TITLE: Economic Council of Canada

One indicator ... is the proportion of GDP allocated to that sector. Data from the OECD show that in 1989... public sector spending on education in Canada amounted to 6.2 per cent of GDP, placing this country in fifth position, behind the Scandinavian countries and the Netherlands, but ahead of the United States, the United Kingdom, France, West Germany and Japan. p.31

The share of educational spending accounted for by the private sector is proportionately very small in most OECD countries... as a proportion of GDP amounted to 0.6 per cent in Canada, 1.7 per cent in the U.S., and 2 per cent in West Germany. When these additional expenditures are taken into account, Canadian spending on education as a proportion of GDP still exceeds that of the U.S., Japan and France, though the gap is significantly narrowed. pp. 31-32

The Canadian rate of participation in education is high by international standards... 24 per cent of the Canadian population was enrolled in formal education in 1986 placing Canada in the leading group of countries.

A particularly useful measure... is the ratio of education spending per student to GDP per capita - in other words, spending per student relative to total income per person... Canada ranked seventh out of 16 OECD countries in 1989; the U.S. had the lowest ration among this group... These findings are disturbing, since Germany and Japan appear to be more successful in terms of overall performance of the education system.

Canadian spending in education is not remarkably different from that of other OECD countries. In some respects, the result is somewhat surprising, as there are features of the Canadian education system that can significantly affect costs. One obvious characteristic that distinguishes Canada is its large size and low population density found in many regions. Another is the proliferation of school systems and school boards in many provinces, reflecting constitutional provisions designed to protect religious and linguistic rights. p.32

There is ample evidence to suggest that reductions in total costs could be achieved by restructuring and rationalizing school boards within provinces.

A further distinguishing feature of the Canadian educational system is the multiplicity of cultural backgrounds found among its student population. In 1986, 16 per cent of Canadian residents were born in other countries - one of the highest proportions among OECD countries. p.33

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2. Spending by Province

... spending per student (in 1981 dollars) at the elementary and secondary levels rose from about $1,100 in 1961 to $3,660 in 1989.... increase in real wages [of teachers] is estimated to have contributed about half... the pupil/teacher ratio fell dramatically - from 26 to 1 in 1960-61 to 16 to 1 in 1989-90... more than a fourth of the total increase in real spending per student can be attributed to it.

... considerable variation in the share of expenditures allocated to each level of the system. Ontario, for example, which accounted for over one third of total Canadian expenditure on education in 1989-90, allocated the largest share to the elementary and secondary levels; postsecondary vocational training received the smallest share. By contrast... the largest share ... going to vocational training were those in the Atlantic region.

In 1989-90, average expenditures per student were highest in Manitoba, Ontario, Alberta and Quebec - and the lowest in the Atlantic provinces... spending per elementary/secondary student averaged $4,800 in the Atlantic... and $6,000 in Quebec and Ontario p.33

... a significant role in explaining the poorer educational achievement of the Atlantic provinces p.34

... share of teachers’ salaries in total school board costs ... averaged across all provinces, was about 60 per cent... capital costs constitute about 8 per cent... shares of administration... grown at a very rapid rate - from less than 3 per cent... in 1961 to close to 7 per cent in the late 1980s. p.36

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3. The Financing of Education

The context... one of severely constrained fiscal capacity.

Until the Second World War and the baby boom that followed, the elementary/secondary system in most provinces was structured into a large number of very small school districts, and the local residential tax base was the major source of funding for education. Rapid growth in enrolment... led to growing involvement in the system by provincial governments and to consolidation of local school districts into regional boards...

In general, provincial funding is provided from a mix of general revenue and specific tax levies, as well as property taxes in some cases, and is delivered to school boards through formulas that take into account general as well as specific needs...‘foundation plans’ because of the commitment by the province to ensure a minimum funding base for local education programs.

An important difference [between the provinces] lies in the sources of funding. Some school boards rely heavily on local property taxes... while others depend on provincial funding... the Atlantic provinces averages about 92 per cent; in Quebec, it is 90 per cent. Municipal funding plays only a minor role in those provinces. In other provinces, such as Ontario and the western provinces, the municipal share of funding is around a third, with a high of 45 per cent in Ontario

... the ’resource-cost’ model, which is based on the notion that the provincial government should specify and fund a basic level of education... and that any ’extras’ should be provided entirely by the local tax base. This approach requires that service levels be precisely defined and that accurate costing of these levels be developed for each school district. p.38

Only one province - British Columbia - has implemented a resource-cost model...rests on two fundamental criteria: equity and accountability. Equity is pursued through strong fiscal controls... Interestingly, the fiscal framework - an elaborate system of costing and accounting - was put into place first. Accountability is the second cornerstone... investing heavily in the development of outcome indicators... p.39

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4. Summary

Despite this variety, no analysis exists of the relationship between the different financing approaches in Canada, and in particular, of their effectiveness in terms of student outcomes.

