What have we learned?

What to do now?
What to do next?
Dirk Van Damme
Head of CERI
OECD/EDU
 Outline
• Preliminary remarks
• Observed impacts:
– Budgets
– Students
– Staff
– Institutions
• What to do now?
• What to do next?

30 June 2009 2
 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
35

UR in Q1 2009
ESP

30

25 SWE
ITA HUN
FRA IRL
GRC SVK TUR
20 BEL
POL
LUX
PRT
FIN
GBR USA
15
CAN
NZL CZE
AUT DNK
10 KOR AUS JPN
DEU
NOR
OECD average
MEX

NLD
5
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
% points difference Q1 2009-Q1 2008

30 June 2009 4
 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
g
– 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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 Scenario 1 = Status-quo
Scenario 2 = Trend

Source: CERI/OECD, 2008

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 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?
g
– 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
p
– Expansion of further education,, part-time
p
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
pp to support
pp local economy,
y,
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
Ri k off overly l defensive
d f i reactions
ti andd protectionist
t ti i t
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

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 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 partnerships

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 What to do now?
• Institutional strategies
– Attracting foreign students
– Develop ‘knowledge cities/regions’
– Efficiencyy g
gains in mergers?,
g , 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
( 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
arrangements,
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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 www.oecd.org/edu/imhe
www oecd org/edu/ceri
www.oecd.org/edu/ceri

THANK YOU !

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