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Interim report - DOC

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									                     EUROPEAN COMMISSION
                     Directorate-General for Education and Culture

                     Education
                     Lifelong Learning Policy Development




                                                              Document 9, WG-E/July 2003, version 9.07.03




      First report on the activities of the Working Group

             'MAKING THE BEST USE OF RESOURCES’

                       February 2003 - June 2003



                                   Draft 1.2




Contact: Richard Deiss, Telephone +32 2 296 4881, richard.deiss@cec.eu.int
                         CONTENT

                                                       page
1.   INTRODUCTION

     1.1   The Objectives process                      1
     1.2   Mandate of Working Group                    2
     1.3   Scope of the report                         2
     1.4   Working methods                             2

2. MAPPING OF EXISTING INITIATIVES

     2.1   Investment in human resources               3
     2.2   Quality                                     3
     2.3   Public-private partnerships                 4
     2.4   Education laws                              4

3. KEY ISSUES and DEFINITIONS

     3.1   Definitions                                 5
     3.2   Key issues 1-Investment                     6
     3.3   Key issue 2-Quality                         7
     3.4   Key issue 3-Public private partnerships     8

4. INDICATORS

     4.1   Indicators proposed by the Standing Group   9
     4.2   Need for new indicators                     9


5. EXCHANGE OF GOOD PRACTICE

     5.1   Methodology and areas selected              10
     5.2   General conclusions                         10

6. OUTCOME AND RECOMMENDATIONS OF THE GROUP            11


7. NEXT STEPS                                          12


8. REFERENCES                                          13




                                                              I
ANNEXES


1. Extract from Work Programme

2. Mapping

2.A    Investment in human capital

2.B    Quality

2.C    Public-private partnerships

2.D    Education laws


3. Definition of relevant terms

4. Statistical data

5. Indicators

6. Exchange of good practice

7. Sequence of meetings and stages of work

8. List of participants




                                             II
1.         INTRODUCTION


1. The ‘objectives process’ and the open method of co-ordination

The Lisbon European Council in March 2000 set the objective for the European Union (EU) to
become the world‟s most dynamic knowledge based economy and defined a strategy to reach
this objective by 2010. In this context, EU Heads of States and Governments stressed the
importance of investing more in human resources development and recognised the key-role to
be played by education and training policy. Following the Lisbon mandate to undertake a
general reflection on the future concrete objectives of education and training systems, the
Education Council adopted a report1 which was subsequently endorsed in March 2001 by the
Stockholm European Council. This report identifies three broad objectives:

           - improving the quality and effectiveness of education and training systems in the EU;

           - facilitating the access of all to education and training systems;

           - opening up education and training systems to the wider world.

At the request of the Stockholm European Council, EU Education Ministers and the
Commission agreed on a detailed work programme2 to implement these three broad objectives
and 13 associated objectives. This detailed work programme will be implemented through the
Open Method of Co-ordination.

The Open Method of cC-ordination (OMC), as described in the conclusions of the Lisbon
European Council of March 20003 seeks to spread good practice and to ensure greater
convergence towards the agreed EU goals. It consists in identifying common goals to be
achieved by Member States, in defining, where appropriate, qualitative and quantitative
indicators and benchmarks, and in periodically reviewing progress through monitoring,
evaluation and peer review. The OMC marks a new stage in European education and training
policies and should enable the EU to realise its ambitions by:

-    Concentrating more on the objectives to be achieved through long-term political
     commitment and precise identification of targets;
-    Drawing greater benefit from exchanges of experience;
-    Jointly discussing similar problems and appropriate solutions, particularly through peer
     reviews;
-    Close monitoring of progress, using indicators and benchmarking.

The instruments available are:

-     Benchmarking

-     Peer review

-     Indicators.


1
  Council Document 5680/01 of 14/02/2001, see http://register.consilium.eu.int/pdf/fr/01/st05/05980f1.pdf
2
  Council Document 5828/02 of 4/02/2002, see http://register.consilium.eu.int/pdf/en/02/st05/05828en2.pdf
3
  See http://ue.eu.int/en/Info/eurocouncil/index.htm

                                                                                                            1
1.2 Mandate of the group
The Working Group relates to objective 1.5 (Making the best use of resources, see Annex 1) of
the detailed work programme on the follow-up of the objectives of education and training
systems in Europe, which also provides the mandate of the group. This objective is part of the
first strategic goal of improving the quality and effectiveness of education and training systems
in the EU.
The question of resources is of key importance for all aspects of the work and thus for all the
Working Groups set up. The importance of education and training for the emerging knowledge
society and the necessity to provide life-wide and lifelong learning increases the overall need
for investment in education and training. The Lisbon conclusions therefore called for a
substantial annual increase in per capita investment in human resources. At the same time
public resources are, however, scarce underlining the need to make most efficient use of
existing public financial resources and to attract complementary private financing.

1.3 Scope of report
This report covers the work carried out by the expert group from February to July 2003 and
provides information on the following activities carried out:
                      - analysis of key issues
                      - definition of concepts and terms
                      - mapping exercise of achievements in the field
                      - formulation of priorities relating to indicators and benchmarks
                      - identifying themes for a first round of exchange of good practice

The report draws from papers relating to these activities prepared for the Working Group
meetings and takes into consideration the oucome of the discussions in the Working Group.


1.4 Working methods
The Working Group was set up in February 2003. Three meetings were held so far:
       1st meeting:   25    February         2003
       2nd meeting:   22-23 May              2003
       3rd meeting    7     July             2003
A fourth meeting in 2003 is foreseen for November/December.

The Group has representatives from 13 Member States, 2 EEA-EFTA countries, 6 Acceding
and 2 Candidate countries. 8 key stakeholders and social partners participate also, as well as
other Commission services and EU agencies (see Annex 7).
An Extranet site within the Commission‟s CIRCA system, to which all participants and in
addition the Council‟s Education Committee have access, has been set up and all documents
prepared for the Working Group and related background documents are available on this site.

A consultant, Mr Ruud van der Aa, from the company ECORYS (Rotterdam) was selected in
March 2003 via a call for tender to assist the Commission in the tasks related to the Working
Group.




                                                                                                2
2.     MAPPING OF EXISTING INITIATIVES

In order to make best use of existing initiatives and to draw on and further develop available
analyses, a mapping of activities and material has been carried out for each of the three key
issues of objective 1.5 (see annex 2).

In addition a mapping of education and training related basic „laws‟ and rules has been prepared
as a tool to facilitate the analysis.

It should be noted that the mapping is an ongoing process and that the resulting papers will be
continuously enhanced, as new material becomes available.


2.1    Investment in human resources

Human capital is a key element in the Lisbon strategy to become the most competitive and
dynamic knowledge-based economy in the world capable of sustainable economic growth with
more and better jobs and greater social cohesion. Increasing investment in human resources
and using means effectively are key elements of key issue 1.
As regards key issue 1 the mapping exercise has identified about 80 policy documents, reports
and other publications from in total over 30 organisations to be of interest for the Working
Group. The following documents are hereby of special importance (see annex 2A):

       -the Commission Communication on Investment in Education and Training
       -the Commission Communication on the Role of Universities
       -the Commission Memorandum on Lifelong Learning
       -the note of DG Economic and Financial Affairs on Investing in Human Capital
       -the study of de la Fuente on human capital, commissioned by DG Employment
       -the reports on human capital investment and education financing of the OECD
       -the statistical publications on education of Eurostat, EURYDICE and OECD

Summarising the findings of the mapping exercise, there seems to be a broad consensus that
education and training play a vital role for sustainable economic growth, employment and
cohesion, that private and social returns to investment in education and training are relatively
high. It furthermore seems that the role of investment in human resources is tending to increase
in the context of the knowledge-based society and economy. In the light of the scarcity of
public resources, an increase of public investment has, however, to be well targeted. The
material suggests that it is also important to improve efficiency of public spending. There seems
furthermore to a need to facilitate private investment, especially in tertiary education, which is
characterised by high private returns. Reforms of education and training systems with a view to
increase efficiency, performance and relevance of curricula seem in some cases necessary.


2.2 Quality

Quality is a key dimension of educational output. Efficiency has to do with the ratio between
input and output and quality is therefore also linked to the issue of making best use of resources
and increasing efficiency. Improving quality can help to make better use of resources and it can
also contribute to objectives like equity and effective use of means.



                                                                                                3
The first round of mapping carried out in the field of qualityt in education has come up with a
list of 6 policy documents and 10 other publications (see annex 2B). Important policy
documents in this field are:

      -Council Recommendation of 24 9.1998 on European co-operation in quality assurance in
      higher education
      -European Report on The Quality of School Education (16 quality Indicators), May 2000
      -European Report on quality indicators for lifelong learning (15 quality indicators), June
      2002
      -Recommendation of the European Parliament and the Council of 12 February 2001 on
      European co-operation in quality evaluation in school education

The mapping showed that there are already a number of international activities in the field of
quality, especially as regards school education (including two Comenius projects on self-
evaluation and a EURYDICE bibliography on evaluation), vocational education and training
(Technical Working Group on VET in the frame of the Copenhagen process) and higher
education (European Network for Quality Assurance in Higher Education, ENQA). However,
non-formal learning is less covered on an international level.

2.3 Public private partnership

The Working Group considers public-private partnerships as a possibility to make more
resources available and to increase efficiency in the use of resources.
The mapping in the field of PPP has yielded a list of 11 publications, 17 web sites and it showed
9 concrete examples for PPP in education and training. A key document hereby is:

          -DG Regional Policy: Guidelines for successful public-private partnership, March 2003
The analysis of the material shows a marked increase in co-operation between the public and
private sectors for the development and operation of activities in various fields, especially
infrastructure in recent years. Such Public-Private Partnerships (PPP) arrangements were driven
by limitations in public funds to cover investment needs but also by efforts to increase the
quality and efficiency of public services.

In education PPP is still a relatively new phenomenon. The most common forms of PPP in
education relate to the (re)building of new schools, refurbishment, repair and maintenance
work, energy and energy management, school meals, kitchen facilities. These types of PPP can
especially be found in the United Kingdom and also to a lesser extent in Ireland. So far PPP in
most cases is not related to the core business of education. In the frame of the goal of linking
all European schools to the Internet by the end of 2001 many partnerships between government,
the schools and industry (Internet service providers, software companies, hardware
manufacturers and others) were set up.
The Commission has expressed strong interest in the concept of Public Private
Partnership (PPP), especially for eLearning4: “Public-Private-Partnerships need to be explored
– new mechanisms need to be explored for increasing co-operation between schools,
universities, training institutes, industry, lifelong learning providers, etc. Not only to explore
new funding models, but also to encourage longer term relationships to ensure that education
remains appropriate to the needs of adult life”.



4
    Role of Public Private Partnership for eLearning, EU-Workshop, November 25-26 November 2002, Brussels

                                                                                                            4
2.4 Education and training related mechanisms (education ‘laws’)

To enhance the (mutual) understanding of economic mechanisms in the field of education and
training, a mapping exercise has taken place on „education laws‟, basic rules and principles that
apply to the education and training sector. The collection of education and training –related
„laws‟ (in the sense of scientific laws) aims at providing in a condensed and easy to use format
an overview on laws and rules that are of relevance for the education and training sector. The
collection thus intends to provide analytical tools supporting the general analysis of the
education and training sector. Most of the „laws‟ are based on empirical observations and relate
to developments in the society and to human behaviour and thus have a softer character than
natural laws. In all about 40 “laws” are identified. Annex 2D shows the laws relating to
economics of education and to the labour market.
Laws of special importance for Working Group E are Baumol‟s cost disease (the fact that
labour intensive industries with a limited ability to benefit from technological productivity
progress such as education inevitably experience growing real costs), Brecht‟s law (increase of
public expenditure per capita with population density/agglomeration size) and the laws relating
to the positive correlation between education level and salary level, labour force participation,
training participation and employment chances.