First, the common perception that Canada spends more than almost any other country... must be modified... generous but not outstanding, by international standards... Second, Canada is a high-cost country because of ... population over a vast area, several layers of linguistic and religious administrations... Third, inter-provincial differences in the burden of educational costs must be considered a concern, particularly because that burden appears to be heaviest in those less prosperous provinces where student achievement is the lowest... Fourth, ... striking differences in cost structures... Finally, current funding formulas in most systems are not linked to educational outcomes. p.39

G - EDUCATION AND TRAINING: AN INTERNATIONAL PERSPECTIVE

If Canadians want to maintain their standard of living, the work force must constantly keep abreast of the best practice and bet use of technology developed at home and abroad. But Canadians do not set the pace and nature of change: “Improving human resources is other nations sets a rising standard even to maintain current competitive positions” [Porter, p.628] p.39

... how Canada ranks internationally in terms of the characteristics and performance not only of its education system but also its labour market and its economy... the three are linked and all must perform well... Four major messages:

i - Canada finds itself in the middle of a group of 18 industrialized countries. Its position reflects an unbalanced performance, with some strengths but also with weaknesses that are a major deterrent to global success;

ii - A nation can achieve “more bang for the buck” from its education and training system if there is coherence with the labour market and with economic performance, as in Germany and Japan, for example;

iii - In Canada the lack of coherence condemns many young people to a haphazard transition from school to work and fails to prepare adult learners for ever-changing skill needs; and,

iv - The particular aspects of coherence upon which Canada must concentrate are: the transmission of clear signals by Canadian employers about skill needs and expectations; the effective reception of those signals by the education and training systems; and the active cooperation of social partners in fashioning an appropriate response. pp. 39-40

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1. Canada’s International Record

Canada ranks ninth overall and also occupies a middle position in each category... It is not that Canada’s ranking is so low... Rather, it is that the imbalance among indicators is a clear sign that this country is not living up to its potential... resources and opportunities are generally good for the academically oriented child. But for others signals are unclear; pathways are confused; and rewards are uncertain. Overall, Canada seems to be accepting mediocrity as the norm, when it has the potential to achieve excellence. p.40

2. Strengths

By international standards, the Canadian population enjoys a high level of educational attainment; with more than 12 years of schooling, on average, Canadians are second only to their American neighbours... however... the school year in North America is one of the shortest in the world... Thus, over a period of 10 years of compulsory schooling Japanese children spend far more time in school - the equivalent of more than three additional school years - than do North American children. p.40

Canada and the United States display another positive characteristic in that there are no significant gender differences in educational level, either for the population as a whole or for young people alone... Today, as in the past, North America appears to provide greater assurance of equal opportunity and universal access to the education system. p.41

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3. Weaknesses

One major concern about the Canadian education system is that close to one third of students do not complete their secondary schooling... Moreover, the scientific fields of study deemed essential to a country’s future attracts a smaller proportion of students ... than in many other countries... The relatively low enrolments in scientific disciplines may reflect - and, at the same time, reinforce - Canada’s low commitment of resources to research and development.

In Canada, vocational preparation is not treated as a credible alternative to the academic stream in secondary schools... the courses tend to be theoretical, with insufficient hands-on, in-company training experience and certification.

... the involvement of employers in vocational training. This sort of commitment is virtually nonexistent in Canada. Moreover, the Canadian apprenticeship system is limited in coverage and is not responsive to labour-market needs. A Major shortcoming of this and other vocational programs is that certification does not confer the instant recognition and widespread acceptance that they enjoy in the German system, for example.

