Economics: England stuck at the back of the class

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THE English elite - English, not Scottish or Welsh - has often had an ambivalent attitude towards education. It has always been reasonably well educated itself, at least in the classics, but has distrusted both academic cleverness and any wider dispersion of scholastic benefits.

The Earl of Rochester, erotic versifier, flaneur and adviser to Charles II, spoke for many before and after him when he warned that the ploughmen whom the puritans had taught to read were likely to stir up trouble. Charles built up the Oxbridge colleges, and discouraged more popular institutions.

The notion that education is too good for the masses has persisted with tenacity, as a report from the National Institute of Economic and Social Research last week suggests*. Much to the cost of our prosperity, England continues to have a poorly schooled workforce.

In the key subjects of importance to working life, the standards of attainment at the end of compulsory schooling in England are far lower than in Germany, France or Japan. The three charts summarise the attempt to compare the number of pupils reaching similar standards in each country.

The first chart shows the number of 16-year-olds reaching the equivalent of GCSE grades A-C in mathematics, the national language and one science in 1990-91. In the German case, this is a Realshulabchluss or better. In the French, it is a brevet d'etudes du premier cycle.

The Japanese comparison is more difficult because of the lack of national examinations at this level. But an Niesr analysis of prefectural exams was alarming. It suggested that the average Japanese pupil studying maths was doing as well as the top thirtieth of English pupils.

The second chart shows the proportions of young people obtaining entry requirement qualifications for further education. In England, it shows school-leavers or further education students up to the age of 19 with two or more passes at A-level or with National Diplomas. The equivalents in Germany are the Abitur and Berufsabschluss and in France the Baccalaureat.

The third chart gives the proximate cause of the problems revealed by the first two: the staying-on rate in different countries. This is the proportion of young people aged 16 to 19 in full- or part-time education and training. Despite recent rises in England, we still lag behind.

There is a fashionable view that the importance of education and training has been overdone, the most important evidence for which is the continued success of the United States. After all, US living standards (as measured by Gross Domestic Product per head after allowing for international price differences) are still 18 per cent higher than German ones. But the US education system is recognised as poor.

However, this argument begins to fall apart on close inspection. The US has traditionally had a strong school system and a self-help, learning culture. Its success was also buoyed by abundant natural resources, a boon enjoyed by other frontier states such as Australia but not on the same scale by any European country or Japan.

Because of high population growth, recent US GDP growth rates are much less impressive than they seem. US living standards for most people have been falling amid increasing complaints about the education system. Moreover, the pattern of the fall in US real wages since 1973 bears out the importance of schooling, because it has been far more pronounced for poor learners.

One study found that the decline in real wages between 1973 and 1988 for a male high school drop-out was 26 per cent, whereas the decline for a male college graduate was 4 per cent. In 1973, college graduates earned 69 per cent more than drop-outs. By 1988, they were earning 110 per cent more. Schooling pays.

Indeed, the surprise in Britain is that our living standards are not relatively more depressed than they are. The figures show that, despite our undoubted problems, our national output per head in 1990 was 87 per cent of that in West Germany (after allowing for price differences) and 92 per cent of that in France.

Part of the explanation for the small gap is that we work longer than people in any other major European economy. Another factor is that more of us work. We maintain our living standards by having far more women at work than in France or Germany. National output per employee is only some 83 per cent of the German level, but we make up the rest with more people and hours.

Repeated studies by the Niesr have highlighted both the gap in productivity - output per employee - between British and continental plants, and the educational causes of it. Poor school standards, particularly for the lower half of the ability range where the disparity with our rivals is worst, make training more difficult.

This is one reason why Britain is still lagging behind France and Germany in the award of craft and technician qualifications. The Niesr work shows that Britain awarded 30,000 mechanical and engineering qualifications in 1987 against 98,000 in France and 134,000 in West Germany, economies of similar size.

This shortfall in intermediate skill training leads to the familiar problems suffered by British businesses near the peak of any cycle. They cannot find enough skilled people, and therefore enter into a bidding war that aggravates inflation. But just as important, the shortfall locks British businesses into a 'low skills equilibrium' at whatever point of the business cycle.

British managers have to make production systems foolproof because they cannot dispense with fools. Downtime on factory production lines is greater than on the Continent because workforces are unable to repair even simple faults, and have to await specialised skilled teams. Stocks have to be higher to avoid bottlenecks. More highly qualified people have to fill the gap because of the lack of intermediate level skills.

Some of the Government's reforms will help. The National Vocational Qualifications will, in theory, establish countrywide benchmarks, but there are potential problems with employer-run TECs. Transferable skills are in shortest supply because businesses have little interest in providing them if competitors can poach the results. But employers will naturally tend to try to get TECs to undertake the specific, rather than transferable, training which they would otherwise have to pay for themselves.

The main problem, though, is simply the lack of urgency with which this central national deficiency is addressed. Every year that passes is another year with another group of school-leavers whose horizons are foreshortened.

If we have so little appreciation of our own self-interest, we should at least have some shame.

*Andy Green and Hilary Steedman; Educational provision, educational attainment and the needs of industry: a review of research for Germany, France, Japan and Britain, NIESR, 2 Dean Trench St, London SW1, pounds 8.50.

(Graphs omitted)