What have we learned?What to do now?What to do next?

Dirk Van DammeHead of CERIOECD/EDU

Outline

• Preliminary remarks• Observed impacts:

– Budgets– Students– Staff– Institutions

• What to do now?• What to do next?

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Preliminary remarks

• Main impact of the crisis on HE still has to come; we are at the very early stages– Budget 2010 will be crucial, but full impact of

consolidation expected in the medium term– Steep rise in (youth) unemployment, will take a

long time to come back to pre-crisis level– Economic stabilisation and mild recovery will

not have major impact, except psychologically

• Yet, nobody has seen such a crisis before– Need to research this crisis

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Deteriorating youth unemployment rate

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AUT

BEL

CZE

DEU

DNK

ESP

FIN

FRAGRC

HUNIRL

ITA

LUX

NLD

NOR

POL

PRT

SWE

SVK TUR

GBR USA

AUS

NZL

KOR JPN

MEX

CAN

5

10

15

20

25

30

35

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

UR

in Q

1 20

09

% points difference Q1 2009-Q1 2008

OECD average

Preliminary remarks

• Very diversified reality…– Effects are/will be manifold and complex– There will be winners and losers– Challenges and opportunities– Straightforward consequences and unexpected

effects– Global and local, synchronized but with many

differences between countries– Mixing up realities, perceptions and expectations

• … will enormously defy the individual and collective capacity to change and adapt

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Preliminary remarks

• How to look in a more ‘hygienic’ and scientific way to the crisis:– Distinguish perception and reality– Distinguish observed (“what is”) and

desired/ undesirable (“what should”) facts and behaviour

• One thing seems to be sure: it is unlikely that the effects of the crisis will be few and will disappear soon

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Observed impact: budgets

• Public resources: Rapidly increasing state deficits and need for consolidation can lead to major cuts in public spending– UK: cuts announced/expected– US: many states cutting on HE spending

while impact of federal stimulus package marginal

– Unclear picture in most other countries– In some countries budgets increase as part

of stimulus packages

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Observed impact: budgets

• Increased competition with other major areas of public expenditure– Age-related and health– Environment

• Demographic decline of young age cohorts may seduce governments to reduce budgets– But participation may not/should not

decrease

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Source: CERI/OECD, 2008

Scenario 1 = Status-quo Scenario 2 = Trend

Observed impact: budgets

• Private resources: Private income comes under severe stress, affecting spec. privately funded institutions– Sometimes spectacular drops in endowment

income, donations, pension funds and annual giving

– Tuition fees hit price ceiling (US)– Decrease in R&D contracts from industries

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Observed impact: budgets

• For publicly funded institutions limited space to increase private resources (fees)– Will students invest/indebt with insecure

return?– Political resistance to significant increase in

tuition fees (Europe)

• Investment strategies will suffer from more difficult access to credit

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Observed impact: budgets

• Diversifying income will be major challenge– International, fee-paying (full cost?) students?– More competition for less research money– Expansion of further education, part-time

programmes, non-degree provision and other atypical activities

• Adverse effects: HEI’s capable in diversifying resources may be seen as not needing public support and offer excuse to governments to cut

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Observed impact: students

• General expectation that demand will increase– Students postpone entry to labour market

• Competitive disadvantage of entering labour market in times of crisis

– Unemployed seeking to upgrade qualifications– Also employed in vulnerable sectors interested in

reskilling in view of mobility– Lifelong learning to cope with innovation

(recovery will include major restructuration)– Decreasing opportunity costs, but higher costs for

students and households to participate

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Observed impact: students

• Yet, some institutions will limit student intake• Shifting demand

– From private to public– From international to domestic

• Students’ expectations with regard to earnings and job prospects to be lowered to realistic levels

• What is long-term impact of high youth unemployment on motivation and aspirations?

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Observed impact: staff

• Serious challenges in staff policies– Senior staff may postpone retirement (<crisis in

pension systems and private pension funds)• Increasing debate on tenure system

– Some institutions may be obliged to lay off well-qualified staff, often junior and more productive• Such staff will enter the academic labour market• Will be willing to be very mobile• Increased competition may push down salaries

– Increasing workload for (remaining) staff

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Observed impact: institutions

• Institutional missions– Balance between research and teaching– Third mission under pressure?