3. KEY ISSUES AND DEFINITIONS

3.1 Definitions

The definition of key terms is an important basis for the analysis of key issues. This paragraph
gives an overview of the definition of key terms in the key issues (see underlining) agreed in the
Working Group. Besides these key terms several other terms have been defined to ensure
mutual understanding of the key issues
The key terms have been defined in close co-operation with the Working Group. Simplicity and
clarity were important criteria when selecting possible definitions. The full list of terms that
were defined is given in annex 3.

Definitions of key terms

Investment in human resources             All expenditure (private and public) on education
                                          and training.
Equitable distribution of available Distribution of available means that does not
means                                     disadvantage any socio-demographic group (age,
                                          gender, disability, social status, nationality, race,
                                          religion etc).
Effective distribution of available means Distribution of available means that reaches in the
                                          best possible way the objectives set.
Quality assurance systems                     A system that allows the monitoring and evaluation
                                              of (the quality of) educational/training output
                                              against predefined and relevant objectives for
                                              education and training.
Public-private partnerships (PPP)             A PPP is a partnership between a publicly financed
                                              organisation and the private sector for the purpose
                                              of delivering a project or service traditionally
                                              provided by the public sector. The project is carried
                                              out on the of an agreed division of tasks and risks,
                                              each party retaining its own identity and
                                              responsibilities.

                                                                                                      5
3.2        Key issue 1: investment

The Working Group analysed in detail the 3 key issues listed in the detailed work programme
for objective 1.5.

Key Issue 1: Increasing investment in human resources while ensuring an equitable and
effective distribution of available means in order to facilitate general access to and enhance the
quality of education and training

Key issue 1 has several aspects. It was agreed to break it down into the following components:

      a)   increasing investment in human resources
      b)   effective distribution of available means
      c)   equitable distribution of available means
      d)   facilitating general access
      e)   enhancing the quality of education and training

All education sectors should hereby be taken into account, including non-formal learning. A
life-wide and lifelong approach was needed.

a) Increasing investment in human resources
It was agreed that the focus should be on efficient use of resources rather than on increasing
investment. The issue of efficiency lends itself better to the exchange of good practice than the
mere increase of public resources, which is furthermore covered by the indicators and the
benchmarking exercise. However, the importance of increasing investment, including a targeted
increase of public investment, should be closely followed by the group. The notion of efficiency
covers in general the allocative (or external) and the productive (or internal) dimensions. The
assessment of efficiency should consider static efficiency (efficient use of today‟s educational
resources) and dynamic efficiency (efficient use to promote growth). The cost of under-
investing should be taken into account too.

All expenditure on education and training can be interpreted as investment in human resources.
A differentiation between levels of education is needed and in addition to monetary investment
time invested by people in education has to be considered too. Statistical data on financial input
and data on qualitative and quantitative aspects of output are needed to analyse efficiency. In
addition data on returns on investment (individual, social, employer returns) are needed.
Regarding formal education, expenditures can be divided in direct expenditure on educational
institutions and expenditure for educational goods and services purchased by households to
allow participation in educational activities and to ensure access to higher education levels. As
regards non-formal learning, expenditures should be subdivided in out-of-pocket costs and
opportunity costs (time spent). As regards formal education it is relevant to make a distinction
between public and private expenditure, particulary at higher education level. Non-formal
education is mostly paid for by business and the individual learner.

Another important issue relates to policies and incentives to encourage more private investment,
especially in higher education. With public finance becoming generally tighter in EU countries,
enhancement of private investments might be one of the few alternatives to enlarge the
available budgets for (tertiary) education.
An argument in favour of enhancing private investment in tertiary education is that the private
returns on investment remain high in most EU countries. Compulsory education should,
however, be free (and of as high quality as possible), otherwise there will be equity and access
problems.

                                                                                                 6
b) Effective distribution of available means
Effective distribution of means is linked to the objectives set for education and training.
Effective distribution means reaching the objectives in the best possible way with given means
Effectiveness should relate to education and training objectives but also to related general
political objectives (competitiveness, growth, employment etc).

c) Equitable distribution of available means
Equitable distribution of means and general access are linked, as an equitable distribution of
means should facilitate general access. The equity dimension is closely related to the notion of
equality of opportunity and access. Related to equity, distinctions can be made between vertical
(opportunity or access for all social groups) and spatial or horizontal equity (reallocation of
funds between regions), but also between the situation at the time of enrolment and the life time
situation (i.e. static versus dynamic equity).

The question of equitable distribution is also linked to returns to investment in education and
training. Public resources have a key function where social returns are high and private means
have to play their role where private returns are high. The potential interaction between the
different sources of funding needs to be identified.


d) Facilitating general access
Facilitating access is also linked to equitable distribution of means. All socio-demographic
groups should have access to education and training throughout life and in all regions.
Education and training systems should be as open as possible. Entry barriers should be removed
and bridges should be built to facilitate access for all to lifelong learning. This implies that
sufficient means have to be available for all levels of education and training.


e) Enhancing the quality of education and training
The quality of educational output is of crucial importance in the context of assessing efficiency.
Quality should be measured against relevant objectives, which reflect the needs of the
individual, the society and the economy. Quality is related to equity, especially as regards basic
education. The average outcome should be as high as possible, but at the same time the
performance disparities and the share of low achievers should be as small as possible.
Enhancing quality should take a wide range of factors into account, including access, the social
aspects of education and the extent for which curricula and study programmes enhance the
skills and knowledge of students. Regarding formal, as well as non-formal education, the
involvement of social partners in assessing the quality of vocational education and training is an
important issue, eventually leading to more responsive curricula.




3.3 Key issue 2: Quality

Key Issue 2: Supporting the development of compatible quality assurance systems respecting
diversity across Europe

Quality assurance systems are already available or in preparation for certain education sectors
(see the mapping on this subject) but non-formal and informal learning are not well covered yet.
Existing developments as regards quality assurance systems including implications for areas not


                                                                                                7
yet covered should be assessed. The focus should be on outcomes rather than at processes or
input elements.

Compatibility between formal and non-formal education, as well as between national systems in
view of a mutual recognition of certificates is considered important. The systems of certificates
should also be transparent. The quality of educational outcomes should be related to a wide
range of possible indicators.



3.4 Key issue 3: Public-private partnerships (PPP)

Key Issue 3: Developing the potential of public-private partnerships (PPP)

Public-private partnerships are linked to the question of making the best use of resources. This
could be realised by looking at ways of co-operation between business and the education and
training sector and how the involvement of the private sector can lead to higher efficiency in the
use of financial resources (e.g. by a better monitoring of resource input and throughput and a
better focus on areas with a high rate of return). The mix between public and private resources
is a key question but the analysis needs to be broadened to wider aspects than the PPP mix and
contractual arrangements.
In the light of the many types of partnerships a definition of what is meant exactly by PPP is
needed. The Working Group identified several types of partnerships, including non-contractual
ones. It was agreed to focus on contractual partnerships (real PPPs), but not to lose other forms
that can help to make more resources available or to use them more efficiently out of sight.
Complementarity with the work of Group H (Making learning attractive, strengthening links
with working life and society), which is also dealing with partnerships in education and training
will be ensured.




                                                                                                8
4. INDICATORS

4.1 Indicators proposed by the Standing Group

Indicators play an important role for measuring progress versus objectives, for comparing
achievements of different countries and for identifying benchmarks and best practice. This is also
true for objective 1.5, however, the complexity of the question on how to make best use of
resources, doesn‟t make it easy to find meaningful indicators.
The Standing Group on Indicators proposes to use several indicators for objective 1.5 (see Annex
5) and the Working Group E was invited to examine in detail the list of indicators proposed and to
comment in particular on the consistency of the indicators proposed with the aims stated within the
key issues, on their suitability, the coverage of the key issues and on the need to develop new
indicators. A small sub-group on indicators, in which 6 countries, the OECD and Eurostat
participated, examined the list of indicators proposed and the questions raised by the Standing
Group.

The group found that the indicators proposed were broadly consistent with the aims stated within
the objectives, but that they covered only parts of the key issues mentioned in the Work
Programme. The indicators proposed address key issue 1 (increasing investment in human
resources), but not key issues 2 (quality assurance systems) and 3 (PPP). As regards the overall
objective of making best use of resources they cover the financial input side but they don‟t include
indicators on efficiency (the relation between output and input).

Concerning the 5 indicators suggested the sub-group on indicators therefore proposed to the
Standing Group that

        - An indicator covering all education expenditure (public, enterprises, households) should
        be developed in the medium and long term. Once such an indicator becomes available,
        indicators 1.5 A-C could be replaced by a single indicator on total education expenditure.
        Complementary information on the development of expenditure in absolute terms should
        be provided in addition.

        - Indicator 1.5 C should be changed to % of GDP, if possible

        - Indicator 1.5 could be removed


  4.2 Need for new indicators

  The sub-group concluded that two new indicators on efficiency were needed at least. The
  Standing Group was invited to examine the feasibility of the following new efficiency
  indicators

        - costs per graduate

        - achievements in mathematics, science and reading according to PISA divided by total
        cumulative spending per student from age 5-15.




                                                                                                  9
5. EXCHANGE OF GOOD PRACTICE

5.1           Methodology and areas selected

The defined the open method of co-ordination (OMC) as defined by the Lisbon European
Council5 is essentially about spreading good practice and achieving greater convergence
towards the main EU goals. More concretely, the exchange of good practice should lead to:
       identifying a limited number of “good” policies (for exemplary purposes);
       identifying factors of “success” or “failure” for the policy areas concerned 6;
       working out policy recommendations to inform policy changes
Working Group members were invited to submit by 10 June a list of examples of areas for good
policy practice they would consider reporting on. In total 55 proposals for examples for good
policies/good practice from 13 countries were submitted, of which 44 were selected for the first
round of the exchange of good practice (see annex 6). The first round of exchange of good
practice was based on the following broad areas:

              -How to encourage private (enterprise) investment at tertiary level and for non-
              formal education and training, how to encourage individual investment in
              education and training
              -How to achieve effective distribution of means in the light of the objectives for
              education (incl. Lisbon objectives) and the education benchmarks adopted by the
              Council in May 2003
              -Implementation of quality assessment results in formal education and quality
              assessment systems in non-formal learning
              -Public-private-partnerships in higher education and in vocational education and
              training
In addition the improvement of the efficiency of the use of resources in education and training
and its equitable use and the evaluation of educational policies were mentioned as general
horizontal areas to draw examples from.

5.2                  General conclusions

The 44 good practices selected will be throughly analysed with the assistance of the consultant.
It will only be possible to draw policy recommendations after the discussion in the Working
Group of this analysis.
However, a first look at the examples shows that there are many possibilities to make better use
of resources given the complexity and many dimensions of education and training systems and
the diversity of actors involved. Important approaches to make better use of resources that
already come out of the examples collected are:
              - Validation of previously acquired (non-formal) learning
              - Use of public-private partnerships to improve efficiency
              - Use of tax and other incentives to stimulate private investment
              - Use of indicators to monitor performance
              - Providing tools to enhance the quality of the education system
              - Better guidance to students
              - Provision of special support for disadvantaged groups

5
    http://ue.eu.int/newsroom/newmain.asp?lang=1, page 11.
6
    The exchange of practice could, where appropriate, cover initiatives that have failed and look at the factors of “failure” (which can turn out to be
      equally relevant in terms of informing policy changes).