In the World Competitiveness Report 1991... Canada ranks above average... in terms of management’s freedom “to adjust employment and compensation levels to economic realities.” But Canadian employers appear to rely more on external adjustment mechanisms - by laying off workers, fro example. This type of adjustment causes disruption in the lives of workers and even in the conduct of business. By contrast, internal adjustment mechanisms - reduced overtime, internal reallocation of workers and tasks, and further training - place less strain on the economy and individual workers, and thus are preferable... Canadian labour relations are characterized by adversarial relationships that are not conducive to social harmony. p.41

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4. Lessons from Japan and Germany

... Japan and Germany: low drop-out rates at both the secondary school and postsecondary level; strong commitment to science and to research and development; reliance on high-quality vocational training, either as compulsory schooling or under the aegis of employers; highly developed mechanisms of internal mobility based on career advancement; cooperative industrial relations, and so on... success comes through an integrative process in which all of these key features build upon one another in a positive, coherent fashion

... five main features usually present in both Germany and Japan:

a) Social Cohesion

a strong sense of belonging to the community... Japan is well known for its widespread social consensus on the importance of education... Parents - especially mothers - are deeply committed to enhancing children’s prospects through direct involvement in some school activities... committed through a significant financial effort... During their careers, Japanese workers display a keen desire to invest time and money to keep abreast of developments affecting their field of endeavour.

Canadian society does not show such a ... commitment to education, and Canadian children do not seem to receive the appropriate signals to perform to the best of their abilities... high and enduring drop-out rates (around one third, compared with less than 2 per cent in Japan and less than 10 per cent in Germany; weak achievement in international tests in maths and sciences; and the incidence of illiteracy and innumeracy among the young. p.42

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b) Curriculum Options vs. a Standard System

In that respect, Germany and Japan show quite different patterns... diversity of education options in Germany, commitment to a standard academic curriculum in Japan. But both of these models derive their coherence from the strong involvement of employers in the design and delivery of professional qualifications...Both Ontario and the Quebec systems resemble that of Japan... Two factors not found in Canada are crucial in the Japanese case: an explicit sharing of educational and training tasks between the education system and employers; and a strong social commitment to praise and reward school achievement, which makes for high retention rates. p.43

... the German model does provide an alternative...based on the response to two types of diversity: diversity of students’ abilities and interests, and diversity of labour demand in the job market... The German system proceeds from early streaming between the ages of 10 and 12, based on the children’s aptitudes and inclinations. At age 15 or 16, most of those in nonacademic streams enter the ‘dual system,’ which consists of learning in the firm under the authority of a certified Meister, combined with school attendance for general and theoretical instruction. Two thirds of young Germans enroll on the dual system... p.44

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c) Committed Employer

... the involvement of employers in the process of learning both general and vocational skills is essential... In Germany, employers are committed to provide vocational training to young people leaving the formal school system... the ‘dual system’ is organized through an extensive collaborative effort of social partners involved in tripartite institutions - governments, employers and labour unions at all levels of administration (federal, state and local). Employers’ organizations... play a central role, monitoring the delivery of training in companies and in institutions. Furthermore, they establish training centres to correct any deficiencies and ensure uniform quality standards. These bodies also give accreditation to firms as providers of training in the dual system... in 1989, the private sector devoted 2.18 per cent of GDP to vocational education and training and to continuing education. This is a reflection of the fact that the business sector is conscious of economic realities and understands its role as a partner in training. This commitment is seen by employers as contributing to social stability by providing employees - and especially young people who have just left school - with status and a place in society.

In Japan, the commitment... takes a quite different form... Employers expect a high standard of academic achievement. Then, they take responsibility for the necessary vocational training after recruitment. By emphasizing educational achievement and social behaviour when hiring, employers end a clear signal to the education community; young people must receive a high level of general education, accept the need for serious work and discipline, and have an appreciation of collective work... This special emphasis on recruitment reflects the strong commitment of employers to ‘lifetime employment.’

The German and Japanese systems provide for coherence in the school-to-work transition. Canada, by contrast, is in the unenviable position of having one of the worst arrangements for this transition.

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d) Careers and Continuous Learning

About three quarters of Canadians who will be in the work force at the turn of the century are already in the labour market. With rapid changes in the workplace, the capacity to adapt and create high-wage jobs depends more on the skills and aptitudes of these people than on those of future school-leavers... this is why the firm must become a ‘learning enterprise’. pp. 44-45

The German dual system is deeply integrated into a learning continuum... A few figures may give an idea of the central place that continuing vocational training occupies in German companies:

i - in 1988, 35 per cent of the population aged 19 to 65 participated in continuing education courses, more than half being directly related with the job;

ii - two thirds of engineers started their careers through the dual system;

iii - more than one in four executive managers of the largest companies started as apprentices and almost half of them went back to study and obtained a postsecondary diploma. One third of these large companies trained their own executive managers;

Several studies have presented evidence that in Germany the occupational training system and the recognition of the human factor in the strategy of the firm encourage the rapid adoption of appropriate technologies and organizational change - keys to improvement in productivity. Moreover, strong and widely recognized qualifications give workers negotiating strength within the firm and a strong position on the external labour market, thus linking high salaries to high qualifications.