• But also opportunities to support local economy, innovative start-up business, technology transfer

• Social mission and impact on society will become more important

– Increasing demand to focus and prioritise institutional missions

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What to do now?

• What not to do:– Because of its severity, speed and impact this

crisis will not be surmounted by continuing ‘business as usual’, ‘let’s buy time’ or ‘wait and see’ approaches

– Risks of overly defensive reactions and protectionist behaviour

– Risk of being focused exclusively to short-term coping strategies

– Risk of being misguided by false rumours, premature expectations etc. that may lead to inadequate behaviour

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What to do now?

• One thing is certain: HEI’s don’t want to be the passively ‘impacted’ or the mere addressees of strategies and policies, but want to have an active role and voice– No top-down policies, but negotiated policies– Mutual trust in HE systems is essential

• Need for a collective ‘sense of urgency’, moving beyond individual coping strategies to be hided from outside (competitors’) view

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What to do now?

• Information and knowledge will be crucial– Speed of the crisis asks for rapid exchange

of information– Institutional need for ‘intelligence’ on what

governments and competitors are planning

• OECD response: educationtoday lighthouse

www.oecd.org/edu/lighthouse 30 June 2009 19

What to do now?

• Institutional strategies– Business models, financing strategies and

investment strategies should be looked at carefully

– Contingency planning– Income diversification– Cost-saving measures

• Impact on quality of raising staff/student ratio?

– Public/private partnerships30 June 2009 20

What to do now?

• Institutional strategies– Attracting foreign students– Develop ‘knowledge cities/regions’– Efficiency gains in mergers?, economies of

scale?• Or engaging in alliances, synergies

– But institutions are rather conservative, not well tuned to change

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What to do now?

• Governmental policies– Increase scholarship and income-contingent

student loan and grant programmes– Governments should stimulate participation

in HE (‘better to have students than to have unemployed people’); marginal cost limited

– Include knowledge & innovation investment in stimulus packages

– More regulation can be expected, but institutions don’t want to return to regulation jeopardizing institutional autonomy

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What to do now?

• Governmental and institutional: opportunities for efficiency gains and structural reforms– Efficiency in teaching and learning can be

enhanced by innovative and more sophisticated arrangements, including use of technology (cfr distance education)

– More cost-effective business models for undergraduate education?

– Move towards more vocational programmes (flexibility, practical, but less apprenticeships)

– New skills (financial education)

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What to do next?

• Crisis and recovery are an opportunity…– To transform coping strategies in long-term

strategic management– To enhance transformative capacity of

institutions and HE systems

• …but also a responsibility– Did universities fail in developing the right

knowledge and skills?– To promote an economy not driven by greed

but by social and ecological responsibility

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What to do next?

• Crisis probably will increase awareness to invest in the knowledge economy– Changing minds from ‘coping with crisis’

to ‘preparing the post-crisis recovery’ which will a more innovative and knowledge-based economy

– Countries will invest more during the crisis will gain a competitive advantage in the post-crisis recovery

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What to do next?

• Crisis will amplify the call for accountability– Institutions to demonstrate what not only

their output but also their outcomes and real impact are

– And to demonstrate their added-value• Are current quality assurance arrangements

capable of providing real transparency?

– Need to strengthen legitimacy of HEIs

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What to do next?

• Long-term effects and impacts– Will private and social return be impacted

by the crisis?– Will HE still be the motor of social mobility

and meritocracy?– Which types of skills will be needed and

rewarded in the post-crisis knowledge economy?• 21st skills?

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Concluding

• Once again universities will have to show their capacity for change in an increasingly demanding and competitive environment:

“The longevity of the university is not a result of never changing – but rather a credit to its ability to evolve, adapt, and change over time” (Clark Kerr)

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THANK YOU !

www.oecd.org/edu/imhewww.oecd.org/edu/ceri

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