                                                                                                                                                           10
6. OUTCOME AND RECOMMENDATIONS OF THE GROUP

The Working Group has concluded stage 1 of the work programme (definition of concepts,
mapping, identification of themes for the exchange of good practice, formulation of priorities
relating to indicators and benchmarks).
Based on the work carried out the following provisional conclusions can be drawn:

       -The question of making best use of resources in the education and training sector is a
       very complex one. The key issues of the work-programme include many sub-issues, and
       the discussions in the Working Group have shown that many aspects and dimensions
       have to be considered. Some of the aspects are furthermore strongly context-related (for
       example the question of quality).

       - There are probably no single measures that can improve overall efficiency but rather a
       set of measures that interact and complement each other. The diversity of education and
       training systems means that each country has to configurate a set of measures in a
       different way. Nevertheless there is a set of common problems to be addressed.

       - All evidence available suggests that there are high private and social returns to
       investment in human capital (that means in this context investment in education and
       training). The importance of education and training for economic development on a
       macro- and micro-economic level is high and in the light of the knowledge society and
       of rapid technological progress it is further increasing.

       - There seems to be a need to facilitate private investment in education and training,
       especially as regards higher education given the high private returns of higher education.

       -As regards private household investment the validation of non-formal learning can help
       to make better use of individual investment in education and training.

       -Public-private partnerships can help to make more funding available and to make more
       efficient use of resources.

       -Priorities have to be set because not all issues can be addressed at the same time. The
       priority areas decided by the ministers should be a starting point.

As regards data, analysis and benchmarking the following provisional recommendations can be
given:

       - A thorough analysis of existing financial flows on all education and training levels and
       form and to all actors in the education field (matrix) based on existing information is
       necessary on a national and European level in order to have a good basis for the analysis
       of the current situation.

       -There seems to be a need for more and new statistical data in order to enable better
       monitoring of education expenditure, outcome and returns. Especially data on private
       expenditure on education and training and on adult education and training and on non-
       formal learning are often incomplete and internationally not comparable.

       -There is a need for more research in the education and training field in order to better
       understand the relationship and mechanisms between financing and social and private


                                                                                                   11
       returns for providing a solid decision basis for a better allocation and a more efficient
       use of resources.

       -Actors in the education field should be encouraged and (via European networks)
       enabled to carry out benchmarking (especially on a micro- or establishment level) in
       order to identify best practice, learn from it and improve efficiency.

       -Exchange of good practice in the benchmarking areas decided by the Council should
       enable development of good strategies aiming t efficient and effective management and
       use of resources, also in order to achieve the objectives set.




7. NEXT STEPS



The Working Group will in September 2003 enter stage 2 of its work, which includes the
following:

       1. Further exchange and analysis of good practice (as submitted by Member States)
       2. Identification of critical factors of success/failure (on the basis of the exchange of
       good practice and peer review)
       3. Peer review (only on the initiative of Member States)

Some study visits will be organised in order to give the opportunity to members of the Working
Group to finance visits to countries with best practices and to discuss with the actors involved.
The working group E is concerned with recommendations made by the other groups and for this
purpose a bettre co-ordination and synergy should be worked out between them. Moreover,
Working Group E will be involved in follow-up measures agreed by the Ministres and then
Commission in view of the various political discussions, which should take place in autumn
2003 under the Italian Presidency and the preparatory work of the European Council in Spring
2004.




                                                                                                   12
8. REFERENCES

European Commission and Council Documents

European Commission, Communication ‘Making a European Area of Lifelong Learning a reality’
COM 2001 678 final from 21.11.2001
http://www.europa.eu.int/comm/education/life/communication/com_en.pdf

European Commission, Communication on ‘European benchmarks in education and training:
follow-up to the Lisbon European Council’
COM 2002 629 of 20.11.2002
http://europa.eu.int/eur-lex/en/com/cnc/2002/com2002_0629en01.pdf

European Commission, Communication ‘Investing efficiently in education and training’
COM 2002 779 final of 10.1.2003
(see attachment in DE, EN, FR)
http://europa.eu.int/eur-lex/en/com/cnc/2002/com2002_0779en01.pdf

European Commission, Communication
‘Choosing to grow: Knowledge, innovation and jobs in a cohesive society’
Report to the Spring European Council 21 March 2003 on the Lisbon Strategy of economic, social and
environmental renewal, COM 2003 5 final of 14.1.2003
http://europa.eu.int/comm/lisbon_strategy/pdf/5b_en.pdf

European Commission, Communication ‘The role of universities in the Europe of Knowledge’
COM 2003 58 final of 5.2.2003
http://europa.eu.int/eur-lex/en/com/cnc/2003/com2003_0058en01.pdf

European Commission, DG Economic and Financial Affairs
Investing in Human Capital: The efficiency of public expenditure and other policies
Note for the Economic Policy Committee, Brussels, 17 December 2002

European Commission, DG Research
Science, Technology and Innovation-Key Figures 2002
Luxembourg 2002
http://www.cordis.lu/rtd2002/indicators/home.html

European Commission, DG Research (2003)
Third European Report on Science & Technology Indicators 2003
http://www.cordis.lu/rtd2002/indicators/third_report.htm

European Commission, DG Employment
Human capital in a global and knowledge-based economy
Final Report of the study of de la Fuente and Ciccone, May 2002

European Council,
Presidency Conclusions Lisbon European Council 23 and 24 March 2000
http://ue.eu.int/en/Info/eurocouncil/index.htm

European Council, Presidency Conclusions Brussels European Council 20 and 21 March 2003
http://ue.eu.int/pressData/en/ec/75136.pdf

Council Resolution on Lifelong Learning
Doc 8459/02 EDUC of 15 May 2002 (approved on 20 June 2002)
http://register.consilium.eu.int/pdf/en/02/st08/08854en2.pdf



                                                                                                 13
Other documents

Pukkinen, T., Romijn, C., Elson-Rogers, S. (2001)
Funding continuing training in small and medium-sized enterprises
CEDEFOP, Thessaloniki, 2001

Campbell, C. Wende, M. van der (2001)
International Initiatives and Trends in Quality Assurance for European Higher Education
ENQA (European Network for Quality Assurance)

Eurostat/Eurydice
Key data on Education in Europe 2002
Luxembourg, January 2003
http://www.eurydice.org/Doc_intermediaires/indicators/en/frameset_key_data.html

OECD, Human Capital Investment: An International Comparison
Paris, 1998.

OECD, Economics and Finance of Lifelong Learning
Paris, 2001
http://oecdpublications.gfi-nb.com/cgi-bin/oecdbookshop.storefront (pay publication)

OECD NERO Meeting, Paris, 1st July 2002, papers
http://www.oecd.org/htm/M00031000/M00031179.htm

OECD, Education Policy Analysis
Paris, 2002

OECD, Mechanisms for the Co-finance of Lifelong Learning. Taking Stock of Experience with
Co-finance Mechanisms, Paris, 2002.
http://www.oecd.org/pdf/M00039000/M00039790.pdf

OECD, Financing Education - Investments and Returns. Analysis of the World Education
Indicators 2002 Edition, Paris, 2002.
http://www.oecd.org/pdf/M00038000/M00038996.pdf (executive summary)

OECD, Investment in Human Capital through Post-compulsory Education and Training.
Selected Efficiency and Equity Aspects. Paris, 2002
http://www.olis.oecd.org/OLIS/2002DOC.NSF/LINKTO/ECO-WKP(2002)19

OECD, The well-being of Nations: The Role of Human and Social Capital
Paris, 2002
http://oecdpublications.gfi-nb.com/cgi-bin/oecdbookshop.storefront (pay publication)

OECD, Education at a Glance 2002
Paris, November 2002
http://www.oecd.org/EN/statistics/0,,EN-statistics-4-nodirectorate-no-no--4,00.html

World Bank, Returns to Investment in Education
George Psacharopoulos and Harry Anthony Patrinos
World Bank Policy Research Working Paper
http://econ.worldbank.org/files/18081_wps2881.pdf




                                                                                            14
ANNEXES




          15
ANNEX 1                        Extract from Work programme


OBJECTIVE 1.5 – MAKING THE BEST USE OF RESOURCES
Achieving the objective to provide Life-wide and Lifelong Learning in the knowledge society
will increase the overall need for investment in education and training. This goes for public
spending in human resources, spending in private enterprises and investment by each
individual. Although public finance is becoming generally tighter in EU countries, Europe
cannot afford to hold back here. The Lisbon conclusions7 call for a substantial annual increase
in per capita investment in human resources, pointing out that the future of the European
economy depends very largely on the skills of its citizens, and these in turn need the continuous
updating which is characteristic of knowledge societies. On the other hand, the education and
training sector must use the pressure on finance to encourage as an efficient as possible
distribution and use of resources, and to achieve the highest levels of quality.

A. Key issues
1. Increasing investment in human resources while ensuring an equitable and effective
distribution of available means in order to facilitate general access to and enhance the
quality of education and training

2. Supporting the development of compatible quality assurance systems respecting
diversity across Europe

3. Developing the potential of public-private partnerships

B. Organisation of the follow-up

a.         Starting period: During 2002 (2nd stage)

b.         Indicators for measuring progress to be reviewed as appropriate (Indicative list):

          Increase in per capita investment in human resources (Structural indicator)

c. Themes for exchanging experience, good practice and, as appropriate, peer review
   (Indicative list):
 Self-evaluation to improve the quality of education provided
 Public and private expenditure on education (structural indicator)




7
    paragraph 26, 1st indent

                                                                                                16
ANNEX 2A             Mapping in the field of investment in human capital



Organisations screened in the field of investment


             1. European Commission                 DG Economic and Financial Affairs
                                                    DG Employment and Social Affairs
                                                    DG Research
                                                    Eurostat

             2. Other EU organisations
             a) EU agencies                         CEDEFOP
                                                    EIB
                                                    ETF

             b) other EU supported organisations EURYDICE

             3. Inter-government organisations OECD
                                               UNESCO
                                               World Bank

             4. Stakeholders                        AEGEE
                                                    EAEA
                                                    EfVET
                                                    EPA
                                                    ESHA
                                                    ESIB
                                                    ETUCE
                                                    EUA
                                                    EUNEC
                                                    EVTA

             5. Social partners                     ETUC
                                                    UNICE

             6. Research                            CPB (Den Haag)
                                                    ESRI (Dublin)
                                                    ETLA (Helsinki)
                                                    EUI (Florence)
                                                    IFS (London)
                                                    IFO (München)
                                                    LSE (London)
                                                    NBER (Stanford)
                                                    University of Louvain
                                                    University of Padova
                                                    Bocconi University (Milano)
                                                    ZEW (Mannheim)




                                                                                        17
Mapping on investment in human capital- Key documents
The Memorandum of lifelong learning of the Commission of October 2000 provides in the
paragraph „Key message 2: More investment in human resources‟ proposals on how to ensure
investment in human resources at a company (framework agreements of social partners on
lifelong learning, target setting, award for best practice companies) and an individual level
(individual learning accounts, company schemes to pursue learning, right for subsidised study).
It also suggests to use Structural Funds (ep. The European Social Fund) for investment in
lifelong learning infrastructure.

