Eastern Europe and Central Asia

The Europe and Central Asia (ECA) region includes Central Europe (the Czech Republic, Hungary, Poland, and the Slovak Republic), Southeast Europe (Albania, Bulgaria, and Romania), the Baltic States (Estonia, Latvia, and Lithuania), the western Commonwealth of Independent States (Belarus, Moldova, Russia, and Ukraine), the Caucasus (Armenia, Azerbaijan, and the Republic of Georgia), former Yugoslavia (Slovenia, Croatia, Republic of Macedonia, Bosnia and Herzegovina, and the Federal Republic of Yugoslavia), and the Central Asian republics (Kazakhstan, Kyrgyzstan, Tajikistan, Turk-menistan, and Uzbekistan). In the early 1990s, the countries of the ECA began a transition from command economies to market economies. As the transition began, the countries had reason to take pride in their education systems. They had solved educational problems that still bedeviled several other regions of the world. Adult literacy was generally universal; participation and completion rates for children and youth of both genders were high at all levels of education; teachers came to work; students had textbooks; students in countries that participated in international assessments of mathematics and science performed well; school dropout rates and rates of grade repetition were low.

In the early 1990s, therefore, education seemed so secure that it could safely be ignored as countries faced the staggering problems of collapsing economies, fragile democracies, unproductive state-owned enterprises, and rapidly increasing poverty. Within ten years that reality changed. ECA education systems joined the ranks of the deeply troubled sectors.

New Rules for Education in the ECA Region

The rules for market economies and open political systems differ from those for command economies and authoritarian political systems. For example, the continuous changes characteristic of market economies and the ambiguities of a democracy require such skills as knowing how to learn, problem solving, and evaluating. Most ECA education systems, however, focus on memorized factual and procedural knowledge, which is adequate for the predictability of a planned economy and the dogma of authoritarianism but not for the volatility of a market economy or the choices required of citizens in democracies.

Analyses of the education systems of ECA identified five central problems:

• Alignment: Educational quality is contextual; it is not a constant under all conditions. ECA education systems that were a good fit with planned economies and authoritarian political systems do not fit well with open market economies and open political systems.
• Fairness: Education is an important mechanism for reducing and preventing poverty. Differences in children's learning opportunities are emerging in ECA countries at that very point in the region's history when skills and knowledge increasingly determine a family's poverty status.
• Financing: ECA countries need to realign the financing of their education systems with fiscal realities without jeopardizing the fairness and quality of educational services. Their failure to rationalize education finance is eroding the achievements of the pretransition period.
• · Efficiency: Most ECA education systems use inputs inefficiently. These inefficiencies are the legacy of centrally planned economies, where prices and budgets did not affect allocation decisions.
• Governance, management, and accountability: Most ECA education systems do not perform well against standards of transparent and effective governance, efficient management, and vigorous accountability to a range of stakeholders. The sector is still dominated by governments unchecked by private sector competition and participation of stakeholders.

These problems were found to apply at all levels of education, but they play out in different ways at each level.

The Economic Imperative

Both economic and civic imperatives for ECA countries define how their education systems will have to adapt. In regard to the economic imperative, the region is undergoing three radical economic shifts: (1) from centrally planned to market economies; (2) from protected trade based on politics to global trade based on economic comparative advantage; and (3) from mass production to flexible, or customized, production.

Market economy. The implications of a market economy for education are significantly different from those of a planned economy, but they are fairly easy to see. In market economies wages reflect skills and knowledge; in planned economies, there is little relationship between the two.

Globalization. Integrating into the global economy imposes a discipline on domestic producers by increasing competition and clarifying comparative advantages. It is a stimulus for doing what producers have to do anyway in order to raise productivity, which is the key to higher wages and higher standards of living. Globalization, in conjunction with the flexible production of goods and services and expanded and cheaper communication and transport systems, gives customers more choice. Thus, moving into the global economy raises the standards for goods and services that suppliers have to meet. These higher standards prevail even within suppliers' domestic markets, because standards "leak" back and forth across national boundaries in the form of traded goods and services.

