Financial Times

Slow growth cause of unemployment - WB report
Sri Lanka is one of the few countries in the world to legally ban the establishment of private schools since the early 1960s from grades 1 to 9, an official report has said.

"Other low income countries and states famous for their high basic education attainment levels such as Costa Rica and the state of Kerala in India rely heavily on the private sector. In Kerala, for instance, more than half of the school enrolment is in private schools," noted the comprehensive report on Sri Lankan education from the World Bank, released recently.

It said in the context of the political economy, Sri Lanka also made it virtually impossible to invest in private universities, although there is no explicit legal barrier. However from the 1990s onwards it has been possible to establish private degree awarding institutions, as long as they do not carry the title "university."

The study titled "Treasures of the Education System in Sri Lanka: Restoring performance, expanding opportunities and enhancing prospects" is a joint collaboration between the Bank and the Education Ministry and takes stock of the education sector here.

Some of the issues it looks at are overall sector and different levels of education; access to education and quality; large number of dropouts with 18 percent failing to complete Grade 9; skills development; allocating resources and improving performance levels of students.

Excerpts of the report:
In preventing formal private universities the Sri Lankan education system deviated from the model adopted by some of the highest performing education systems in the world such as South Korea which concentrated public resources on primary and basic education, followed by secondary education while leaving university education largely to the private sector.

Recently however Sri Lankan education policy makers have recommended amending legislation to allow private schools and private universities to be established. This is a path breaking recommendation which, if implemented, would remove a major, self imposed shackle on the education system and enable Sri Lanka to compete on more even terms with other countries.

Enrolment
Enrolment in grade 1 is about 97 percent for both boys and girls and nearly all children complete grade 5. At the end of the compulsory education cycle - Grade 9 - completion rates are about 81 percent for boys and 84 percent for girls.

School completion rates are less satisfactory in the senior secondary cycle with comparatively low examination pass rates at the GCE OL and GCE AL exams. The average pass rate at the GCE OL exam for the country as a whole is 37 percent implying that only one out of about three successively pass the exam. Pass rates in the GCE AL exam is about 56 percent which is on the low side given that only the best students survive through to the GCE AL cycle.
Over the past 10 years GCE OL pass rates have improved while pass rates in the GCE AL have remained constant.

Unemployment
The high unemployment rates of educated labour force participants are mainly caused by lengthy job search durations by new entrants into the labour market. These long periods have led to considerable social unrest in the past, particularly among university graduates. The main cause of high unemployment and long job search among educated young people has been the slow growth rate of the economy.

Capital spending
The tight budget constraint in recent years has fallen especially heavily on the capital budget. The education capital budget declined steeply from 5 percent of government capital spending in 1999 to 2.5 percent in 2002. Most of the capital investment is on construction activities - building of classroom blocks in schools and lecture halls, administrative complexes and residential facilities in universities. Less than 20 percent is invested in quality inputs such as equipment, technology, furniture and tools.

The classroom construction activities in the school system also appear ad hoc without sound forward planning based on enrolment needs. In consequence many rural schools carry excess capacity with empty classrooms while urban schools are heavily congested and over-crowded. As a result of the low investment in quality inputs, the country could find itself on the wrong side of the digital divide and be seriously constrained in equipping future generations with the knowledge, skills and competencies required in the modern global knowledge economy.

Schools
There has been sharply increasing demand for popular, prestigious urban schools and decreasing demand for rural and less prestigious semi-urban schools. This shift in demand has led to the existence of a large number of very small schools. About 5,900 schools (60% of schools) have less than 300 students. Further, about 2,700 schools (27% of schools) have less than 100 students and 1,360 schools (14% of schools) have less than 50 students. This network of small schools is expensive to maintain and operate.

Public university education in Sri Lanka is expensive, with high unit operating costs in comparison to other developing countries. In addition, there are wide differences in unit costs among public universities, ranging from about 40,000-120,000 rupees per student per year. Generally, unit costs are related to student enrolment size, with smaller universities experiencing high costs and larger universities, which can reap economies of scale, enjoying low unit costs. The most expensive universities tend to be small, new institutions such as the Wayamba, Eastern and South-Eastern Universities. Larger older universities such as Kelaniya, Jayawardenapura, Colombo and Jaffna have the lowest unit costs, apart from the special case of the Open University, which only offers distance education course and has high enrolment numbers and very low unit costs. The exception to the general rule above of an inverse relationship between unit costs and enrolment size is Peradeniya University, which is the second largest university in terms of student numbers, but has unit costs comparable to the small South-Eastern University.

Education Qualities and Learning Outcomes
The Sri Lankan education system contains islands of excellence. Students from the best schools and university programs enjoy high demand in some of the world's leading universities and private corporations, and in international organizations. However the average level education quality and learning outcomes are considered unsatisfactory by policymakers. Cognitive achievement tests among substantial shortfalls in mastery of fundamental language and numeracy skills towards the end of the primary cycle. In first language (Sinhalese and Tamils), average mastery is only 37%. Writing (28%) and syntax (30%) are the weakest mother tongue skills. Comprehension (45%), too, is poor.

Vocabulary skills (70%) are better, but even here one in three children has an inadequate command of the language. English language skills are extremely low. Only 10% of primary children achieve the target level of mastery. English language writing skills are virtually non-existent, with just 1% of children exhibiting the required skill level. English language comprehension (16%) and syntax (20%) are also very poor. English language vocabulary skills are higher (35%), but show that two out of three children lack even this basic skill.