The Commission Communication „Investing efficiently in education and training‟ COM (2002)
779 final of 10 January 2003 provides an important basis for the Working Group. It sets out the
Commission‟s view on the new investment paradigm in education and training in the enlarged
EU within the framework of the Lisbon goals, it analyses funding trends and identifies areas
where additional funding is needed. The Communication also looks at ways to spend existing
resources more efficiently and it identifies signs of inefficiencies in expenditure such as high
failure, dropout and graduate unemployment rates, excessive duration of studies and low
attainment levels. It furthermore shows that investment can only be fully effective if anchored
in a European context.

The Commission Communication „The role of universities in the Europe of knowledge‟ COM
58 final of 5 February 2003 looks, amongst other issues, at the financing of universities. It
shows a funding gap compared to US universities, identifies different sources in view of
increasing and diversifying universities income and underlines that available financial resources
should be used more effectively. It identifies also signs for inefficiencies such as high dropout
rates, mismatch between supply of qualifications and demand, overlong duration of studies,
disparity of status and conditions of recruitment and work for researchers and lack of a
transparent system for calculating the cost of research in European universities.
The December 2002 note of DG Economic and Financial Affair on Investing in Human Capital
prepared for the Economic Policy Committee provides an analysis of research outcome as
regards the returns on investment in human capital and shows areas where potential efficiency
improvements have been suggested like early child education and tertiary education.
In May 2002 the final report of the study of de la Fuente and Ciccone on „Human capital in a
global and knowledge-based economy‟, commissioned by DG Employment became available.
The report was partly based on quantitative results of the 5th Framework research project PURE
on public funding and private returns to education and on other studies. The study shows the
importance of investment in human capital for economic growth and the high social and private
returns such investments yield. A second part of the study with a quantitative assessment on a
country level was finished in March 2003.
The OECD has over the last couple of years released a considerable number of publications in
the field of investment in human capital and financing of lifelong learning. Examples are
„Economics and Finance of Lifelong learning‟ (2001), „Mechanisms for the Co-Finance of
Lifelong Learning‟ (2002), and „The well-being of nations: the role of human and social capital‟
(2002)). The OECD reports analyse education systems cover economic aspects of education and
look at mechanisms for the financing of lifelong learning. They are an important basis for the
work of the Group.
As regards statistical publications of key importance for the Working Group the
Eurostat/EURYDICE publication „Key data on Education in Europe‟ and the OECD‟s
„Education at a Glance‟ stand out. The two publications provide statistical data and analysis on
all aspects of education including economic and efficiency aspects. The Eurostat/EURYDICE
publication has a special chapter on the financing of education.

                                                                                              18
ANNEX 2B                          Mapping in the field of quality

           Education and training in general
    Actor                               Activity
    European Commission                 European Report on Quality Indicators of Lifelong Learning
    DG     Education   and              of June 2002. The report lists 15 quality indicators
    Culture
    ETUCE        (European              Publication:
    Trade Union Committee               Quality in Education, presentation of ETUCE‟s work 1995-2001, October
    for         Education)              2002
    http://www.ei-
    ie.org/etuce/english/eetuceinde
    x.htm
    Bund-Länder                         BLK prepared an overview paper on national and international initiatives
    Kommission           für            in the field of quality comparision and quality assurance.
    Bildungsplanung     und             „Übersicht Über nationale und internationale Initiativen zu
    Forschungsförderung                 Qualitätsvergleichen und zur Qualitätssicherung im Bildungswesen.‟
    (Germany)
    http://www.blk-
    bonn.de/papers/qualitaet
    .pdf

           School education
    Actor                             Activity
    European                          European Report on Quality in School Education
    Commission                        Of May 2000 listing 16 quality indicators
                                      http://europa.eu.int/comm/education/policies/educ/indic/back_en.html
    DG Education and
    Culture
    Socrates-Comenius                 Project „I-probe-Net‟ on self-evaluation in school education
    projects                          http://www.i-probenet.net
    Comenius networks                 Project „The treasure within‟ on quality at a broader level‟
                                      http://www.treasurewithin.com
    EURYDICE                          Thematic bibliography „Evaluation in Education‟
    http://www.eurydice.or            Brussels, 2002, http://www.eurydice.org
    g
    OECD                              OECD organises the 3-yearly PISA (Programme for International Student
    http://www.oecd.org               Assessment) studies
    IEA                               IEA, a network of research centres, organises the student achievement
    International                     surveys PIRLS (reading) and TIMSS (mathematics and science).
    Association for the
    Evaluation         of
    Educational
    Achievement.
    http://www.iea.nl/

Since the mid-nineties the Commission has launched various studies and operational activities
to examine the question of evaluation from different perspectives. The Commission conducted a
pilot project during the academic year 1997/1998 in 101 upper and lower secondary schools in
the countries participating in the Socrates programme, which raised awareness of quality issues
and helped to improve the quality of education in those schools. The final report emphasises a
range of methodological aspects as important elements for successful self-evaluation8.
The Lisbon European Council of March 2000 underlined that European education and training
systems must adapt both to the needs of the information society and to the need to raise levels
of employment and improve its quality. Member states were invited to support the improvement
of quality evaluation in school education. Following the meeting of the Ministers of Education

8
    Evaluation quality in school education, A European pilot project, June 1999.

                                                                                                                   19
from the EU and the acceding countries in Prague, June 1998, a Working Group was set up and
a "European report on quality of education" was prepared for the meeting of Ministers of
Education from the EU and the acceding countries in Bucharest in June 20009. The findings of
the report were later integrated in the „European report on quality indicators in Lifelong
learning‟ of June 2002. In 2001 the European Parliament and the European Council published a
Recommendation on European cooperation in quality evaluation in school education10.
In 2002 EURYDICE published a bibliography on evaluation in education. Two Comenius
projects started in early 2002 in this field. The first (I-Porbe-net) addresses the self-evaluation
on school education, the second („The Treasure Within‟) looks at quality at a broader level.

           Vocational education and training

    Actor                            Activity
    European Commission              European Forum on the quality of vocational training (2001-2002)

                                     Technical working Group on quality in VET (since 2003)
                                     NARIC: network of National Centres created in 1984 to help in regulating
                                     title recognition and facilitating the integration of national educational
                                     systems. It aims at improving academic recognition of diplomas and
                                     periods of study in the Member States of the EU, the EEA countries and
                                     the associated countries in Central and Eastern Europe, Cyprus and Malta.
                                     http://www.enic-naric.net
    CEDEFOP                          Publication „Indicators in Perspective. The use of quality indicators in
                                     vocational education and training‟, CEDEFOP 1997
                                     Van den Berghe, Wouter
                                     Application of ISO 9000 Standards to Education and training.
                                     Interpretation and guidelines in a European perspective, CEDEFOP 1997
    ILO                              Quality in vocational training institutions.
    International Labour             http://www.cinterfor.org.uy/public/english/region/ampro/cinterfor/temas/ca
    Organisation                     lidad/exp_inst/

The mapping pointed out that in all Member States, a concept of „quality in VET‟ has
developed over many years in terms of the attainment of particular goals and objectives. Also
elements of „quality control systems‟ have evolved for the different components of VET
provision, involving the use of specific procedures and control mechanisms.
The improvement of the quality of vocational education and training (VET) is also one of the
main priorities pursued through the „Copenhagen process‟ of enhanced co-operation. The
Council resolution on the Promotion of Enhanced Co-operation in Vocational Education and
Training11 and the Declaration of the European Ministers of Vocational Education and Training,
convened in Copenhagen on 29 and 30 November 2002, set up a policy agenda in this field:
Promoting co-operation in quality assurance with particular focus on exchange of models and
methods, as well as common criteria and principles for quality in vocational education and
training‟. The mandate given by the Council is being implemented through a technical Working
Group (TWG), which took over the results of the Quality Forum created in December 2000.


Non-formal learning

           Quality in non-formal learning is hardly covered in international activities, the mapping
           has thus not yielded much information on it. The literature concludes that better

9
     European Commission, Directorate-General for Education and Culture, European Report on the Quality of School Education, Sixteen Quality
     indicators, Report based on the work of the Working Committee on Quality Indicators (1), Brussels, May 2000.
10
     Recommendation of the European parliament and of the Council of 12 February 2001 on European cooperation in quality evaluation in school
     education, Official Journal of the European Communities (L 60/51), 1 March 2001.
11
   Of 19 December 2002 (OJ 2003/c13/02); http://europa.eu.int/eur-lex/pri/en/oj/dat/2003/c_013/c_01320030118en00020004.pdf

                                                                                                                                            20
              exchanges of experience between countries, regions and enterprises have an important
              role to play in improving understanding of the tasks to be accomplished and in
              promoting high-quality local, regional or national solutions12.




12
     P. Descy, M. Tessaring, Certification systems, assessments and recognition of skills. In: Training and learning for competence, Cedefop, 2001.

                                                                                                                                                      21
           Higher education
     Actor                             Activity
     ENQA                              ENQA is a European Network to disseminate information, experiences,
     European Network for              good practice and new developments in the field of quality assessment and
     Quality Assurance                 quality assurance in higher education between interested parties: public
     http://www.enqa.net               authorities, higher education institutions and quality assurance agencies.
     INQAAHE                           INQAAHE was established in 1991. The main purpose of the Network is
     http://www.inqaahe.nl             to collect and disseminate information on current and developing theory
     International Network             and practice in the assessment, improvement and maintenance of quality in
     for Quality Assurance             higher education (quotation from INQAAHE website)
     Agen-cies in Higher               Publications: Journal „Quality in Higher Education‟.
     Education
     Joint Quality                     The joint quality initiative is an informal network for quality assurance and
     http://www.jointquality.org       accreditation of bachelor and master programmes in Europe.
     Naric                             Network of national academic recognition information centres in Europe.
                                       The NARIC network is an initiative of the European Commission and was
     http://www.enic-                  created in 1984. The network aims at improving academic recognition of
     naric.net                         diplomas and periods of study in the EU Member States and other
                                       European countries. The network has been part of the Community's
                                       Programme SOCRATES/ERASMUS.
     ESIB                              ESIB‟s European Student Handbook on Quality gives a definition of
     The National Unions of            quality assurance and accreditation and discusses ESIB‟s point of view on
     Students in Europe                these. Possible benefits of systems for students and higher education
     http://www.esib.org               institutions are pointed out. European dimension is also discussed
     CEPS                              Quality assurance in complex higher education systems. Research project
     Center    for   Higher            aimed at theoretical and empirical analysis of (political aspects of) current
     Education        Policy           developments around institutional development in Europe, exemplified by
     Analysis (University of           the debate on quality assurance in the Bologna process.
     Twente/NL)
     http://www.utwente.nl/che
     ps/


In the field of higher education two networks on quality are operational: the European Network
for Quality Assurance in Higher Education (ENQA) and the International Network for Quality
Assurance Agencies in Higher Education (INQAAHE).
INQAAHE was established in 1991. The main purpose of this Network is to collect and
disseminate information on current and developing theory and practice in the assessment,
improvement and maintenance of quality in higher education13.
ENQA has been established to promote European co-operation in the field of quality
assessment and quality assurance between all actors involved in the quality assurance process.
The idea for the Network was given momentum by the Recommendation of the Council
(98/561/EC of 24 September 1998) 14 on European co-operation in quality assurance in higher
education and the Bologna declaration. More specifically the EU Ministers of Education called
for more visibility, transparency and comparability of quality in higher education. ENQA
presents itself as a European Network to disseminate information, experiences, good practices
and new developments in the field of quality assessment and quality assurance in higher
education between interested parties: public authorities, higher education institutions and
quality assurance agencies. Membership of the Network is open to Quality Assurance Agencies,
public authorities responsible for (Quality Assurance) Higher Education and associations of
higher education institutions in the Member States of the European Union.
This summer (2003), the Commission will adopt a Report on the implementation of the 1998
Council Recommendation, in which it will propose to make European quality assurance more

13
     http://www.inqaahe.nl/index.html
14
     Council Recommendation of 24 September 1998 on European cooperation in quality assurance in higher education. Official Journal of the
     European Communities 7-10-98.