Flexible production. Moving from mass production to the flexible production of goods and services changes the opportunities and ultimately the basis for economic growth. Computerized technologies have revolutionized production by allowing both long and short production runs that can respond to niche or customized markets at the cost savings of mass production.

Employer responses. Globalization and flexible production have combined to change the profile of customer demand for manufactured goods, agricultural products, and services. Customers have come to expect a large, varied, and continuously improving basket of goods and services, fast delivery of orders, high and consistent quality, and low prices. To meet these demands, employers have to change technologies and the organization of work. Mass production of goods and services depended on routinization and a hierarchical specialization of function, where most workers, even middle managers, were order takers. Workers were not expected to exercise judgment, initiative, or problem-solving skills, and most decisions were referred up the chain of command. This productive regime was predicated on slow rates of change that minimized the need for adult learning.

Under flexible production, however, employers broaden job descriptions to give each worker authority over more of the component tasks of production. Employers flatten organizational hierarchies and introduce job rotation and team-based work. These changes save the time lost by referring decisions up and down organizational ladders; they reduce middle management and supervisory jobs. The jobs of less-skilled workers begin to incorporate some of the supervisory, planning, repair, maintenance, and quality-control functions previously reserved for managers or specialists.

Worker skills required. In this context workers need solid literacy or information-processing and interpretive skills, better problem-solving skills, better knowing-how-to-learn skills, and greater initiative. Advanced economies confront increasing unemployment rates and falling wages for those with low educational qualifications.

Status of ECA countries. Evidence from the Organisation for Economic Co-operation and Development (OECD) International Adult Literacy Survey (IALS) suggests that the region's education systems are a poor fit with modern economies. Four ECA countries–Hungary, Slovenia, Poland, and the Czech Republic–have participated in the IALS. Of these four, three–Hungary, Slovenia, and Poland–seriously lag OECD countries in the information-processing and interpretive skills that modern economies require of their citizens.

A comparison of the IALS data for the lowperforming ECA countries with those for the strong ECA performer (the Czech Republic) and with participating OECD countries tells an important story. First of all, in Hungary, Slovenia, and Poland, very high percentages of workers aged sixteen to sixty-five tested at levels one and two on the prose, document, and quantitative scales, with about 75 percent of the workers in each of the three countries testing below level three on the prose scale. Scores at or above level three predict the ability of a person to function in a modern workplace.

The differences between the tested skills of adults in Hungary, Poland, and Slovenia and those of Czech adults and adults in participating OECD countries cannot be attributed to the quantity of education that low-performing ECA populations complete.

The performances of those still in, or recently graduated from, school reflect most pertinently on the quality of their country's education system. Substantially higher percentages of twenty-to twenty-five-year-olds in Hungary, Poland, and Slovenia tested at lower literacy levels than those of the same age group in the Czech Republic and participating OECD countries, indicating that education systems of the transition countries are not producing the skills that new entrants into the workplace will need as these workplaces modernize.

Multivariate analyses show that parental socioeconomic status has a significantly greater effect on scores in the three low-performing ECA countries than in the Czech Republic and OECD countries. Apparently, education policy in these three ECA countries is not designed to minimize the effect of parental background and may operate to reinforce it via mechanisms such as early tracking.

The Civic Imperative

For decades ECA countries were ruled by authoritarian regimes that controlled their populations through fear and the deliberate creation and manipulation of distrust. In the posttransition era, ECA schools can be important weapons for socializing children to the rights and obligations of citizenship and for developing the trust among groups that leads to a willingness to cooperate across the boundaries that normally divides the groups (e.g., clan, ethnic or religious membership)–provided that the political context supports these values.

Increasing Inequality in Education

In the pretransition period learning opportunities were inequitable, but given the region's wage compression (the lack of variation in wages), unequal access to education had little effect on family income. Unequal learning opportunities matter more in ECA countries in the early twenty-first century because education matters more. Skills and knowledge affect individuals' earnings, unemployment probabilities, and likelihood of receiving wage-enhancing training from employers. Because the education acquired by parents affects that acquired by their children, lower levels of education in one generation can ignite intergenerational cycles of poverty through the inter-generational transmission of lower levels of skills and knowledge.

