Going for growth on education

Densil Williams, Guest Columnist

The job of being a minister of finance in Jamaica must be an unenviable one. Trying to grow the Jamaican economy, behave fiscally responsible, generate macroeconomic stability, among other imperatives, is not a simple task.

Given the many problems in Jamaica exacerbated by some structural deficiencies, the job must require long days and lonely nights for the minister. There clearly has to be something that motivates the holder of this office, besides the salary, to want to get up and go to work every day.

To pay less than US$100,000 per annum to a minister of finance who has the difficult task of growing a difficult economy like Jamaica's is a joke taken too far. We need to pay our public servants well; and when they do not deliver the outputs, we fire them without warning. We cannot, however, expect to compensate people poorly but expect performance to be above efficiency.

Our economic numbers seem to be getting worse by the day. The main doorkeepers for growth, the Bank of Jamaica and the Planning Institute of Jamaica, are all trying to sound optimistic about growth in the current environment. They predicted growth for the next fiscal year to be around 1%, but as we know, this is hardly anything to shout about.

Any single shock will easily derail the growth prospect and push the economy off track. Growing by 1% is like not growing at all. Further, if we look at the targets the Government has set itself for the next seven years, one per cent growth will not get us very far.

Take, as an example, the debt-to-GDP target of 95% in 2020 as a case in point. At the moment, it is reported that the debt stock stands at J$1.7 trillion, and GDP stands at J$1.2 trillion, making debt 140% of GDP. To get to 95% in seven years, we will need to grow the GDP or reduce the debt stock in order to achieve this.

If we assume 1% growth per year for seven years and further assume the stock of debt does not change, the ratio at 2020 will be roughly 132%. So, to get to 95%, with a 1% growth rate, there will have to be a cut in the stock of debt to, say, J$1.2 trillion. Otherwise, we will have to grow the GDP to roughly J$1.6 trillion and assume the measures identified to bring down the debt stock will be able to get the stock to roughly J$1.5 trillion in seven years.

Although these are rough figures, and clearly there are margins of error with which we will have to work, the numbers suggest that the task ahead is a daunting one. We will have to find ways to get the growth figures up to 6% to have any serious chance of meeting that debt-to-GDP target of 95%. At 6% growth per year over the next seven years, the GDP should roughly be in the area of around J$1.8 trillion. With all other things being equal and if the debt stock is reduced by J$120 billion, the target can be achieved.

How to get this 6% growth is where the conversation needs to be focused. The extant conversation is too focused on the austerity measures and cut-cut-cut instead of grow-grow-grow. To get to the 6% level, however, we will have to do some work correcting many of the structural deficiencies that have hindered sustained growth for a long time. I discussed energy the last time. Another important area is education.

RETHINK CURRICULUM

An educated workforce will have a higher level of productivity than one that is not. Education is a powerful tool which can help workers to be creative, innovative and produce more output with a smaller amount of input. However, this outcome of higher productivity from the education system will be a function of what the system is designed to do: that is, the learning outcomes expected of the recipients.

In the main, we have an education system that values sophistry over hard-core analytics and problem solving. If we are going to use education as a transformative tool to improve the nation's productivity, we will have to start with producing graduates that are not only good at talking but must be good at problem solving, using data, and not merely their gut feelings. Too many of our managers make decisions based on gut feelings and on the data and analytics available to them.

Our education system has to correct this. This is not good in a knowledge-driven economy.

TECHNOLOGY GAP

Another important area that needs to be corrected in our education system are the offerings our students have to choose from. Science and technology (S&T) is clearly an important area that we need to focus on. When Singapore embarked on its developmental journey over 40 years ago, a calculated effort was made to focus on investments in S&T in schools. Today, we see where they are compared to us.

Every year, as we hold graduations at our major tertiary institutions, we see thousands of persons leaving with all sorts of degrees in the social sciences and the arts, but only a handful in S&T. We need to see a stronger focus on mathematics, engineering, information technology, environmental sciences, among other hard sciences. We have too few graduates, as a country, in these areas and, as such, we see very little patents coming from economies like ours.

Going for growth in the magnitude of 6% will require focused policy decisions on these areas in the next seven years.

FUNDING CHALLENGE

To use education as an important pillar in the growth equation, we cannot escape a discussion on how education is funded in Jamaica. There is no doubt that the State has to provide some funding for aspects of the education system, while private individuals will also have to make a contribution. Indeed, education has both a social benefit and a private benefit. As such, it is not equitable for everyone to fund education that will lead to private benefits for only a few individuals.

We need to identify where the social benefits are in the system and the State provide funding for these areas and allow persons to pay for the private benefits from their own resources. The conversation in this area can become emotional, but we need to have it.

We cannot continue to treat funding as if it is not important and allow the system to operate loosely, based on what the State can provide and then hope the institutions can find ways to make up the balance. This is not sustainable.

In the funding discourse, we need to have a serious discussion on how to best allocate limited state resources to those institutions that benefit from the public purse.

Any shrewd business executive will tell you that when you have one dollar to spend, you will have to ensure that it is allocated in the most efficient way to ensure that the return on investment is highest. The Ministry of Education must do the same in allocating its subvention to schools.

It cannot be that universities that are funded from the public purse are allowed to overlap in their offerings and basically cannibalise each other. If they are funded from the public purse, the Government must mandate that programmes not overlap and institutions specialise in areas where they have their greatest competitive advantage. If they want to do programmes that overlap, they can offer these privately, but the State should not fund these.

We have to be serious about how we use our limited resources to fund education in order to get the best returns from the system, so that it can contribute more effectively to economic growth and development.

Dr Densil A. Williams is senior lecturer of international business at the Mona School of Business and Management. Email feedback to columns@gleanerjm.com and densilw@yahoo.com.