                                                                                                                                             22
coherent and more reliable through the use of comparable methodologies, comparable criteria
and through the creation of a European system of “meta-accreditation”




                                                                                        23
ANNEX 2 C                                Mapping in the field of Puplic Private Partnerships
In Europe the beginning of PPP can be traced back to the early 1990‟s, related to a change in the role
and tasks of the public authorities. Examples of public inefficiency were the main reasons for this
change. “Traditionally” PPP constructions were especially applied in large infrastructure projects. As
regards education, in Europe the United Kingdom seems to be most advanced in the use of PPP
arrangements, whereas other countries e.g. the Netherlands, have just started with PPP‟s in education.
 Table: Strengths and weaknesses of PPP arrangements
Source: European Commission/DG Regional Policy, Guidelines for successful Public-Private Partnerships, 2003
PPP Type        Main Features             Application          Strengths              Weaknesses
Contrac-ting       Contract with Private   Suited to capital    Transfer of design    Possible conflict
                   party to design & build         projects with small             and construction risk          between planning and
                   public facility                 operating requirement.           Potential to                 environmental
                     Facility is financed           Suited to capital            accelerate construction        considerations.
                   & owned by public               projects where the              program.                         May increase
                   sector                          public sector wishes to                                        operational risk.
                     Key driver is the            retain operating                                                 Commissioning stage
                   transfer of design and          responsibility.                                                is critical.
                   construction risk.                                                                               Limited incentive for
                                                                                                                 whole life costing
                                                                                                                  approach to design.
                                                                                                                    Does not attract
                                                                                                                  private finance
BOT                  Contract with a                Suited to projects             Transfer of design,           Possible conflict
(Build-Own-        private sector                  that involve a                  construction and               between planning and
                   contractor to design,           significant operating           operating risk                 environmental
Operate)           build and operate a             content.                          Potential to                considerations.
                   public facility for a             Particularly suited to       accelerate construction          Contracts are more
                   defined period, after           water and waste                   Risk transfer               complex and tendering
                   which the facility is           projects.                       provides incentive for         process can take longer
                   handed back to the                                              adoption of whole life           Contract
                   public sector.                                                  costing approach               management and
                     The facility is                                                Promotes private            performance
                   financed by the public                                          sector innovation and          monitoring systems
                   sector and remains in                                           improved value for             required.
                   public ownership                                                money.                           Cost of re-entering
                   throughout the contract.                                          Improved quality of         the business if operator
                     Key driver is the                                            operation and                  proves unsatisfactory.
                   transfer of operating                                           maintenance.                     Does not attract
                   risk in addition to                                               Contracts can be            private finance and
                   design and construction                                         holistic                       commits public sector
                   risk.                                                             Government able to          to providing long term
                                                                                   focus on core public           finance.
                                                                                   sector responsibilities.
DBFO                    Contract with a             Suited to projects             As for BOT plus:              Possible conflict
(Design-Build-       private party to design,      that involve significant          Attracts private            between planning and
                     build, operate and            operating content.              sector finance;                environmental
Finance-             finance a facility for          Particularly suited to         Attracts debt finance       considerations.
Operate)             defined period, after         roads, water and waste          discipline;                      Contracts can be
                     which the facility            projects.                         Delivers more               more complex and
                     reverts to the public                                         predictable and                tendering process can
                     sector.                                                       consistent cost profile;       take longer than for
                        The facility is owned                                       Greater potential for       BOT.
                     by the private sector for                                     accelerated                      Contract
                     the contract period and                                       construction                   management and
                     it recovers costs                                             programme; and                 performance
                     through public                                                  Increased risk              monitoring systems
                     subvention.                                                   transfer provides              required.
                        Key driver is the                                         greater incentive for            Cost of re-entering
                     utilisation of private                                        private sector                 the business if operator
                     finance and transfer of                                       contractor to adopt a          proves unsatisfactory.
                        Design, construction                                      whole life costing               Funding guarantees
                     & operating risk.                                             approach to design.            may be required.
                        Variant forms                                                                              Change of
                     involve different                                                                            management system
                     combinations of                                                                              required.
                     principle
                     responsibilities.




                                                                                                                                             24
Concession       As for DBFO except          Suited to projects          As for DBFO plus:            As for DBFO plus:
               private party recovers       that provide an                Facilitates                  May not be
               costs from user charges.     opportunity for the           implementation of the        politically acceptable
                 Key driver is the         introduction of user          Polluter Pays Principle;       Requires effective
               Polluter Pays Principle      charging.                      Increases level of         management of
               and utilising private          Particularly suited to     demand risk transfer         alternatives /
               finance and transferring     roads, water (non-            and encourgaes               substitutes, e.g.
               design, construction         domestic) and waste           generation of third          alternative transport
               and operating risk.          projects.                     party revenue                routes; alternative
                                                                                                       waste disposal options)




                                                                                                                                 25
                ANNEX 2D Mapping in the field of education laws - extract Economics of Education
Graph                                         Law/rule/trend
                                              Baumol’s cost disease                                         (economic law)
Productivity                                  Labour intensive industries that have a limited ability to benefit from technological
                                              (productivity) progress-such as education-inevitably experience growing real costs.
                                              In the long run, wages in different sectors of the economy go up and down together regardless
    Other sectors
                                              of which sectors are the most productive or which sector generates the most productivity gains.
                                              Education is a labour intensive service with limited ability for productivity gains. Staff costs
                                              increase faster than productivity in this sector because teacher costs and other labour
              Services with limited           components of education depend on the cost of labour in the economy as a whole rather than
              rationalisation possibilities
                                              productivity in the education sector. Examples for other sectors where Baumol‟s cost disease
                                              applies are the healthcare sector and the cultural sector (e.g. symphony orchestras).
                                   Time        articulated first by the American macroeconomist William Baumol (*1922) in his article
                                              (1967) on the macroeconomics of unbalanced growth.
                                              Education level and salary level 
Average income                                Average salary tends to increase with education level

                                              Example: An OECD analysis for the year 1999 showed that earnings in 17 OECD countries
                                              were on average over 60% higher (women + 62%, men + 64%) for 25-64 year-olds who had
                                              attained tertiary education level compared to people with upper secondary as the highest
                Education level               education level attained.
                                              Education level and salary development 
Salary                                        The higher the education level the steeper the salary increase over lifetime.
e    education level                high
                                              A high level of education offers more career opportunities than a low level of education and the
                                medium        group of people who have graduated from higher education are also more likely to show the
                                              abilities needed for making a career. In public service there tend to be separate career paths
                                low           depending on the level of education with more promotion steps and possibilities for persons
                                              having a high education level.
                                               It has to be taken into account that persons with a high education level tend to enter the labour
                              Age             market at an older age than persons with a low education level. Also in order to provide a return
                                              for the direct and opportunity costs of a long education starting salaries have to be high and
                                              salary progression steep.
                                              Cost-benefit ratio of learning and age 
Benefits/costs of learning
                                              The ratio between costs and benefits (on an individual level) of learning tends to become less
                                              favourable with age.
                                              As salary levels increase with age the opportunity costs in terms of forgone earnings related to
                                              learning also tend to increase with age. Furthermore the number of years in the working life on
                                              which what has been learned can be applied declines with age and in addition learning tends to
                                              become more difficult with age.
                                               This applies especially to initial education and training. Continuing vocational education and
                                     Age
                                              training and adult education can be carried out within employment and thus cause less
                                              opportunity costs for the employee. Half-life of knowledge and technical progress also requires
                                              life long learning in order to update and adapt knowledge.
                                              Engel’s law 
Share of income spent on                      The share of income spent on food declines with increasing income. The share of income spent
                                              on most other goods (including education) is therefore tending to increase.
   Inferior goods (Engel‟s curve)
                                              Example: In 1988 EU households spent on average 18% of their income on food and non-
                                              alcoholic beverages, in 1994 16% and in 1999 14%, while average incomes increased in this
                                              period. In the 8 Central and Eastern European Acceding countries, which have lower salary
                     Superior goods
                                              levels than EU countries, households in 1999 spent on average 33% of income on food and non-
                                              alcoholic beverages, in the low income countries Bulgaria and Romania the share was 53%.
                                              Goods for which people spend a smaller share of income as income increases (i.e. which have a
                                              low income elasticity of demand) are also called inferior goods (example are food and clothes).
                                              Goods for which households spend an increasing share of income as incomes increase are called
                                              superior goods (most other goods). Education (especially higher education) can be considered
                                              as a superior good: in 1988 EU households spent on average 0.5 % of income on education, in
                                Income        1999 0.7 % (however the share didn‟t increase between 1994 and 1999).
                                               named after the German statistician and economist Ernst Engel (1821-1896); Hermann
                                              Schwabe found in 1868 a similar principle for expenditure on rents, the law is therefore also
                                              called Engel-Schwabe’s law.