Skills development
The skills development sector faces a number of critical challenges. These include: (i) expanding the coverage of service provision to offer greater regional balance: (ii) stimulating private investment and forging private - public partnership in service deliver; (iii) training mismatches, with the presence of TEVT course for which there is insufficient demand and a shortage of TEVT courses which enjoy strong demand; (iv) internal inefficiencies in the sector with duplication of course, outdated equipment and curricula, shortage of good trainers and high dropout rates; and (v) sub-optimal use of existing public sector workshops and laboratories; and insufficient linkages between the education and training sectors.

Health and nutrition
The analysis of the relationship between cognitive scores and school, household and health variables show that poor health and low nutrition status among children are negatively associated with learning outcomes. In consequence, attempts to improve education quality and learning levels could benefit from actions to improve the health and nutrition levels of poor children. The basic framework for an effective school health and nutrition program could contain the following core elements:

* Health-related school policies that provide a safe and secure physical environment, a favourable and affirmative psychosocial environment, and address issues such as student abuse, sexual harassment, school violence, and bullying;

* Good school construction and maintenance practices to ensure safe drinking water and adequate, clean sanitation facilities; and

* Skill based health education to develop knowledge, attitudes values and life skills to enable students to make and act on the most appropriate and positive health related decisions; and school-based health and nutrition services to address problems such as micronutrient deficiencies and worm infestations hunger, dental caries myopia and hearing impediments.

Social cohesion
Enhancing civic knowledge and understanding among students is an important measure to promote respect for diversity, democratic governance and civic liberties in the backdrop of the 20 years long secessionist conflict in the country. Additional measures to promote social cohesion through education include producing textbooks that are sensitive to the cultures of different social groups, using the curriculum and co-curricular activities to promote respect for diversity, introducing schools where children from different ethic groups can study together and promoting the use of English as a link language. These are useful measures although their impact clearly depends on the cooperation of dominant groups in the conflict affected areas are needed to promote these activities effectively.

Private sector
As the country advances to higher levels of education quality the education system needs to supplement the government budget by raising alternative sources of revenue. This is especially urgent in an unfavourable macroeconomic environment with a large and persistent budget deficit. Relaxing legal obstacles to the establishment of private schools and introducing strategic initiatives to counter the adverse political economy environment to private sector participation in education could produce several benefits like:

It would increase the overall volume of resources invested in the education sector since the students attending private schools and education institutions are likely to be drawn from upper income families, it would release more public resources, on a per student basis, for student from poorer families,
It would stimulate economic activity in a sector where investment has been artificially restricted and contribute to higher growth, and
It would provide an alternative model of service delivery, with considerable power and responsibility at the level of the individual education institutions, such as private schools and institutes. These private education institutions would be compelled to offer high quality services to remain viable in an economic context where they are in competition with free public education institutions.

The establishment of private universities has been an extremely contentious issue, with several past attempts resulting in student violence and social unrest. Hence, it is highly unlikely that private universities can be established in Sri Lanka in the medium-term. The government has responded to the opposition to private universities by encouraging the private sector to participate in non-contentious areas. These have mainly been the establishment of private degree awarding institutions, usually linked to foreign universities and investment in tertiary level programs such as professional courses and technical fields.

The government needs to explore participation in tertiary level non-university education, especially in professional and technical fields where the demand for labour, both within and outside the country, is strong.

Cost sharing in education
The analysis clearly shows that public university undergraduate education yields high private return well in excess of social returns, and inappropriately benefits the wealthiest quintile of households. Given these facts, there is a strong case for increasing the share of university income that is drawn from private households.

Equally, it is important to take into account the political economy context of Sri Lanka, where tuition free public university has been the norm for decades, and the international experience of countries that have sought to introduce cost sharing into free public university systems, which have resulted in strong resistance, especially from student groups.

Hence it is unlikely that Sri Lanka will be able to introduce cost sharing into public undergraduate education anytime in the near future. However, over the long-term, especially as the economy grows and the wealth of households increases, cost sharing will need to become a live policy option. In this context an area that has aroused considerable interest in transition economies is that of income contingent student loans.

The government could consider pilot testing some student loans of this type, perhaps to be used in private tertiary institutions in the first instance. Meanwhile, an area where cost sharing is possible in public education is that of postgraduate degrees.

The majority of postgraduate students in universities are employed and engage in part time, fee paying courses.
This is an area that has considerable potential for further expansion to increase university incomes and improve the supply of well-educated human resources in the country.

Political economy constraints
Communicating the rationale for controversial but important policy measures to stakeholders and beneficiaries and building shareholders participation in reforms is an important area where government capacity is still modest. For instance, the government implemented a school rationalization program over 1998-2002, which achieved over 75% of its target.

This was a well-designed, successful rationalization program. However, it generated intense controversy, and central and provincial education authorities were unable to explain the rationale for the program clearly to local communities, resulting in its temporary suspension in 2003. Similarly, the government commenced a multiple textbook policy, to widen choice and improve quality, which generated intense controversy and delayed implementation for several years.

Again central and provincial education authorities lacked the capability to communicate the policy effectively. The country also has in the aggregate, a surplus of schoolteachers, although there are efficiencies in certain subjects, especially English and in the Tamil medium. However, there is intense pressure to employ more teachers, inter alia to reduce the pressure of unemployed educated young people. Again, government agencies have often found it nearly impossible to withstand this pressure. Hence strengthening the ability of government education agencies, at each level of the administrative tier, to communicate the rationale for potentially controversial policy measures and build stakeholder support is a vitally important area for future institutional strengthening.

Public expenditure tracking
A public expenditure tracking system would constitute an important management tool for education policy makers and finance officials and complement the medium-term budgeting system.

It would provide the central government and the provinces information on the flow of funds through the education system and the actual level of resources reaching various service delivery points such as schools, universities, national colleges of education and teachers centres.

It would also increase the transparency of resource flows through the system. Such information could then feed back into policy formulation and resources allocation as education development needs evolve, and central government and provincial plans refined.

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