Bob Harris, EI's Senior Consultant to the General Secretary, shares information and commentary on the impact of the financial crisis on education funding, and how education can be part of the solution.
As Europe, North America and East Asia return to work after the summer break the question posed everywhere is: has a global recovery started? Stock markets continue to improve and some of the major surviving banks have reported profits. Cautious optimism came out of the annual meeting of Central Bankers held in the US (in Jackson Hole, Wyoming) over the weekend. US Federal Reserve Chairman Ben Bernanke said “the prospects for a return to growth … appear good”. But European Central Bank President Claude Triclet admitted feeling “a little bit uneasy” over suggestions that “we are close to back to normal” (Financial Times, 22/23 August 2009).
A few days earlier on 19 August, IMF Chief Economist Olivier Blanchard posted an article stating, yes, the recovery had started, but posing the next question: “Will it be sustainable?” (Blanchard: “Sustaining a Global Recovery” link: http://www.imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm). Blanchard also said “some parts of the economic system have broken”. Then he put his finger on the big issue: “unemployment … is not expected to crest until some time next year”. In other words, the number of people thrown out of their jobs by the crisis, estimated by ILO as at least 50 million to date, will continue to increase until “some time next year”. Millions of families will continue to find themselves in dire straits while financial traders get back to “business as usual”.
Two other issues have to be set against the cautious optimism of the central bankers and the IMF.
The first directly concerns EI members worldwide. It is the pressure on public sector budgets resulting from massive drops in revenue, especially at local level in many countries, the increased debt resulting from fiscal stimulus packages, and the growing cost of health care and pension plans. Blanchard discusses these issues in his article. Public school systems throughout the OECD are already confronted by this revenue drop and funding for schools is not likely to improve in 2010.
The second issue is that while the crisis has been global, the impact varies greatly among regions and individual countries. Blanchard discusses in some details the situation in Asia. He states that the GDP of emerging Asia (China, India, Malaysia, Indonesia, Thailand) is roughly 50 per cent of US GDP, but is projected to increase to 70 per cent within 5 years. The emerging economies of Latin America are not mentioned, but Brazil, Argentina and Chile are also increasing their share of world GDP. On the other hand, capital inflows to these countries have decreased dramatically. The drop in such inflows for the least developed countries, mainly in Africa and Asia, is likely to be even more dramatic, despite the decisions of the London G20. In Eastern and Central Europe, public services, schools and teachers have been hit badly and the outlook is grim for at least this year and next. This is why EI is convening a meeting of education union leaders in Warsaw next week, so as to share first hand information and to work out the best strategy to pursue in these countries. (Regarding the general economic outlook in the area, see also the International Herald Tribune “Cash gone, East Europe is left adrift in sea of debt”, 24 August 2009).
Blanchard’s question about sustainability remains central. We have to keep up the effort to get across the message that investment in education and skills is a key factor in sustainability. As a mass of often conflicting information comes out in global and national media, we must keep that focus: education is a smart investment in sustainable recovery.
Sources: Global Unions Washington office, Financial Times, International Herald Tribune
A few days earlier on 19 August, IMF Chief Economist Olivier Blanchard posted an article stating, yes, the recovery had started, but posing the next question: “Will it be sustainable?” (Blanchard: “Sustaining a Global Recovery” link: http://www.imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm). Blanchard also said “some parts of the economic system have broken”. Then he put his finger on the big issue: “unemployment … is not expected to crest until some time next year”. In other words, the number of people thrown out of their jobs by the crisis, estimated by ILO as at least 50 million to date, will continue to increase until “some time next year”. Millions of families will continue to find themselves in dire straits while financial traders get back to “business as usual”.
Two other issues have to be set against the cautious optimism of the central bankers and the IMF.
The first directly concerns EI members worldwide. It is the pressure on public sector budgets resulting from massive drops in revenue, especially at local level in many countries, the increased debt resulting from fiscal stimulus packages, and the growing cost of health care and pension plans. Blanchard discusses these issues in his article. Public school systems throughout the OECD are already confronted by this revenue drop and funding for schools is not likely to improve in 2010.
The second issue is that while the crisis has been global, the impact varies greatly among regions and individual countries. Blanchard discusses in some details the situation in Asia. He states that the GDP of emerging Asia (China, India, Malaysia, Indonesia, Thailand) is roughly 50 per cent of US GDP, but is projected to increase to 70 per cent within 5 years. The emerging economies of Latin America are not mentioned, but Brazil, Argentina and Chile are also increasing their share of world GDP. On the other hand, capital inflows to these countries have decreased dramatically. The drop in such inflows for the least developed countries, mainly in Africa and Asia, is likely to be even more dramatic, despite the decisions of the London G20. In Eastern and Central Europe, public services, schools and teachers have been hit badly and the outlook is grim for at least this year and next. This is why EI is convening a meeting of education union leaders in Warsaw next week, so as to share first hand information and to work out the best strategy to pursue in these countries. (Regarding the general economic outlook in the area, see also the International Herald Tribune “Cash gone, East Europe is left adrift in sea of debt”, 24 August 2009).
Blanchard’s question about sustainability remains central. We have to keep up the effort to get across the message that investment in education and skills is a key factor in sustainability. As a mass of often conflicting information comes out in global and national media, we must keep that focus: education is a smart investment in sustainable recovery.
Sources: Global Unions Washington office, Financial Times, International Herald Tribune
Education International 2009