                                                                                                                                           26
                                                            The labour market
Graph                                              Law/rule/trend
                                                   Economic development and employment share of services sector 
                                                   The share of the services sector (the tertiary sector) in total employment increases with
Employment share                                   economic development.
                                                   The development of the employment shares of the three economic sectors is a function of
     Secondary sector                   tertiary   productivity growth and the demand for their output. With economic development employment
                                       sector      in the primary sector (agriculture, forestry, fishing) falls continuously as a result of ongoing
                                                   productivity improvements and slow growth of demand for primary goods. Employment in the
                                                   secondary sector (manufacturing industry, construction, energy, mining) first increases but then
                                                   falls as a result of continuous improvements in productivity. However, potential for
                                                   improvement of productivity is more limited in the services sector (especially for personal
                               Primary sector
                                                   services, see also Baumol‟s cost disease), while demand for services is tending to increase. The
                                                   share of employment of the tertiary sector is thus increasing continuously.
     Time, Economic development                    Example: In 2000 the primary sector represented 4.4% of total employment in the EU, the
                                                   secondary sector 26.9% and the tertiary sector 68.8%.  In his book „Le Grand Espoir‟ (1949) the
                                                   French economist Jean Fourastié (1907-1990) analysed pro-ductivity growth and employment trends and
                                                   predicted that service sector growth will provide employment in the future.
                                                   Skills level and employment growth                                           (empirical observation)
Employment growth 95-2000                          Employment growth is faster in high education sectors than in low education sectors and it is
                                   III             faster for jobs that require a high education level than for low skill jobs.
                                                   The economy is getting increasingly knowledge-intensive, an ever increasing share of value is
                    II upper                       created by adding knowledge to goods and services and thus there is a growing demand for
      II lower                                     high-skill workers Example: in the period 1995-2000 employment growth in the EU for workers
                                                   with lower secondary education or less was –3.2%, for workers with upper secondary it was
                                                   3.6%, for workers with a tertiary education qualification it was 4.6%.
                                                   : One reason for the increase of employment of high skill workers is the simple fact that there
                                                   is a growing share of persons with higher educational attainment.
               Skills level
Unemployment rate                                  Education level and unemployment                                      (empirical observation)
                                                   Higher education qualifications tend to reduce the risk of unemployment.
     II lower                                      Example: In the second quarter 2001 the unemployment rate in EU-15 for the population 15-64
                                                   was 4% for people with a tertiary education qualification, 7% for people who had completed no
                II upper                           more than upper secondary education and 10% amongst those who had not gone beyond lower
                                 III               secondary schooling (source: Eurostat, Labour Force Survey).
                                                   From a lower to the next higher education level unemployment rates roughly fall by 1/3.
                                                    Although the unemployment rates for women are slightly higher than for men, for both sexes
                      Education level              the unemployment rate of people who had completed tertiary education was only about 40% of
                                                   those who had not gone beyond lower secondary education.
                                                   Education level and participation rate                               (empirical observation)
Labour force participation > 60y                   Labour force participation rates tend to increase with education level.
                                   III             This is especially true for women and for older persons.
                                                   Example: In the second quarter 2001 the labour force participation of 60-64 year old persons
                    II upper                       was 20% for people who had not gone beyond lower secondary education, 24 % for people who
      II lower                                     had completed upper secondary education and 43% for people with tertiary education.
                                                   People who have finished tertiary education start working life much later than people without
                                                   tertiary education, but their working life also tends to end later. A higher education level of the
                 Education level                   population could thus contribute to increasing the average age of retirement
Quantity                                           The Hog cycle                                     (Fr: cycle porcin, De: Schweinezyklus)
   Demand                  supply                  In certain markets there is a time lag between demand and the provision of supply while both
                                                   fluctuate asynchronously.
                                                   The labour market fluctuations for university graduates for certain studies (e.g.: computer
                                                   specialists, teachers) can be described by using the hog cycle (pig cycle) model. When labour
                                                   demand is high in certain years for certain qualifications an increasing number of students will
                                                   be attracted by the positive outlook and start corresponding studies. It takes, however, several
                                                   years till they graduate and the economic situation might have changed by then by a cyclical
                                  Time             downturn and the oversupply of graduates will furthermore affect job prospects. The new
         Cobweb function                           situation then leads to fewer students starting studies in these areas and a few years later a skills
      demand           supply                      gap might emerge again.  Also named cobweb theorem since the graph showing the
                                                   evolution of supply versus demand resembles a cobweb.
                                                    Described by the German economist Arthus Hanau in the late 1920s, who analysed price and
                                                   supply curves for pig meat, thus also called Hanau‟s Schweinezyklus (pig cycle). The term
                                                   „Schweinezyklus‟ is often used in German speaking countries in the context of the analysis of

                                                                                                                                                      27
the skills mismatch at tertiary graduate level.




                                                  28
        ANNEX 3:                           Definition of relevant terms
        a) Spending on education and training

Term                        Definition                                              Remarks
Investment in education     All expenditure (private and public) on education       All     expenditure      on
and training                and training.                                           education and training is
                                                                                    considered as investment.
Investment   in   human     All expenditure (private and public) on education       Although the term human
resources                   and training.                                           resources is wider than
                                                                                    education and training in
                                                                                    this context investment in
                                                                                    education is synonymous
                                                                                    with investment in human
                                                                                    resources.          Human
                                                                                    resources relate to whole
                                                                                    popu-lation/all age classes
                                                                                    (LLL).
Spending     in   human     All expenditure (private and public) on education       Since      spending       is
resources                   and training.                                           synonymous             with
                                                                                    investment, the term is
                                                                                    synonymous with the
                                                                                    terms above.


        b) Public and private spending

Term                        Definition                                              Remarks

Public    spending    (on   Eurostat definition:                                    Includes     funds    from
education and training)     Spending by the different levels of government          international agencies and
                            (central, regional and local) on education and          other foreign sources.
                            training (spending on educational institutions, on      Expenditure on CVT not
                            private entities and on households and students) in     included.
                            form of:
                            -direct expenditure to public educational
                            institutions to cover the costs of instruction,
                            ancillary services (meals, transport to schools or
                            dormitories) or R&D expenditure,
                            -public subsidies to private educational
                            institutions,
                            -transfers to private entities (i.e. financial aid to
                            students and payments to other private entities.
Private spending (on        Eurostat definition:                                    Includes payment          for
education and training)     Spending by private entities on education and           educational and training
                            training. It includes                                   purposes     other      than
                            -Fees paid by private households (students and          educational institutions.
                            their families) to educational institutions             Eurostat    definition     is
                            -purchase of educational goods and services             relatively narrow. There
                            (school books, extra tuition) related to the            are proposals to take all
                            participation in educational activities                 private investment (incl.
                            - payments by private entities (firms, non-profit       opportunity costs) into
                            organisations) to educational institutions              account.
                            -financial aid to students provided by firms (e.g.
                            loans from banks)


Public-private              A PPP is a partnership between a publicly               PPP doesn‟t necessarily
partnership                 financed organization and the private sector for        provide more financing for
(PPP)                       the purpose of delivering a project or service          a project but it facilitate
                            traditionally provided by the public sector. The        financing can lead via
                            public and pri-vate sector together carry out the       additional monitoring of
                            project on the ba-sis of an agreed division of tasks    inputs and output to higher
                            and risks, each party retaining its own identity and    efficiency.
                            responsibilities.
                            A PPP project must meet a number of criteria:
                                                                                                                    29
                             i) public and private sectors work together on the
                             basis of clear contractual agreements;
                             ii) the division of responsibilities, costs and risks
                             is agreed by contract;
                             iii) both public-interest and commercial goals are
                             served;
                             iv) both parties expect, through collaboration and
                             the input of each party‟s specific expertise, to
                             achieve a better result for the same cost (or the
                             same result for less cost);
                             v) each party retains its own identity and
                             responsibility.
                             Source:            http://kenniscentrumpps.econom-
                             .com/uk/pps/kennis_frameset.html

         c) Distribution and use of resources

Term                         Definition                                              Remarks
                                                                                     Efficiency       can       be
Efficient use of resources   Use of resources close to the best possible ratio       increased by achieving a
                             between input and output.                               given output with less
                                                                                     input or by achieving a
                                                                                     higher quantity or quality
                                                                                     of output with a given
                                                                                     input.
                                                                                     Efficiency in distribution
Efficient distribution of    Distribution of resources that maximises the ratio      of output can be achieved
resources                    between output and input.                               by       avoiding      over-
                                                                                     investment      or    under-
                                                                                     investment in specific
                                                                                     areas.
                                                                                     Effective distribution is
Effective distribution of    Distribution of available means that reaches in the     linked       to     efficient
available means              best possible way the objectives set.                   distribution but adds in
                                                                                     addition the element of
                                                                                     objectives.
                                                                                     “Equity” is frequently used
Equitable distribution of    Distribution of available means that does not           as synonym for “equality”.
available means              disadvantage any socio-demographic group (age,          “Equity”
                             gender, disability, social status, nationality, race,    can be viewed as a more
                             religion etc).                                          open, less
                                                                                      demanding concept than
                                                                                     “equality”
                                                                                     , and hence a more neutral,
                                                                                     even
                                                                                      politically acceptable, term.
                                                                                      OECD (1997), Education
                                                                                     and equity in OECD
                                                                                     Countries.

         d) Quality
Term                               Definition                                        Remarks
Quality assurance systems          A system that allows the monitoring and           Activities    on     quality
                                   evaluation     of     (the  quality    of)        assurance           systems
                                   educational/training output (or outcome)          especially exist for higher
                                   against predefined and relevant objectives        education and vocational
                                   for education and training.                       education and training.
                                                                                     Some quality assurance
                                                                                     systems also measure the
                                                                                     throughput, the quality of
                                                                                     education provided rather
                                                                                     than the outcome.



                                                                                                                      30
         e) Learning
Term                   Definition                                            Remarks
Lifelong learning      „All learning activity undertaken throughout life,    Sometimes        abbreviated
(LLL)                  with the aim of improving knowledge, skills and       LLL.
                       competencies within a personal, civic, social
                       and/or employment-related perspective.‟(source:       The         Communication
                       Communication of Nov. 2001 on Lifelong                defines LLL in the widest
                       learning).                                            sense.
                       LLL thus represents learning from pre-school to       Since basic education is
                       post-retirement encompassing formal, non-formal       compulsory the term is
                       and in-formal learning.                               sometimes used in the
                                                                             context of to stressing the
                                                                             need for adult education.
                       „Learning typically provided by an education or       See      also:    UNESCO
Formal learning        training institution, structured (in terms of         „Manual on Non- Formal
                       learning objectives, learning time or learning        Education‟, 1996; and
                       support) and leading to certification. Formal         Colley, H., Hodkinson, P.
                       learning is intentional from the learner‟s            & Malcolm, J.: Non-
                       perspective „(source: Communication on LLL).          Formal            Learning:
                       Formal learning is furthermore characterised by       Mapping the Conceptual
                       admission requirements, registration and a            Terrain, a Consultation
                       hierarchy level grade structure.                      Report.
                       Examples: learning at schools and universities,       http://www.infed.org/archi
                       VET                                                   ves/e-
                       Learning that is not provided by an education or      texts/colley_informal_lear
Non-formal learning    training institution and typically does not lead to   ning.htm.
                       a certification. It is, however, structured (in
                       terms of learning objectives, learning time or        The definition of the LLL
                       learning support). Non-formal learning is             Communication has to be
                       intentional from the learner‟s perspective.„          modified/complemented
                       (source: Communication on LLL).                       since it does not cover all
                                                                             forms      of     non-formal
                       Non-formal learning is typically provided within      learning, e.g. courses at
                       an institutional framework and location (other        adult education centers
                       than schools and universities) but without            (Volkshochschulen)          are
                       admission requirements and with no hierarchy          counted as non-formal
                       grade structures.                                     education, which is not
                       Examples: learning at adult education centres,        obvious in the definition.
                       learning in private (language) courses                In      some       definitions
                                                                             informal       learning      is
                                                                             considered.
                       „Learning resulting from daily life activities        It is in many cases difficult
Informal learning      related to work, family or leisure. It is not         to make a clear distinction
                       structured (in terms of learning objectives,          between       formal       and
                       learning time or learning support) and typically      informal learning as there
                       does not lead to certification. Informal learning     is often a crossover
                       may be intentional but in most cases it is non-       between the two and new
                       intentional (or “incidental/random).„(source:         developments blur the
                       Communication on LLL).                                difference.
                       Examples: own learning at home                        The                 UNESCO
                                                                             differentiates       between
                                                                             „informal learning‟, which
                                                                             is in general intentional
                                                                             and           non-intentional
                                                                             „random-learning‟.




