FREE KIC - NO. 9 JUNE 06

EDUCATION : THE FOUNDATION OF ECONOMIC SUCCESS

If anyone asks me about the reasons for the success of the Irish economy I will always mention education as being one of the single biggest reasons. I know that it is always trotted out as a contributory factor to the Celtic Tiger but I sometimes think that given our current success we might become complacent about the state of our current education system. If we allow our education system to deteriorate I worry about prospects for our economy in 20 years time (Just around the time when demographic problems might be an issue as well)
I genuinely believe that an educated workforce has to be central to the success of any economy in the modern era of knowledge workers. We can see the hollowing out of low skilled manufacturing jobs due to lower wage costs in countries like China. We will therefore be increasingly dependent on industries like software and finance that can compete on the basis of knowledge.

If education is so important to our future I often wonder if we are doing enough to make sure that we have a world class education system. I say this because I read with increasing concern that there are a number of national schools that have class sizes of over 40 pupils! It is scary the number of national schools that have over 30 in the class. The Minister for Education has accepted that the government commitment from before the last election to have average class sizes of 20 will not be met. The Minister's response is the same old one we have heard on many occasions...... "sure haven't we hired 4000 more teachers and spent hundreds of millions more on education". The problem is that we have to spend even more and hire even more because it is critical that we reduce class sizes. I don't know where the trade off between class size and expense should lead us but I do believe that there should be an absolute legal maximum of 30 pupils in a class. If I had my way it would be nearer to 25 and when we reach that limit do some research to see if it makes sense to go further (I can imagine that most of you are thinking that I will be waiting a long long time before 25 is the maximum class size but please allow me the indulgence of thinking that it is a possibility within a reasonable time frame.)
I know the I.N.T.O are trying to make an electoral issue of this situation. I would urge everyone to support them in this campaign and make it the number one issue with any politician you meet. I know that health is probably the number one issue in most peoples opinion but I would urge you to put education up their with health.

Another potential problem in our education system seems to be the small numbers of students doing well at mathematics and physics. These are subjects that are an important part of a knowledge driven economy. I wonder whether some radical solutions will have to be considered to deal with this problem. As far as I can tell part of the problem lies in the fact that very few if any of the best graduates in maths and physics go on to become teachers. I presume that they can make a lot more money in the private sector. Does this inevitably lead us to look at introducing higher pay scales for teachers in subjects where there are shortages? I think I can predict the reaction of the unions. I presume that this is too radical for them. Ironically here I am trying to get you to support the government taking on the teachers unions when in the previous paragraph I was trying to get you to support the union taking on the government! Life sure is strange at times!
I haven't heard the unions come up with practical solutions for resolving this issue but if they have I beg their forgiveness because it hasn't received coverage in the media.
I would have thought that the benchmarking process would be an ideal way of comparing what a physics graduate earns in the private sector versus what they get as a teacher. I presume, however that the benchmarking body only looks at teachers as one big group. As we know benchmarking is all done behind closed doors and we will not know how the comparisons are done. In my opinion this makes benchmarking a joke (a topic to be covered in another opinion piece perhaps?)

I have no doubt that there are many other issues impacting upon our education system. A couple that come to mind are discipline and would you believe eating habits!
I can only imagine how big an issue discipline is and I am sure that class size impacts upon this but unfortunately I assume it is far more complex than this and I certainly do not have a simple solution.
I mentioned eating habits because of watching Jamie Oliver's programme "School Dinners". Having watched that programme I just hope that Irish parents do not feed their kids the type of junk that Jamie saw. He provided research that highlights how bad eating habits impact upon the ability of children to concentrate. If I had my way every parent would be made watch that programme!! (Jamie you're a hero in my books.) Anyone who watched the series saw the strain it placed on him. He has a young family and a business to run but he persevered because he knew it was the right thing to do. (Nora from Kilkenny is a hero too....watch the programme and you'll know what I'm on about)

I know that I have probably rambled on and you probably think that this has little relevance to investment. For anyone who thinks that way I would bring you back to former Federal Reserve Chairman Alan Greenspan. I have listened to Alan on any number of occasions when he has been asked about what does the US have to do to improve the economy. The one thing he always came back to was education. In particular he always talked about the poor levels of achievement of US students in the area of maths. Unfortunately Alan didnít have a simple answer to the problem but at least by highlighting the problem it may lead to something being done.

In conclusion I want to say that if we respond to these problems quickly we can ensure that the Celtic Tiger lives on!!!


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Directors: Kenneth Power (Managing) B.Comm, MBS, ASIP, Regular Member of the CFA Institute.
Siobhan Power