 10:10:04 PM Contents vii Improve the Efficiency of Resource Use 126 Summary 136 Notes 138 Chapter 5 Managing for Results in the Tertiary Education Sector 139 Introduce Learning Assessments and Track Employment Outcomes 140 Strengthen Accountability 152 Introduce Performance-Based Financing and Encourage Private Funding Resources 159 Summary 162 Notes 163 Chapter 6 Advancing Adult Learning in ECA 165 Building the Foundations for Adult Learning Systems 166 Promote Autonomy and Accountability of both Public and Private Providers 172 Ensure the Efficiency of Sector Financing 175 Continued Government Role in Retraining and Education for the Unemployed 183 Priorities for Adult Education and Training Systems in ECA Countries 187 Summary 191 Notes 191 Chapter 7 Extended Summary: The Path for Education Reforms in the ECA Region 193 The Skills Challenge in the ECA Region 194 Why Are Skills an Emerging Problem if Education Systems Are Delivering? 197 Priority Areas for Action 203 Managing Education Systems for Results 207 Build the Foundations of Adult Learning Systems 219 Summary 220 Notes 222 References 225 SNJD.indb vii 9/27/11 10:10:05 PM viii Contents Boxes 2.1 Defining “Skills,” “Competencies,” and Other Terms 49 2.2 Testing for Reading Competency in the Programme for International Student Assessment (PISA) 55 2.3 Turkey: Many Students Fail to Acquire Even the Most Basic Proficiencies 57 2.4 Russia: Building Higher-Order Skills Is Proving Difficult 59 2.5 The History of Vocational Education in the ECA Region 64 2.6 Two Forms of Adult Learning 69 3.1 The Value of Standardized External Student Assessments in ECA Countries 94 3.2 Detailed Regulations Set Norms Even for Education Facilities in the ECA Region 99 4.1 Using Data to Measure Gaps and Design Better Policies: Three Examples 118 4.2 Eliminating Class Size Norms in Denmark 124 4.3 Rethinking Secondary Education 125 4.4 Per Student Funding Formula: Recognizing the Varied Costs of Providing Education 128 4.5 Rationalizing Class Sizes in Bulgaria 133 4.6 Developing New Teacher Policies 135 5.1 The Difficulty of Measuring Competencies at the Tertiary Level 142 5.2 Decentralization of the University Sector in Romania 146 5.3 Introducing Businesslike Leadership and Management in Lithuanian Universities 149 5.4 Using External Watchdogs to Shed Light on Integrity Problems 155 5.5 Two Approaches to Strengthening Accountability 157 6.1 Lifelong Learning Strategy of the Czech Republic 167 6.2 Policy Tools for Advancing Adult Learning in the United Kingdom 169 6.3 Market Failures that Impede Adult Learning 176 6.4 Supporting Small and Medium Enterprises to Participate in Training 181 6.5 Second-Chance and Remedial Education 184 7.1 Higher-Order Skills for the World of Work in the 21st Century 199 7.2 A Large Proportion of Students Are Failing 201 SNJD.indb viii 9/27/11 10:10:05 PM Contents ix 7.3 Options for Making Schools More Accountable for Learning Outcomes 213 Figures O.1 Analysis of Reading Competency of 15-Year-Old Students on the PISA 2009 3 O.2 Distribution of Firms in ECA Region that Consider Worker Skills a “Major” or “Very Severe” Constraint, 2008 4 O.3 Primary School Student-Teacher Ratios in ECA Compared to Other Regions of the World, 1990–2008 8 O.4 Status of Measuring and Using Data on Student Learning Outcomes in the ECA Region, 2009 10 1.1 Trends in Routine and Nonroutine Tasks of U.S.