                                                                                                               31
ANNEX 4                                   Statistical data

a) General data

Data for EU 15                                       Reference     %            As a % In    absolute
                                                     year                       of GDP terms (billion
(EU GDP in 2000: 8524 billion Euro)                                                             Euro of 2000)
(1) Public expenditure on education and 2000                       4.94         4.94            421
training as a % of GDP
(2) Private expenditure on educational 1999                        0.66         0.66            56
institutions as a % of GDP
(3) Enterprise expenditure on vocational 1999                      2.3          1.1e            94
education and training as a % of labour
costs
(4) Private household expenditure one 1999                         0.8          0.5e            43
ducation and training as % of private
expenditure
Source: 1,3,4: Eurostat, 2: OECD; e= estimate
Categories partly overlap and cannot simply be added up. Total expenditure amounts to between 6 and 7% of GDP.

b) Public expenditure on education as a % of GDP
                1995       1996     1997      1998               1999       2000       2001           2002
US                   4.9            :       5.2          5         5.2       4.85           :              :
Japan                3.5            :       3.5        3.5         3.5       3.56           :              :
EU15               5.18 i     5.17 i      5.06 i     5.02 i      4.96 i      4.94           :              :
ACC                5.30 i      4.97 i     5.04 i     5.06 i      4.99 i         :           :              :
Belgium                 :           :          :       5.2       5.53 i      5.22           :              :
Denmark              7.7        8.09       7.94       8.22       8.14 i      8.38           :              :
Germany             4.71         4.8       4.73       4.66        4.58       4.51           :              :
Greece              2.87        3.07       3.44       3.48        3.63       3.80      3.52 e              :
Spain               4.66        4.68       4.54       4.49         4.5       4.43      4.43 e              :
France             5.97 i      5.95 i     5.97 i     5.89 i      5.87 i      5.78      5.75 e              :
Ireland             5.49        5.33       5.16       4.89        4.56       4.49           :              :
Italy               4.87        4.86       4.57       4.55        4.55       4.65      4.53 e              :
Luxembourg          4.26           4        4.1           :           :         :           :              :
Netherlands         5.01        4.96       4.79       4.87        4.78       4.83      4.96 e              :
Austria             6.17        6.04        5.9       5.84         5.9       5.74           :              :
Portugal            5.37        5.53       5.59        5.6        5.74       5.74           :              :
Finland             6.86        6.96       6.47       6.24        6.22       5.98           :              :
Sweden              7.46        7.62       7.89       7.98        7.46       7.39      8.10 e              :
UK                 5.04 i      4.84 i     4.66 i     4.58 i      4.41 i      4.41           :              :
Bulgaria            3.36        2.58       2.64       3.23        3.66       4.41      3.67 e              :
Cyprus              4.79        5.02       5.67       5.79        5.66       5.61      5.86 e         6.08 e
Czech Rep           4.91        4.96       4.71        4.2        4.34       4.38      4.31 e         4.44 e
Estonia             7.02        7.27       7.08       6.77        7.37       6.67      6.83 e         7.31 e
Hungary             5.04        4.48       4.61       4.56        4.66       4.55      4.53 e              :
Lithuania            5.6        5.43       5.75      6.07 i       6.28       5.86      5.97 e              :
Latvia              6.95        5.79       5.66      6.83 i       6.18       5.98      5.85 e              :
Malta               4.99         5.3       5.48       5.21         5.1       4.92      5.01 e         6.46 e
Poland               5.5        5.05       5.17       5.42        5.18          :           :              :
Romania             3.32        3.55       3.24      4.38 i       3.37       2.90      3.09 e         3.02 e
Slovenia                :           :          :          :           :         :           :              :
Slovak Rep         5.04 i       4.57       4.83       4.55        4.45       4.26      4.17 e         4.06 e
Turkey               2.4            :          :         3           4       3.46           :              :
Iceland             4.88         5.3        5.4        5.9        5.87       5.90           :              :
Norway              7.51           7       7.65       7.68        7.15       6.84      6.97 e              :
Source: Eurostat, Structural Indicators domain (e= provisional estimates)
                                                                                                               32
ANNEX 5                                    Indicators

a) Proposal on Indicators

The Work Programme on the Objectives for Education and Training shows for objective 1.5
„Making best use of resources‟ the following indicator for measuring progress:

Indicators for measuring progress to be reviewed as appropriate (Indicative list)
 - Increase in per capita investment in human resources

The Work Programme states that this selection was indicative and mentions that it should be
reviewed as appropriate. This indicator is at the same time a Structural Indicator (i.e. an indicator
that is part of the list of the Lisbon Process and that is reviewed each year in the report to the
Spring European Council).

The Standing Group on Indicators and Benchmarks has examined data availability and technical
feasibility for all the indicative indicators of the work programme. In some cases the Standing
Group has come up with alternative or additional proposals for indicators. The proposal of March
2003 showed 5 indicators for objective 1.5:

  - 1.5.A Public expenditure on education and training as a percentage of GDP

  - 1.5.B Private expenditure on educational institutions as a percentage of GDP

  - 1.5.C Enterprise expenditure on continuing vocational training as a % of labour costs

  - 1.5.D Total expenditure per pupil/student by level of education (PPS)

  - 1.5.E Expenditure on educational institutions per student relative to GDP per capita (PPS)



In March 2003 the Standing Group invited the Working groups to examine in detail the list of
indicators proposed and to comment in particular on the consistency of the indicators proposed
with the aims stated within the key issues, on their suitability, the coverage of the key issues and
on the need to develop new indicators.
The Working Groups were asked to provide a feedback on these questions by the end of May
2003.
Within the Working Group E meeting on 22-23 May a small sub-group on indicators examined the
list of indicators proposed and the questions raised by the Standing Group.
The proposals by the sub-group submitted in a note to the Standing Group are shown on the
following pages.
In its Working Group meeting on 5-6 June the Standing had a first discussion on the proposals
made. It was felt that additional specifications were needed (like measured in PPS and related to
GDP per capita). A preference was given for the simpler indicator costs per graduate or something
related. However, it was felt that the indicator costs per graduate might be difficult to interpret
because high costs could be the result of high expenditure for teaching and equipment of high
quality or high drop out rates. It was therefore recommended to use a less complex indicator like
drop out rates instead. The Standing Group meeting of September 2003 will examine the new
proposals in more detail.
As regards the existing indicators proposed by the Standing Group the conclusion of the meeting
was that while some small changes on the definition were necessary basically all would be kept on
board in the short term. Indicators 1.5A (public expenditure on education and training as a % of
GDP) and D would hereby be priority indicators.
                                                                                                 33
b) Note to Standing Group on Indicators


  Answers from the group to the 4 questions from the Standing Group on Indicators

  1) Are the Standing Group recommendations consistent with the aims stated within the
  objectives/key issues?
  The 5 indicators proposed by the Standing Group are broadly consistent with the aims stated
  within objective 1.5 and its 3 key issues. However, it should be noted that not all key issues and
  their different aspects are covered by the indicators proposed.

  Key issues of Objective 1.5 ‘Making the best use of resources’

  1. Increasing investment in human resources while ensuring an equitable and effective
  distribution of available means in order to facilitate general access to and enhance the
  quality of education and training
  2. Supporting the development of compatible quality assurance systems
  3. Developing the potential of public-private partnership


  Table 1: Consistency of Standing Group recommendations with key issues

   Standing Group recommendation                      Consistency of indicators proposed with key
   Indicator proposed                                 issues
   1.5.A Public expenditure on education and          Consistent with goal of increasing investment
   training as a percentage of GDP                    in human resources (key issue 1).

   1.5.B Private expenditure on educational           Consistent with goal of increasing investment
   institutions as a percentage of GDP                in human resources (key issue 1) and with
                                                      PPP (key issue 3).
   1.5.C Enterprise expenditure on continuing         Consistent with goal of increasing investment
   vocational training as a % of labour costs         in human resources (key issue 1).
   1.5.D Total expenditure per pupil/student by       Consistent with goal of increasing investment
   level of education (PPS)                           in human resources and with ensuring
                                                      equitable and effective distribution of
                                                      available means (key issue 1).

   1.5.E Expenditure on educational institutions      Consistent with goal of increasing investment
   per student relative to GDP per capita (PPS)       in human resources and with ensuring
                                                      equitable and effective distribution (key issue
                                                      1).




                                                                                                 34
2) To what extent are the indicators proposed for each area suitable to assess progress
towards the related objectives?

The indicators proposed are suitable to assess progress as regards the main aspect of key
issue 1 „Increasing investment in human resources‟. They show, assuming that time series
are available, the development of public expenditure and important categories of private
spending on education and training as a percentage of GDP and, in the case of spending on
education, per pupil/student. Time series will hereby be especially important for showing
progress in each country. However, the indicators proposed don‟t show very well the
development and increase in education expenditure in absolute terms.
Nor do the data sets behind the indicators provide full coverage of spending by households
and enterprises. Coverage of private education expenditure (including household
expenditure) should be as complete as possible in order to obtain a complete picture of
education expenditure. Corresponding statistical data sets should be developed as a matter of
priority (however, since it takes time to prepare and modify surveys, which are necessary to
collect some of the data missing the data will only be available in the medium and long
term). The definition of expenditure should be as comprehensive as possible and cover all
aspects of education and training at all levels.
Another problem is comparability of data across countries. As regards 1.5B, 1.5D and 1.5E
data are not always fully comparable across countries as data on private expenditure tend to
be incomplete. Along with completeness comparability across countries should be improved
(this might, however, lead to breaks in time series in some cases). Merging indicators 1.5A-
C requires comprehensive and comparable data on private expenditure.
If statistically possible (it requires a certain amount of estimation), indicator 1.5C should be
expressed in % of GDP (and it should be brought in line with CVTS terminology which
refers to enterprise expenditure on CVTS courses) in order to allow the aggregation of 1.5A,
1.5B and 1.5C.

    Table 2: Changes proposed to the current indicators
  Indicator proposed        Short term action proposed               Medium/long term action
                                                                     proposed
  1.5.A Public expenditure      Keep indicator                       Keep indicator (at least as
  on education and training                                          background information,
  as a percentage of GDP                                             some participants suggest
                                                                     to replace it by total
                                                                     expenditure).
  1.5.B Private expenditure     Keep indicator (at least as          Merge with 1.5 A and C to
  on educational institutions   background/complementary             an indicator on total
  as a percentage of GDP        indi-cator) but improve              expenditure.
                                international comparability.
  1.5.C Enterprise              Express as a % of GDP, if            Develop into an indicator
  expenditure on continuing     feasible (estimates to be carried    covering all public and
  vocational training as a %    out within official statistics).     private expenditure (incl.
  of labour costs               Bring in line with CVTS              private households) and
                                terminology.                         then merge 1.5A-C.
  1.5.D Total expenditure       1.5 D might have to be
  per pupil/student by level    complemented by adding
  of education (PPS)            „relative to GDP per capita‟ to
                                take into account different levels
                                of GDP per capita (and the fact
                                that 1.5 E will be removed).
  1.5.E Expenditure on          Replace by an indicator on
  educational institutions      efficiency (see table 4).
  per student relative to
  GDP per capita (PPS)
                                                                                             35
3) To what extent are the key issues identified within each objective, covered by the
proposed indicators?

While key issue 1 is partly covered, the key issues 2 (development of quality assurance in
education systems) and 3 (PPP) are not covered (however, issues 2 and 3 don‟t lend
themselves well to statistical comparisons via indicators with data currently available and
don‟t necessarily need to be covered).
As regards the overall objective of making best use of resources and key issue 1 the
proposal of the Standing Group on Indicators covers the input side of the use of resources,
they thus address the Lisbon Council call for a substantial annual increase in investment
in human resources.
However, the overall objective of making best use of resources is also related to
efficiency, which was identified by Working Group E as a key aspect of issue 1.
Efficiency has to do with the input/output ratio, the indicators proposed thus currently
don‟t cover efficiency.

 Table 3: Coverage of key issues by indicators proposed

 Key issues                                          Consistency of Standing Group
                                                     recommendations (indicators
                                                     proposed)
                                                     with aims within objectives/key
                                                     issues
 1. Increasing investment in human resources         Increasing investment in human
 while ensuring an equitable and effective           resources /the input side is covered
 distribution of available means in order to         with 5 indicators.
 facilitate general access to and enhance the
 quality of education and training                   Efficiency (input-output ratio) is not
                                                     covered.
 2. Supporting the development of compatible         Not addressed
 quality assurance systems
 3. Developing the potential of public-private       Not directly addressed (indirectly
 partnership                                         addressed by indicator 1.5B)




                                                                                            36
4) In relation to which priority areas within the objectives/key issues currently
considered by the working group, should new indicators be developed?

