Are FUTA demands credible?

September 4, 2012, 7:39 pm , The Island

By Spectator  

What is the layman to make of the FUTA (Federation of University Teachers’ Associations) set of demands presented to the government relating to higher salaries for university dons and to wider policy on education? A strike of FUTA members has followed inconclusive negotiations with the government. A positive feature is the wide-ranging discussion and debate of the issues in the media following the strike. The public has benefited from the differing views expressed on the pros and cons of FUTA demands.

The morality of the strike action by FUTA, however, has surprisingly received scant attention. There can be little dispute that strike action of FUTA professionals, who belong to the top 5% of income earners in the country, is detrimental to the cream of youth studying at the 15 universities in the country. Disrupting education of youth for an unknown period surely presents a moral dilemma even in this materialistic age. Striking before exhausting all other options, including mobilizing collective trade union agitation on their demands and soliciting political support of the Opposition in Parliament, is perhaps not FUTA`s finest hour.

Trade Unions and Public Policy

Informed judgment on FUTA demands must be based on reason and evidence. FUTA and its supporters have not helped by the arguments put forward to underpin their demands.

One doubts that anyone challenges the right of FUTA, or for that matter any trade union, to make demands going beyond wages/salaries (and conditions of employment) to areas that are of an economic, social and political nature. However anyone would be hard pressed to subscribe to the view that governments must necessarily accede to individual or collective trade union demands on wider public policy and, in the case of FUTA accept demands related to fiscal policy to finance education because that is "what the society, the people, the citizens and the so-called stakeholders have to say".

It is common sense that the Government in its consideration of demands on matters of fiscal policy, such as those made by FUTA, take account, and safeguard, the interest of all stakeholders in society. That is what they are elected to do. Governments have the responsibility to be the arbiter of competing claims (e.g. education, health, defense) for the allocation of resources available to the Government. Moreover the allocations made are subject to Cabinet approval followed by parliamentary approval. The decision making processes of Government (where Treasury economists play a prominent role) balancing the interests of all stakeholders in society are far from being based on a colonial and neo-colonial attitude. It is the basis of budgetary policy of all countries and not specific to Sri Lanka.

Education spending of 6% of GDP annually

One of the central demands of FUTA is that the Government pledges to spend on education annually 6% of GDP compared to 1.86% currently on general education (2011). FUTA has argued that 6% of GDP is the figure that the Government committed itself in the Millennium Development Goals (MDG) framework at UNESCO and that it should fulfill that pledge "in the next few years". FUTA has not felt it incumbent to justify this figure in any other way. Nor has it explained why it has taken upon itself to speak on behalf of all stakeholders on education without consulting let alone associating them.

The comments on the 6% of GDP demand of FUTA can be put succinctly.

(1) Few Governments have achieved the target of 6% of GDP on education spending. FUTA has given no comparative figures to buttress their case. Likewise no country has pledged to achieve the target "in the next few years" as FUTA demands from the Sri Lanka Government.

(2) High or low percentages of GDP on education spending is not the best yardstick to judge the quality of education in different countries. Japan and Singapore spend significantly less on education as a proportion of GDP than the USA and the United Kingdom. Education services and standards are deemed to be better in Japan and Singapore than in most developed countries that spend a higher percentage of GDP on education. China spends about the same percentage of GDP on education as Sri Lanka. It has had over 30 years of near or above 10% economic growth annually. What should be noted is that the low percentage of GDP spent on education in Sri Lanka in comparison with rich countries is partly explained by the variability of relative costs. Providing the same labour intensive basic educational services cost much more in rich countries than in Sri Lanka.

(3) FUTA gives no breakdown of how much is spent on universities and how much on government schools. Nor does it indicate the funding per pupil at universities and schools. One suspects it is hugely disproportionate in favour of university students and far wider than in other countries. Elitist concentration on high quality university education and relative negligence of school education, as in India (and perhaps in the United States at least for Afro-Americans), is not the best way forward to have a more democratic society. More money for all educational services is important but how it is spent is more important. FUTA stresses the former but has nothing to say on the latter except to demand higher salaries for university dons.

(4) Numerical targets such as 6% GDP education spending would have little value if achieved primarily by payment of higher salaries and emoluments (another central objective of FUTA for its members). There is no evidence to suggest that the quality of education would improve by salary inflation. That is the experience elsewhere, notably in the United Kingdom from 1997-2010. 

(5) FUTA is clear that it wants far more money (mind boggling figures of hundreds of billions of rupees) to be spent on education to achieve the 6% target. It is however unable or unwilling to work out what the Government would have to give up spending to accommodate its demand or how the money should be generated. The idea that it could be obtained by better collection of taxes is far too simplistic. If it was that easy it would have been done already for reasons other than increasing education spending.

(6) The clamour for 6% GDP a year for education spending may have consequences unintended by FUTA. The Government (with Official Opposition support) may encourage the private sector (including foreign institutions) to spend big money to establish private schools, universities and vocationally-oriented institutions in Sri Lanka; and set up a mechanism to regulate the establishments. The next logical step, as witnessed in many other countries when per capita incomes increase, is for the State to no longer consider education in state universities and state schools as a public good to be financed entirely by public funds. Instead public funds would be supplemented by the Government charging variable fees from students for different university courses ( e.g. higher fees for medicine, engineering and information technology courses that lead to higher earnings in employment) and, more generally, for all students (at universities and schools) with the impact mitigated by long-term, low interest loans or free education vouchers. National educational spending as a percentage of GDP could then rise towards the 6% target albeit in an unforeseen way.

(7) Supporters of the 6% of GDP on education spending need to bear in mind that while many of the claims of the benefits of education and skills may be true they apply to other sectors, notably to the health sector, for the same reasons as for education. The current inadequacies of state health services have left the country not well prepared for widely shared economic growth. Simple arithmetic would show that it is impossible to conceive of spending, primarily from Government resources, 6% of GDP on each of even two sectors, education and health.

The Government and FUTA may well come to a face-saving fudged compromise on the FUTA demands. Both sides are well advised, however, to collaborate closely, and in a meaningful way, to improve the educational and skill levels in the country in a cost effective manner. A "top down" approach of setting a figure of 6% of GDP for educational spending and then thinking of ways and means to spend the billions of rupees involved is not the right way to go about the task. A "bottom up" approach of first examining the requirements at every step of the educational and skills ladder, and how best to achieve the objectives in the shortest time at least cost, is a better way to proceed.

What is called for is a national education plan highlighting the direction of changes required over say the next 15 years. It should respond to the seeming public demand for English language learning, for a shift in emphasis in teaching from the humanities to science, technology, engineering, management and practical subjects at university level, for high quality science and technical education at schools and technical colleges, for job-related state vocational education and for a national scheme of apprenticeships.

If there is a clear vision of the direction of policy on education and skills, and a credible plan for implementation of the changes, step by step, finding the money to do so for state universities and state schools, may not present a major problem. Higher taxes, a gradual decline in defense spending, the sale of state enterprises with proceeds wholly earmarked for education and long-term, low interest loans from international financial institutions are all options to raise the necessary resources.