The Japanese system... The firm is an essential focus of the individual’s personal and social life. Human resources are a company’s most valuable capital and are given the greatest consideration, with training as an indispensable element.

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d) The Role of Government

Japan and Germany show two very different types of administrative organization. Japan is highly centralized country where the ministry of education jealously guards its prerogatives - with particularly close control over curriculum and evaluation at the national level. The ministry of labour and local government are active in the field of occupational training (national testing and certification of qualifications, administration of training centres, financial assistance to small business) but the scope of this effort falls far short of the training activity of the major corporations or groups of corporations.

In contrast, Germany - like Canada a federal state - possesses a decentralized, but coordinated, administrative organization. The primary responsibility in education-related fields rests with the states. The ‘standing conference of the ministers of education’ and a federal presence through the ministry of education and science ensures a high level of coordination. As stated in the ‘basic law’, freedom of movement and of occupational choice necessitates cooperation among the Lander for the standardization of school and higher education systems in terms of structures, curriculum and evaluation systems. Also, federal labour legislation regulates... the working conditions and training of workers, as well as social negotiations at the industry level.

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Canada is the only federal country without a federal ministry of education... not to argue for another layer of bureaucracy... but to emphasize the necessity of coordination... Coordination mechanisms must be found. Traditionally, provincial governments have tended to be more concerned with their own priorities than with a search for adequate coordination of their respective systems and policies. Recently, however, the Council of Ministers of Education (which does not include a federal representative) has been striving to coordinate some aspects of education policy, such as evaluation and the setting of goals. p.45

In the area of labour market policy, passive employment policies (essentially, unemployment compensation) have predominated in Canada, compared to proactive policies such as support for training and employment creation... Although Canada and Germany spend a roughly similar amount on labour-market programs relative to their GDP (2 to 2.5 per cent), Germany spends twice as much as Canada, in relative terms, on active measures - especially training. pp. 45-46

... to be effective, an active stance of the government in the area of training must lean on a strong commitment on the part of employers. p.46

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e) Summary

By comparison, Canada often has a missing link that prevents it from entering the virtuous circle that transforms a wealth of resources into global success... The two North American neighbours rely on the principles of a ‘market model’ while Japan and Germany rely on an ‘institutional model’.... Individual competition in free markets, along with an emphasis on unconstrained freedom of individual decision making and on local control, is the basis of the market model... [but the social safety net] the very existence of this protective net may lull some young people into a state of apathy...

By contrast, the ‘institutional model’, although it does not deny the general market rules or individual freedom of choice, is characterized by organized interactions between institutions - firms, schools, unions, or governments. Individuals are free to make decisions, but they get full support from such a network and clear indications of opportunities and ways to achieve career goals. p.46

We summarize a few:

i - Today’s world offers young people a myriad of opportunities for which the education system must prepare them. In Canada, too often young people do not receive clear signals on which to base sound career choices. As a consequence, many get lost in the process of labour-market trial and error;

ii - With insufficient involvement of employers in the design and delivery of education in the early stages of vocational development, skill mismatches inevitably arise. Moreover, a strong commitment by employers towards continuous learning - largely missing at present in our country - is crucial to fostering the motivation and adaptability of workers;

iii - The lack of coherence in several aspects of the Canadian education system, and especially in school-to-work transition mechanisms, suggests that governments - together with other stakeholders - mist focus on concrete ways to develop closer links between education and the world of work in Canada;

iv - In short, what is needed is a national consensus on the importance of education and training and on the widest possible involvement and commitment in the quest for excellence. p.46

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Conclusions

Many Canadians are not well served... for example, secondary school programs are geared to the needs of the 30 per cent... who... go to college and university...what about the other 70 per cent...

Our research shows a woeful lack of pragmatic technical and vocational programs to prepare young people for the world of work... one third of secondary school students drop out and spend haphazard periods of casual work and joblessness... nearly a quarter of young Canadians are both functionally illiterate and innumerate. If present trends continue, our schools will release one million more functionally illiterates into the workforce by the year 2000... pp. 47-48

two other weaknesses:

i - the performance of Canadian students on international tests in mathematics and science... is mediocre; and,

ii - the substantial differences in achievement among the provinces suggest serious inequalities in learning opportunities in Canada. p.48

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