Statistical relationships are emerging in the ECA region between educational attainment and such outcomes as employment status, wage level, and poverty. Figures from 1993 to 1998 show that households whose heads had completed only basic education were 20 to 80 percent more likely to be poor than the average household.

Declining enrollment rates. Enrollment rates, the best available measure of learning opportunities in ECA countries, are declining at all levels except at the tertiary level (see Table 1). These enrollment rates indicate that a larger number of young people are building fewer skills and less knowledge and a smaller number are building more. Calculations show a decline in the number of years of full-time education (excluding preschool) that the average six-year-old child in the ECA region can expect to achieve over her lifetime. In 1989 the average full-time school expectancy was 11.2 years; by 1997 it had declined to 10.6 years. In contrast, the average full-time school expectancy for OECD countries in 1998 was 15.4 years.

The secondary vocational/technical track accounts for enrollment losses at the secondary level. Enrollment declines at this level signal emerging educational inequalities of particular significance because a solid upper-secondary education increases the chances of acquiring the skills required in modern workplaces.

Relationships between enrollment rates and family income and education costs. Results of poverty assessments show that youth from poorer and less well-educated families in the ECA region are likely to leave school before completing basic education or at the time of its completion. Because students from poorer families tend to select the technical/vocational track, losses out of upper-secondary education are concentrated among poorer families. As a result, upper-secondary enrollments are becoming increasingly biased in favor of the nonpoor.

TABLE 1

ECA countries have substantial poverty overall, and income inequality is growing as a predictable and inevitable consequence of the shift to market economies where demand, not central wage-setting, determines the price for labor. Greater income inequality translates into less-equal abilities to pay the costs of education. Early studies indicate that education is costing families more than before the transition, although costs vary by country and among jurisdictions within countries. These studies also show that poor families are paying a higher percentage of per capita consumption for education than nonpoor families. Not surprisingly, the countries and jurisdictions that are under the greatest fiscal pressures are shifting costs to families more than those that are less fiscally constrained. Unfortunately, it is just these countries and jurisdictions that tend to have higher levels of family poverty.

Problems Stemming from the Financing Structure

Since the transition, the education systems in many ECA countries have been experiencing serious fiscal constraints that will almost certainly persist for the foreseeable future. Governments have yet to reconcile their education sectors with fiscal realities without jeopardizing education outcomes and fairness of educational opportunities.

The resource imbalance in the sector stems from three causes: (1) macroeconomic declines have reduced total public funds available for education; (2) the removal of subsidies and price distortions has led to market-based pricing for inputs, particularly for energy; and (3) major inefficiencies inherited from the pretransition period are pervasive in the sector, a problem discussed in the efficiency section below.

Following the disintegration of the Soviet Union, macroeconomic conditions deteriorated dramatically in all ECA countries. Most countries in Central Europe and the Baltics have subsequently recovered, but the rest of the region continues to face macroeconomic decline or stagnation. Countries experiencing declines in gross domestic product (GDP) have tended to react by reducing public spending on education even more rapidly, causing not only an absolute decline but also a decline in the ratio of public education spending to GDP.

How have education sectors reacted to budget pressures? ECA governments and local education authorities have not yet adjusted effectively to reduced funding (in some cases) or to increased prices (in all cases). Instead, they have tended to take temporary measures that only paper over fiscal shortfalls and that tend to delay genuine adjustment. Such temporary measures, which increase the eventual costs of adjustment and undermine education outcomes and fairness, include:

• continuing to defer building maintenance, thereby borrowing from the future at exorbitant interest rates because it will cost much more to rehabilitate schools in the future than it would to repair them in the present
• cutting the purchase of teaching materials and equipment
• saving on heating bills by closing schools
• allowing teachers' wage rates to fall relative to other wages
• shifting financing responsibilities to local governments that lack adequate taxing authorities to pay schooling costs
• running up arrears in energy bills and teacher wages
• shifting costs of education to families

The Command Economies' Legacy of Inefficiency

Depending on the country, ECA countries may consume at least double the resources employed per basic and secondary student in the West. The most egregious examples of the inefficient use of resources are space norms per student, utility consumption, and labor inputs. Many of the inefficiencies are a legacy of pretransition economies when planners, not market forces, determined wages, subsidies, and prices. There were no mechanisms for determining the total costs of anything and therefore no incentives to contain costs.

