Education: the missing link

Edward Seaga, Contributor

The first round of the makeover of the Jamaica economy is the IMF Stabilisation Programme. Without using that particular title, this is what the IMF is concluding now - rebalancing the economy so that the deficit in domestic financing can be eliminated over the next four years, by 2017.

This is only phase one of the total programme. The second involves the multilateral institutions, the World Bank and the Inter-American Development Bank (IDB). These two institutions will enter into policy-based loans to deal with the most critical areas in need of policy adjustments to rebalance the society and the economy. These policy-based loans are funded by the multilateral lending institutions subject to strict conditionalities for performance to achieve targets agreed. The areas most necessary to be adjusted are: education, productivity, and tax reforms, particularly to increase incentives for growth. A possible fourth category would be a review of the public administration.

These adjustments, if they are the selected areas of attention, are the levers which control social development and economic growth, the missing links over much of the last 50 years since Independence.

Education promotes both social development and economic growth. It could be considered that education, because of its greater span of influence, is the most important of all. Most people do not see the link between education and the economy, since education is basically understood to be book learning. The basic function of education is to create a learned society capable of understanding and producing. It is in this respect that the deficiency of the education system can be recognised, certainly in the Jamaican case.

LEGACY OF THE PAST

This educational deficiency is the product of centuries of lack of schooling for the great majority of the poor who originated from the ranks of slavery. Education was a small secondary-school system which would educate a creole class of free Jamaicans to help run the country. The poor ex-slaves were expected to do the manual work on the sugar cane and other estates. This pattern was broken after the Morant Bay Rebellion in 1865 when the newly appointed governor, Sir John Peter Grant, began to construct government primary schools intended to serve the poor. This was a turning point, but much more was needed.

In the mid-1950s, the People's National Party Government began an expansion of places in secondary schools to accommodate students from primary schools, children of the poor. This was done by an exam-based selection of students with merit. However, it was determined soon after introduction that of the candidates who sat the merit exam, only one in 80 in primary schools gained selection to go to secondary schools, compared to one in four in the fee-paying private schools which catered to the privileged. Obviously, while this was a turning point, it only achieved a limited improvement.

It was Edwin Allen, as minister of education in 1965, who solved this problem by requiring secondary schools to hold 70% of all places for students from government primary schools. The rest came from fee-paying schools. This was a major turning point, but not sufficient to create a system of education for all, for two reasons: first, the students could not cope with secondary education; and second, with the increase of the numbers admitted, there was a massive shortage of space. To cope with the shortage, the World Bank agreed to finance construction of 60 new secondary schools, doubling the number. This was a meaningful turning point.

One shortfall remained: affordability. In 1973, Prime Minister Michael Manley announced free secondary education, a further decisive turning point.

With all these transformational changes, it was expected that the education system was at least on the right course to attaining education for all.

SAME OLD RESULTS

But this was not the case. Some 50-odd years after these dramatic changes, the result has been the same: only 30% of school leavers from secondary schools could cope with secondary education; 70%, as in 1965, failed to do so, indicating virtually no progress in training more qualified Jamaicans.

This monumental failure represents a problem that can be solved only by a domestic overhaul of the education system, starting with early childhood education. It will require substantial funding to bring early childhood education up to par as one of the principal objectives. Other than that, the failures which start at the early childhood level continue right through the primary and secondary systems, producing the same record of 30% success: 70 percent failure.

How does this monumental problem in education affect the growth of the economy? What this pattern of failure means is that 30% of the society, on a cumulative basis, would have to provide an improved standard of living for 70%. Failure to do so means that the shortfall will result in more boys on the corner and more babymothers, engaged in idle pursuit of betterment.

This clearly explains the root of the deeper problem as to why, with the exception of Haiti, Jamaica has more poor people than any other country in the Caribbean. Check the vast areas of distressed housing conditions, 'tattoos' and 'ranches' across the island. As in Haiti, this is testimony to a failing state.

The economy cannot continue to support this massive burden which has stagnated economic growth and social development. This is one of the most critical problems confronting Jamaica's future. Recognising problems which lock down progress, for which solutions must be found, the multilateral banks, the World Bank and the IDB, must accept this challenge, which is an imperative.

Failing this, the country will continue to operate two economies and two societies: one for the haves and the other for the have-nots, depriving the revenues of collection and overloading the public financing with a burden to provide a special regime for most of the population who cannot help themselves. The National Water Commission, for instance, collects rates on only 30% of potable water produced, the remaining 70% distributed to the poor as social water. This is only one of several such special regimes which deprive the economy to help the poor.

A proper education would have produced a more self-reliant country with citizens able to pay their way. Education cannot, therefore, be separated from the economy. They are flip sides of the same coin.

PRODUCTIVITY A MAIN FACTOR

So, too, is productivity, the essential ingredient of competitiveness, without which international trade is stifled. This is one of the main factors in the lack of performance of our export sector, the earnings being the source from which the external financial gap in the economy is to be closed.

Failure to close this deficit means additional external borrowings, which is precisely the problem area to be reduced if the economy is to survive. At present, Jamaica's international debt is US$12.5 billion and the domestic debt is US$5.0 billion. The prime objective of the economic recovery programmes launched by the IMF, World Bank and the Inter-American Development Bank is to ensure reduction of the national debt.

What is the state of Jamaica's productivity? A Productivity Summary Report 1972-2007 tells it all. I quote from the report a telling section in the executive summary:

"The Jamaican economy has been in a low-growth, low-productivity trap since the 1970s. Real gross domestic product (GDP) for the period 1973-2007 grew by only 0.5% per annum. This resulted in the
standard of living of the average Jamaican remaining almost stagnant.
In fact, real GDP per capita in 1972 was greater than it was in
2007.

"Labour productivity, or output per worker, has
been declining at an average annual rate of 1.3% over the period
1973-2007. For the period 2003-2007, this decline has increased to 1.8
per cent per annum. This low-growth, low-productivity performance has
many implications when viewed in the context that productivity growth is
the only sustainable means of continuously improving living
standards.

"For most of our trading partners and
neighbours in the Caribbean, output per worker has been advancing by
more than 1.5% annually since 1972 and by more than 2.0% during the last
10 years. In 1997, the average worker in Trinidad was three times more
productive than the average Jamaican worker. However, this gap widened
to more than five times by 2007. Furthermore, in 1997, the average
Jamaican worker was more productive than his or her counterpart in St
Lucia. However, by 2007, the productivity of a worker in the latter was
approximately 1.16 times times that of a Jamaican
worker.

"Unit labour cost, which is a crude measure of
the competitiveness of our goods and services, grew by 0.4 per cent per
annum over the period 1973-2007. However, this increase in unit labour
cost was not driven by wage increases, as the real wage per worker
declined on average by 1.2% per annum, compared to output per worker
declining at a much faster rate (1.3%).

DECLINE IN
UNIT LABOUR COST

"Therefore, not only has the country
lost competitiveness as a result of declining labour productivity, but
workers have got poorer in real terms. In the last five years, unit
labour cost has declined slightly (0.9% per year), but given the trend
in labour productivity, this was at the expense of compensation to
workers."

In summary, then, education and productivity
must be adopted as drivers of economic recovery, and given the
attention only the World Bank can provide in its structural adjustment
programme, which will follow the adoption of the IMF
programme.

Only then can real recovery be achieved to
restore a low-debt, competitive, low-inflation growth
economy.

Edward Seaga is a former prime minister. He
is now chancellor of UTech and a distinguished fellow at the UWI. Email
feedback to columns@gleanerjm.com and
odf@uwimona.edu.jm