What have we learned? What to do now? What to do next?

1. What have we learned?What to do now?What to do next? Dirk Van Damme Head of CERI OECD/EDU

2. Outline • Preliminary remarks • Observed impacts: • Budgets • Students • Staff • Institutions • What to do now? • What to do next?

3. 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

4. Deteriorating youth unemployment rate

5. 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

6. Preliminary remarks • How to look in a more ‘hygienic’ and scientific way to the crisis: • Distinguish perception and reality • 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

7. 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

8. 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

9. Scenario 1 = Status-quo Scenario 2 = Trend Source: CERI/OECD, 2008

10. 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

11. Observed impact: budgets • For publicly funded institutions limited space to increase private resources (fees) • Will students invest/indebt with insecure return? • Political resistance to significant increase in tuition fees (Europe) • Investment strategies will suffer from more difficult access to credit

12. Observed impact: budgets • Diversifying income will be major challenge • International, fee-paying (full cost?) students? • More competition for less research money • Expansion of further education, part-time 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

13. 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

14. 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?

15. 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

16. Observed impact: institutions • Institutional missions • Balance between research and teaching • Third mission under pressure? • But also opportunities to support local economy, innovative start-up business, technology transfer • Social mission and impact on society will become more important • Increasing demand to focus and prioritise institutional missions

17. 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 of overly defensive reactions and protectionist 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

18. 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

19. 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

20. 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

21. What to do now? • Institutional strategies • Attracting foreign students • Develop ‘knowledge cities/regions’ • Efficiency gains in mergers?, economies of scale? • Or engaging in alliances, synergies • But institutions are rather conservative, not well tuned to change

22. What to do now? • Governmental policies • Increase scholarship and income-contingent student loan and grant programmes • Governments should stimulate participation in HE (‘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

23. 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 distance education) • More cost-effective business models for undergraduate education? • Move towards more vocational programmes (flexibility, practical, but less apprenticeships) • New skills (financial education)

24. 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

25. 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

26. 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

27. 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?

28. 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)

29. www.oecd.org/edu/imhe www.oecd.org/edu/ceri Thank you !