As mentioned before the indicators don‟t show very well the development of expenditure in
absolute terms. This could be shown by indexing expenditure to a baseline, for example
1990. Complementary data on the development of GDP and the change in the number of
students and pupils might be necessary to interpret the data. Such an indicator could have
the status of a sub-indicator or background indicator used in the analysis but not as a
headline indicator.
As suggested in 2b) an indicator on total education expenditure (public, enterprises,
households) as a % of GDP should be developed (at least in the medium and long term).
Such an indicator, which should be as comprehensive as possible, could replace the current
indicators 1.5 A-C. Many participants of Working Group E supported to keep in addition the
because of its importance the indicator on public expenditure to show the level of public
commitment to education and training (this indicator is also covered by the Structural
Indicators, no additional resources are thus needed to collect the information, but the
question is, if a reference to the Structural Indicators might be sufficient).
To reflect the strong policy message that efficiency is important two indicators are needed at
least (covering outcome and output). To obtain an indicator on efficiency the Netherlands
proposed to look at the costs per exam/graduate. Here international comparability in the
number of graduates is important since there is double counting in some countries.
Another possibility would be to relate output quality to financial input. Ireland suggested an
indicator on mean country score in achievement in mathematics, science and reading
according to PISA divided by total cumulative spending per student from age 5-15. Further
analysis is needed here in order to relate educational outcome to resource input in a
meaningful way.
OECD proposed to relate the average years of schooling to education expenditure. Such an
indicator requires data on annual expenditure covering the period of time during which those
in the age group for which the average is calculated were in school. Further analysis is
needed on the feasibility of this indicator and the availability of corresponding data.
In order not to inflate the number of indicators too much the current indicator 1.5E (which
goes in the same direction as 1.5D) could be replaced. In the long run the merging of 1.5A-
C could make additional indicators superfluous. If 6 indicators are considered too many
indicator 1.5 B would have lowest priority.


   Table 4: New indicators needed
  Priority area               New/modified indicator            Comment
  Increasing investment       Indicator on total expenditure    See under 2b)
  in human resources          on education and training (to     Can only be realised in
                              replace 1.5A-C, see 2b)           medium/long term
  Increasing investment       Background indicator on           Needs indexing of
  in human resources          absolute development of           expenditure, might in the
                              expenditure for education and     short run only be feasible for
                              training.                         public expenditure.
  Efficient use of            a) (cumulative) costs per         Double counting of graduates
  resources                   graduate                          to be avoided (comparability
                                                                of output data necessary).
                              b) PISA scores divided by         Question on how to relate
                              cumulative spending               outcome in terms of PISA to
                                                                financial input. No linear
                                                                relation.



                                                                                           37
ANNEX 6: Exchange of good policies

The total number of proposals from Working Group Members for areas for the exchange of good
practice to be reported before 15 July reached 44 at the end of June 2003. The 44 areas fall into
the following categories:

           a.   Encouraging private investment: 7
           b.   Effective distribution of means: 12
           c.   Equitable distribution and general access: 9
           d.   Quality assessment: 7
           e.   Public-private partnerships: 11
           f.   Efficiency in general: 13
           g.   Evaluation of educational policies: 1


The following 11 examples were recommended by reporting countries for peer review

Spain           Open distance education through the Internet
Spain           Training and labour market integration of young unemployed people
Spain           Network of public adult education centres
France          Validation of previously acquired learning
France          Indicators for good administration of establishments and performance
Ireland         Transition year option
Austria         Quality in schools combining quality assurance and quality development
Iceland         Lifelong learning centres based on PPP in Iceland
Norway          Validation of non-formal and informal learning
Poland          Monitoring of educational reform in Poland
Romania         Reform of Higher Education and Research

In the Working Group meeting on 7 July 2003 examples from 3 countries were selected for
presentation and a more detailed analysis:

       1. Use of indicators for assessing performance and efficiency (France)
       2. Quality in schools (Austria)
       3. Public-private partnerships (UK)
      Examples proposed and coverage of the 6 themes proposed and the 5 key issues and sub-issues
       Proposals of                                                        Area        f), g)     a)          b)          c)         d)        e)
                                                                           numbering   (1 a-e)    (1a)        (1b)        (1c, 1d)   (1e/2)    (3)
       for areas to be covered                                             Key issue   efficiency increas-    effective   equity     Quality   PPP in
                                                                           number      in general ing priv.   ness        general              VET/
                                                                           Area        pol.icy    Invest.                 access               HE
                                                                                       evaluation
D      1) Promotion of vocational support for disadvantaged young people                                                  X
       2) New strategies and models of expert group on Financing LLL                                                                           X
E      1) Programme Internet in schools                                                                       X
       2) Open distance education through the Internet                                                        X           X
       3) Training and labour market integration of young unemployed people            X                                  X                    X
           without basic qualifications
       4) Network of public adult education centres                                                                       X
F      1)Validation of previously acquired learning (already reported)                 X                                             X
       2) Indicators for good administration of establishments and performance         X                      X
       3) Experience of universities on commercial activity service SAIC                            X
       4) Indicators on education accounts                                             X                      X
       5) Experience with positive discrimination (ZEP areas)                          X
       6) Development of training in higher education                                                                                          X
IRL    Transition year option - 1 year option for pupils in upper second. education    X                      X

I      1) PPP-arrangements between banking foundations and universities                                                                        X
       2) Non-formal education/e-learning: public funding of television                                                   X          X
           broadcasting programs on education
A      1) Tax reduction to encourage investment in non-formal learning                              X
       2) Introduction of contribution from students to raise fund for higher                       X                     X
           education/ system for reducing the contribution from students from
          certain socio-demographic groups
       3) Quality in Schools System combining quality assurance and development                                                      X
P      1) Standard tests in Portuguese and Mathematics at end of primary                                                             X
       2) Non-formal learning recognition, validation and certification          X                                                   X
FIN    PPP in higher education-co-operation between polytechnics and enterprises                                                               X
S      1) Annual written quality reports for pre-schools and adult education                                  X                      X
       2) Advanced vocational education                                                             X
       3) Commissioned training programmes                                                          X                                          X
       4) Contracts between municipalities and private bodies                    X                            X           X
       5) The Adult Education Initiative                                                                      X
       6) University introductory programmes (college programmes)                                                                              X
UK     1) Encouraging private enterprises to invest in learning                                     X                                          X
       2) Example from the field effective distribution of public resources/                                  X
           distribution of resources to enable equitable access                                                           X
       3) Quality assessment                                                                                                         X
       4) Public-private partnerships                                                                                                          X
       5) Evaluation of Gov. progr. to measure added value, outcomes , impact    X
       6) Encouraging individual investment in learning                                             X

IS      1)Lifelong learning centres based on PPP in Iceland                                                                                     X
        2) PPP for financing and building of schools                                                                                            X
NO      1) Validation of non-formal and informal learning in Norway                     X
        2) Better use of human resources in schools                                     X
HU      1) Quality development scheme in school and pre-school education                                                              X
        2) Additional financing of VET through tax like payments from employers                     X
LV      Improvement of the effectiveness of the provision of financial resources        X                      X
        for Vocational Education and Training (already reported)
PL      1) Monitoring of educational reform in Poland                                                          X           X
        2) Provision of pre-school type education in areas without pre-schools          X
RO      Reform of Higher Education and Research (already reported)                      X


EUN     Involvement of stakeholders by governments in problem detection,                                       X
EC      implementation and evaluation of educational change


                                                                   39
          ANNEX 7



                            Suggested sequence of meetings and stages of work


DESCRIPTION OF TASK                          Meetings 2003/2004
                                               1      2          3     4        5    6     7     8-9
                                             Feb    May        Jul    Nov   Jan     Mar   May   June-
                                                                                                Dec
                                                   STAGE 1

1. Definition of concepts

2. Mapping exercise of achievements in
the field of education/training and in
related initiatives in other fields
3. Identification of themes for exchange                       May-
of good practice and peer review.                              June
Preparation of scheme for reporting back
good practice.
4. Formulation of priorities relating to                       May-
indicators and benchmarks.                                     June
5. First exchange and analysis of good
practice (for selected areas).

6. Drawing up of interim report (based on
discussions during stage 1).

                                                    STAGE 2

1. Further exchange and analysis of good
practice (as submitted by Member States).

2. Identification of critical factors of
success/failure (on the basis of the
exchange of good practice and peer
review).
3. Peer review (possibly, only on the
initiative of Member States).

                                                    STAGE 3

1. Discussion and validation of outside
expertise work.

2.   Drawing         up       of    policy
recommendations.

3. Adoption of second interim report.                                                           End
                                                                                                2004




                                                          40
ANNEX 8
                   LIST OF PARTICIPANTS OF WORKING GROUP E
European Commission
Angelique Verli                               DG EAC, A-1
Richard Deiss                                 DG EAC, A-1
Guy Haug                                      DG EAC, A-1
Ruud van der Aa                               Consultant
Pedro Martinez Macias                         DG EAC, A-2
Lars Jakobsen                                 DG EAC, A-4
Martina Ni Cheallaigh                         DG EAC, B-1
Fernanda Oliveira Reis                        DG EAC, B-1
David Young                                   DG ECFIN, E-1
Vittorio Campanelli                           DG EMPL, A-1
Pascal Schmidt                                Eurostat
EU-Agencies and International Organisations
Manfred Tessaring                             CEDEFOP
Stephen Wright                                EIB
Anne Godenir                                  EURYDICE
Gregory Wurzburg                              OECD
Asghar Husain                                 UNESCO
Stakeholders and Social Partners
Tomek Helbin                                  AEGEE
André Schläfli                                EAEA
Leif Haar                                     EfVET/EVTA
Stefan Bienefeld                              ESIB
Jan Gispen                                    ESHA
Christoph Heise                               ETUCE
Roos Herpelinck                               EUNEC
EU/EEA Countries                                                 (ME = ministry of Education)
Ludmilla Aksajef                              Belgium, Communauté Francais (ME)
Rik Verstraete                                Belgium, Flemish community
Ken Thomassen                                 Denmark (ME)
Mariano Labarta Aizpun                        Spain (ME)
Christine Klingbeil                           Germany (ME)
Michèle Jacquot                               France (ME)
Ioannis Katsilis                              Hellas (Patras university)
Tom Healy                                     Ireland (ME)
Paolo Glisenti                                Italy (ME)
Michel Lanners                                Luxembourg (ME)
Ruud Abeln                                    Netherlands (ME)
Edwin Radnitzky                               Austria (ME)
Clementina Reis                               Portugal (ME)
Simo Juva                                     Finland (ME)
Eva Wallberg                                  Sweden (ME)
Steve Leman                                   United Kingdom (ME)
Örlygur Geirsson                              Iceland (ME)
Mona Skaret                                   Norway (ME)
Acceeding and Candidate Countries
Xenakis Michaelidis                           Cyprus (ME)
Jan Koucky                                    Czech Rep. (ME)
Attila Kotan                                  Hungary (ME)
Laszlo Limbacher                              Hungary (ME)
Gunars Krusts                                 Latvia (ME)
Kristina Markeliene                           Lithuania (ME)
Elzbieta Putkiewicz                           Poland (Warsaw university)
Jan Hero                                      Slovakia (ME)
Vera Gradisar                                 Slovenia (ME)
Mariana Vuta                                  Romania (ME)
Ceya Ücyildiz                                 Turkey (ME)

								
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