Nova workboard

a blog from young economists at Nova SBE

Our Education

In the present year 93% of the students who applied for a place in a public high education institution have been accepted. However, this is not a good indicator; it’s a sign of the shortage of candidates. Actually, in 2013 were only registered 40 419 applicants, about 13 000 persons less than in 2008.

In fact, there are two main reasons (which are intimately linked) that can justify this phenomena – the present crisis situation in Portugal and the increasing prices of the tuition fees. Indeed, since 2003 those tuition fees had increased more than 25%! Even though this is in nominal terms (in real terms there’s still an increase but a lower one), it is important to mention that even with the same tuition fees, less people have the possibility to include them in their consumption bundle due to real income reductions. This can be faced as a strong reason to have a shortage of candidates to the public high education by itself: families that are already supporting the peak level of taxes of all times and have to cut the expenses, cannot afford this increasing prices of the tuition fees, making many students not to take high education degrees and drop out college.

With this, the human capital is not being potentiated, leaving the country with a rate of graduated workers who are between 25-34 years old far from the European Union average (26,1% and 34,6% respectively in 2011 according to the European Commission,Fig1).

Sem Título

Yet, I am not only another student complaining about government measures, I am writing as an economist trying to understand those measures. If we analyze some IMF statistics, last year’s high education expenditure was 1.6 billion Euros, being 1 billion of those financed by the government. And the so called super expensive fees mentioned before only represent 300 millions of this budget. Therefore, if Portugal wants to cut the expenditure in education has to take other measures besides increasing tuition fees, being this measure doubtful taking in consideration the scarce Euros that the government saves against the future lack of qualified human capital. A measure that has been implemented is the extinction of several undergraduate degrees that don’t satisfy some requirements, like the minimum average number of students each year. In my opinion, this is a measure that can be efficient and a step in the right direction. Since Portugal’s economical situation it’s poor and has to make cuts in every area, I think that in education (like in health) the government has to make an effort to cut only the superfluous services or else Portugal will pay in the future for the mistakes made now. Increasing tuition fees is a disincentive for students since we cannot solve a problem in the education system by depriving people to have conditions to attend college. Actually, “over the past decade, more than two thirds of the GDP growth in EU21 countries with available data has been driven by labor income growth among tertiary-educated individuals.” (Education at a Glance: OECD Indicators 2012)

Given that, it seems to be hopeless trying to solve mistakes from the past by compromising the major input in the future – the human capital!

Catarina Coelho
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Author: studentnovasbe

Master student in Nova Sbe

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