Should more money be invested in Latvia’s educational system?

24. October, 2001


Guntars Catlaks

Foto: E. Rudzitis

If teachers in Estonia are paid more money and if several thousand children in Latvia do not go to school, that is not due to a lack of financing. We do not have lots more or lots less money than other countries with a similar economic level. Latvia’s problem is the ineffective use of resources that are available.

The answer to the question that is posed in the headline of this article may seem obvious – yes, there is a catastrophic lack of money. Schools are run down, teachers are poorly paid, students do not have money for university studies. A list of problems which, according to thoughts that have been expressed in the press and in everyday conversations, are based on a chronic lack of financing could be continued on and on.

I would, however, like to present a different view – one that has not received much attention so far. It is certainly not a popular viewpoint among those who shape policy, and it may seem odd to people in society.

Namely – Latvia’s educational system does not need more money.

Of course, I must qualify this statement. In absolute numbers, spending per student in Latvia lags far behind spending in the United States, Sweden, Germany and other developed countries. To be sure, there are certain fixed costs in education, and the cost of a specific level of quality is similar in the world. Oil prices tend to even out in the world, and the same is true when it comes to building and repairing schools, installing heating systems, publishing textbooks and buying computers. All of this requires similar expenditures when the spending is calculated on a per capita basis, and it makes no difference if the country is large or small, wealthy or poor. Salaries, of course, are different, especially for teachers, but saving money at the expense of the workforce is a phenomenon in the entire economy, not just in education. This is a vicious circle. Lower investments in education cause education to be of poorer quality. This leads to a labor force of a poorer level of quality and less competitiveness. This reduces GDP, etc.

Where is the escape? Is Latvia doomed to be forever backward? Should we perhaps increase per-student spending to the Swedish level to break out of the circle?

Let’s be realistic. Latvia’s GDP does not exceed a per capita level of USD 5,000 per year, when calculated on the basis of purchasing power parity, and that means that the majority of our national budget would have to be spent on education. I don’t believe that a majority of citizens would support such an idea in a referendum, to say nothing of the fact that more or less responsible political parties have to hash out the country’s various needs when writing up the annual budget.

Secondly, a lack of money is a relative concept. Latvia spends approximately 6.5% of GDP on education. That is not a pittance, and it is more or less in line with spending in the world’s developed countries, as far as percentages are concerned. Each country and each society have similar needs and similar budget structures – pensions, social payments, defense, health care and education. In many countries, especially in Europe, there are efforts to even out differences among these various sectors, and this inevitably is reflected in the structure of a national budget. The percentage-based differences get smaller and smaller.

The idea that a society can spend what it has earned is unquestionably true. This means that education financing in absolute numbers cannot increase in Latvia until GDP increases, too.

We have to find ways, therefore, of spending the money that we have more effectively. That is particularly true when we come to realize that even though per capita spending on education in Latvia is similar to that in other countries in the region, the results of education are far behind the results that are posted in other countries. If Estonia’s teachers earn considerably more money than Latvia’s, if Poland posts far better results than Latvia in an international comparative study of civic studies, and if thousands of children in Latvia are not going to school at all – these are not problems which can be attributed to a lack of money. We do not have lots more or lots less money than other countries with a similar level of economy.

Latvia’s educational problems are related first and foremost to the ineffective use of resources. Latvia has maintained a dense network of schools with out-of-date infrastructure, major energy costs and relatively small classes of students. All of this is far out of whack when compared to population density and modern quality demands. Latvia has one of the highest student:teacher ratios in the world – approximately one teacher per 10 students. That is because of the large number of schools and because of the narrow qualifications of teachers. A high school needs at least 20 different teachers to cover all of the subjects that are listed in the curriculum. This means that there have to be at least 400 students in the school if we look at the proportional teacher:student ratio that is apt for a country with a developed economy. We have very few schools with fewer teachers, but we have lots and lots of schools with far fewer students. We can understand those who shape educational policies – half-empty minority schools cannot be closed down for political reasons. Small rural schools cannot be merged because of local government interests, some of which are also political. The salaries which the state pays to teachers, irrespective of spending on school building maintenance, help to uphold a relatively stable social environment in parts of the country which are in other respects economically depressed.

It’s no surprise, then, that Latvia’s teachers earn so little money. Indeed, their salaries are, relatively speaking, among the lowest in the region. Rich local governments try to compensate for the national government’s inability to solve the problem by paying bonuses to their teachers, thus deforming the well-intended principle of equal salaries for all teachers with similar qualifications. Educational institutions, meanwhile, have fairly limited opportunities to find other financing. Schools which seek to do so are forced into something of a “shadow economy”. Latvia does not have a tax system which would stimulate private investments in the educational system.

This vicious circle will not be broken, as I noted above, without fairly radical reforms to education financing in Latvia, and the basic components will have to be a competitive salary system for teachers and an effective network of educational institutions.

Sure, we can go back to the old saw that “the people will not understand us”. As long as Latvia remains poorer than Sweden, however, improvements are not possible if things remain the same. I believe that the Latvian people can understand and accept justified and necessary reforms if those who shape policies are able to prepare, explain and discuss them with the people. I don’t agree that poverty is an excuse for stupidity, idleness or poor work in any area, including education and politics. raksts

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