Crisis hit countries cut down public spending on education

Androulla Vassiliou, Member of the EC in charge of Education, Culture, Multilingualism and Youth delivered a speach at the debate entitled ‘The Crisis in Europe and the Future of Higher Engineering Education’, co-organised by the European Society for Engineering Education and the Greek Presidency. (from left to right) Kamel Hawwash, President of the European Society for Engineering Education (SEFI) and Professor in the School of Civil Engineering at the University of Birmingham, Androulla Vassiliou and Antonia Moropoulou, Vice President of SEFI and Professor at the National Technical University of Athens, School of Chemical Engineering, Section of Materials Science and Engineering. (EC Audiovisual Services, 07/04/2014).

Despite an almost continuous but very moderate increase of government spending on education in absolute (euro) terms during the 2002-2012 decade the amount of public resources devoted to this end as a percentage of GPD either stagnated (2002-2007) or decreased (2009-2012), with the exception of a brief period between 2007-2009. During those three years educational spending rose by half a percentage unit of GDP. According to Eurostat, the EU statistical service, “In 2012, EU-27 total general government expenditure amounted to 49.4 % of GDP. Based on the latest available expenditure data by economic function for 2012, 5.3% of GDP was devoted to expenditure on education. Of this, the highest shares were dedicated to ‘secondary education’ at 1.9% of GDP and ‘pre-primary and primary education’ at 1.7% of GDP”.

As expected government spending on education was higher in countries with strong and wealthy economies and much lower in the poorer EU member states. It’s difficult to distinguish which of the two facts is the cause and which is the effect. Low educational investments lead to future poorness or present poorness is the cause of low educational spending? In any case it is certain that high educational expenditure yields the largest future returns.

Cause and effect

Eurostat found that “As a ratio to GDP, the highest levels of government expenditure on education among the reporting countries were found in Denmark (7.9 % of GDP), Sweden (6.8 % of GDP) and Cyprus (6.7 % of GDP), while the lowest ratios were recorded in Romania (3.0 % of GDP), Bulgaria (3.5 % of GDP) and Slovakia (3.9 % of GDP). As far as EFTA countries are concerned, the highest value was recorded in Iceland (8% of GDP)”.

In 2012, education had the highest weight in total government expenditure in Estonia (16.2% of total expenditure), followed by Lithuania (15.5%) and Latvia (15%). Apart from the EU Member States, Iceland recorded the highest value (16.9% of total expenditure). Eurostat observes that “The countries devoting a higher proportion of total general government expenditure to education tend to be those where total general government expenditure to GDP is relatively low”.

A positive correlation must be also present between educational spending as a percentage of GDP and overall wealth. Not surprisingly, “The lowest weights of general government expenditure on education in total general government expenditure were recorded in Greece (7.7% of total expenditure), Italy and Romania (both 8.2% of total expenditure). The same logic seems to apply in the relation between government expenditure on education as a ratio to GDP and total national income. Expenditure decreased slightly from 2011 to 2012, continuing the trend started in 2009 (crisis years, falling overall incomes). In particular, the biggest decreases in terms of GDP were observed in Romania (-1.1% of GDP), Portugal (-0.9% of GDP), Cyprus (-0.5% of GDP) and Hungary (-0.4% of GDP).

Easy victim

This is an unfortunate finding. A fall in total national income due to the financial crisis should not have led to a fall of expenditure on education as a ratio of GDP. Yet this proved to be the case. The obvious reason is that during the crisis years governments tended to cut those expenses, which had the lowest direct and less visible impact on present welfare. Educational expenditure was the first candidate for the ‘butchery’. In reality politicians didn’t care if this behavior severely undermined incomes and overall competitiveness of the economy in the long-term.

It’s a pity to watch politicians having a time horizon ending at the next election, usually a few years, while Peoples and countries have time horizons spanning many centuries. It takes a very strong political altruism and long-term vision in order to try and make the two horizons coincide.