Subsidized education...and then what? Why the Barbadian social contract no longer makes sense
In the context of a global shortage of skilled labour and double- and triple-dip recessions, cutting access to free tertiary academic education in Barbados isn't necessarily a bad idea. The introduction of free secondary and tertiary education under the Honorable Errol Barrow was meant to create an educated and proficient postcolonial Barbados. The "one graduate per household" policy, later espoused by Sir Hilary Beckles and the Honorable Owen Arthur, is attached to the old hat practice of training professionals and technocrats for the civil service. With the universal understanding that economic growth and social security are not symbiotic processes, and that one must expand exponentially to support the other, it may be time for Beckles' concept to move on.
Why doesn't it make sense?
1. It costs too much, especially when compared to other options1
According to this article, the Barbadian government spent US$271.6 million on higher education between 1999 and 2007, and US$318.15 million from 2008 to 2012. That is a shift in spending from US$24.69 million a year to US$79.54 million a year! While the recession may be a contributing factor to the upshot in cost, that is still an astronomical increase in cost. Spending per tertiary student as a percentage of GDP per capita is 50.39% as of 2010. Part time student enrolment has jumped 141% in 10 years, and the main area of concentration is the Faculty of Social Sciences  (admittedly, Cave Hill is heavy on Social Sciences). In sharp contrast, the budget of the Barbados Community College (BCC) has expanded from US$11 million to US$12 million between 2002 and 2010.
2. It is available to everybody, which makes it inefficient
Let's face it. If the sole purpose of a policy is to increase the national percentage of university-educated labour by throwing as many students as possible at the University of the West Indies (UWI), not only is there a complete lack of efficiency, there is very little real national gain. Studies have shown that there is no causal relationship between high levels of enrolment in tertiary institutions and economic growth.
A government subsidy [in education] is justifiable when it produces benefits that would not otherwise have been possible. What this means is that if there is a lack of expertise in accounting, and the government were to subsidize accounting degrees to meet labour market needs, that spending would be appropriate. That is not the case in Barbados. The high concentration of students in the Social Sciences and Humanities (53% of graduates in 2010, not including Education programmes) is an indication that the tuition subsidy is facilitating higher education in potentially non-productive areas,2 which may be a contributing factor to unemployment (explained below).
To return to the point on part-time students, let us recall that the upshot in enrollment is as a result of an increasing number of part time students. Barbadians who are employed and want to develop upward professional mobility and/or attract higher wages are still able to profit from the tuition subsidy at the undergraduate level. The returns on this investment by the government are poor, since taxes on incremental salary increases due to education are not commensurate with the volume of public spending.
As a final point, it makes the University inefficient. Increased demand requires an increase in teaching staff or wage increases for current staff, more infrastructure, and higher energy costs, to name a few. While an increase in student uptake is desirable for any university, it should not be as a result of high subsidies.
3. It's so cheap, it's practically free...which can decrease its value.
More on inefficiency. Sahin argues here that an increase in enrolment rates is balanced by a decrease in student effort. A high subsidy, low tuition policy causes an increase in the percentage of less able and less motivated university graduates. Instead of channeling citizens into under-produced areas (read technical and vocational education (TVET)), there is an incentive to pursue subsidized higher education. in many cases, the dropout rate is exceeded only by the number of students graduating with degree classes that do not necessarily make them more competitive in the job market.
4. It may be contributing to unemployment
Why? Because in the context of a global shortage of skilled labour and a glut of university degrees, nobody's hiring overqualified academics—especially those with degrees that are already overproduced. Unemployment in Barbados in the first quarter of 2013 was 11.5%. If we look at the fact that 596 of the 1132 students graduating from the UWI in 2010 were graduating with degrees in Social Sciences and Humanities (not including education), and then look at this article, the problem becomes very evident. By subsidizing higher education without limitations based on indicators such as ability and labour needs, the government is spending money to decrease labour diversity and increase unemployment.
5. Taxation is not a suitable substitute for social responsibility
Social responsibility is the unspoken partner of social democracy (which Barbados evidently subscribes to). However, in the absence of an abudance of wealth à la Germany or Sweden, the basis of the Barbadian social contract is taxation in exchange for social security. The current debt burden in Barbados is evidence that the cost of social security far outweighs taxes collected and that without social responsibility, failure is a certainty.
In the case of education, the absence of social responsibility is visible. Prospective students do not necessarily consider (and are not socialized to do so) the public benefits of following a particular course of study, such as filling a skill gap, mainly because the prospect of private benefits is much more alluring (personal interest in the subject, salary and prestige). If the cost of these private benefits is too high (US$20,844 per year for a law degree) then persons will be deterred from pursuing them, and will instead engage according to the public good. However, if the private benefits are higher than the cost, persons will pursue these degrees anyway. This means that if the benefit of becoming a lawyer outweighs the sizeable financial input, persons will pursue that career in any scenario. By almost eliminating the cost of higher education in Barbados, the government has dramatically improved the private benefits of Barbadians without increasing public gain.
What can be done?
Exactly what Prime Minister Stuart and his government plan to do. Why? Because contrary to popular belief, sufficient academic and technical graduates can be produced without a subsidy. By transferring the cost of tuition to Barbadians, the government is achieving the triple objective of stemming the tide at the UWI, increasing diversion to other educational and professional pursuits and reducing its financial burden. How should Prime Minister Stuart follow up this policy? With a number of things:
- The government should create a priority list for study that should be reviewed annually to reflect shortages in labour across sectors. Tuition subsidies awarded year on year should be based on the labour outlook.
- The increase in tuition should be phased in to allow current students the opportunity to either complete their programmes or apply for government grants under the new education policy.
- The government should use a modification of the St. Vincent model. There should be an online application portal that allows student loans to be evaluated and guaranteed on the basis of labour needs, effectively channeling labour into fields that are currently undermanned.
- Subsidies should be given based on merit and need. If the inability to pay can be proven in the context of high achievement, or if a prospective student is exceptionally good in a particular area, the subsidy should be made available.
- In partnership with the private sector, the government should create an apprenticeship system that allows Fifth and Sixth Form students to volunteer with organizations tied to their career goals. Not only will they gain invaluable experience, they will create familiarity with employers who will be less hesitant to hire them given their experiences with them on the job. A similar system should be created for current students at the UWI, BCC and SJPP.
- Transfer some of the money currently being spent on subsidizing the UWI to BCC and SJPP.
- Facilitate the uptake of Certificate and Diploma programmes at the BCC and SJPP, with UWI as the awarding body.
In the context of smallness and vulnerability as argued by the late Dame Mary Eugenia Charles in her book A Future for Small States: Overcoming Vulnerability, efficiency is of major economic concern. Merit and need-based aid to the poor is a much more efficient use of public funds. The "one graduate per household" dream can still be achieved within a larger labour framework. However, in the current global economy, alternative strategies are necessary.
1 As of 2010, tuition at BCC was US$2000 a year, and US$750 a year at the Samuel Jackman Pescod Polytechnic (SJPP).
2 The use of non-productive here does not necessarily mean that these degrees are less important and should not be taught or subsidized. The argument is instead that unless a student is exceptionally gifted, these degrees should not be given priority over other areas where there are labour shortages.