Schools in the ECA region were not built to conserve energy and consume, on average, between two and three times as much energy as modern school buildings in OECD countries. For example, the average Danish school consumes about 100 kilowatthours per square meter per year, in contrast to Latvia's typical 285 kilowatt-hours per square meter per year. Now that energy is being priced at market levels, the percentage of education budgets devoted to energy has increased from less than 5 percent to between 25 and 40 percent, depending on the severity of the climate.

Staffing norms inherited from the pretransition period mean that the proportion of teachers to students is two or three times as great as in OECD countries. Low at the start of the transition, student/teacher ratios worsened over the next decade for most ECA countries. The ECA practice of using single-subject teachers after the primary grades fuels labor inefficiencies, given that highly specialized resources of any kind are more difficult to allocate efficiently. Although data on nonteaching staff are not generally available, limited data hint at further inefficiencies in the countries that had comprised the Soviet Union. For example, in 1999 Moldova had a ratio for all levels of education of 1.35 nonteaching staff to one teacher.

Total fertility rates for all ECA countries declined dramatically between 1989 and 1997, falling from 2.1 to 1.3 children per family in all ECA countries except Albania and the Central Asian republics. Thus, at least in the short-to medium term, ECA education systems are sized for more children than will be going through them, adding to the need to down-size inputs.

Management Failures in Governance and Accountability

Because the state takes actions in education on behalf of its citizens and taxpayers, it must respond to questions about how well it represents their interests. Is the education sector doing the right things? Is it doing the right things right? What mechanisms do stakeholders have to hold the state accountable for its actions?

The answers to these questions lie in the sector's arrangements for governance, management, and accountability. Unfortunately, ECA education systems tend to fail spectacularly on these three key dimensions. Improving these functions seems to be absolutely essential for straightening out other problems of the sector.

Governance–goal setting and monitoring. Major changes in context, such as ECA countries are experiencing, normally force countries to rethink and debate goals for their education systems. The discussion in the ECA region is not well focused, however, and only the most progressive countries in the region have moved toward goals that are practical rather than focusing on vague ideals.

Management. Countries can vary in how they distribute responsibilities and powers among levels of government and still secure reasonably efficient service. In the ECA region's education sector, however, the responsibilities of management tend to be allocated to different levels of government in ways that are contradictory, unclear, or duplicated within or between levels; the responsibilities are often misaligned with the availability of resources, or they may be missing altogether. For example, even in centralized education systems, ministers often do not perform functions that should be centralized, such as leading improvement efforts, setting learning standards and ensuring educational quality, monitoring performance, and ensuring educational fairness.

Even where functions and decision-making powers are complete and sensibly allocated among levels of government, functions may be performed well or poorly. In the ECA region, the performance of functions in the education sector falls woefully short of good international practice.

Accountability. The key to accountability in education is a checks-and-balances relationship among the interests of three groups: the public sector (government and professional educators), the private sector, and the civic society (taxpayers, users, and beneficiaries). Each of these three actors plays according to different rules. The public sector uses rules and standards to establish the framework for service delivery; the private sector uses competition and choice; and the civic society uses participation or "voice."

Analyses show that the state cannot be trusted to supply educational goods and services efficiently without the competitive checks of markets or the exercise of voice by beneficiaries. These same studies, however, also show that efficiency and responsiveness decline if any one of these players dominates. Mechanisms for strengthening accountability carry their own distortions. Thus, it is the checks and balances among the three mechanisms that result in the most efficient and responsive provision of services.

In ECA the state dominates the sector. Competition in the form of private provision and contracting out of services is still in its infancy. Voice is a very weak reed in the region. Several ECA countries impose legal or political constraints on mechanisms for expressing voice–such as constraints on the press.