Editorial - FUTA is Right on the 6%

The Kandy News, Sept 2012.  

By, Professor SWR de A Samarasinghe, 

The Federation of University Teachers Associations (FUTA) has two main demands. One is higher salary for university teachers. The other is that government spending on education and related fields such as research should be raised to at least 6% of the Gross Domestic Product (GDP). If the government agrees to the second demand it is not too difficult to accommodate the first. FUTA has a very compelling case for both demands.

Sri Lanka does not have oil or other high-valued natural resources to sell to the rest of the world. Our main resource that creates economic wealth is its working people. For example, our migrant workers alone remitted to the country almost $5,000 million in 2011, that is about five times as much as the loans that China gave Sri Lanka or private foreign investors brought in for long term investment. Many of the migrant workers who had earned that money are unskilled or semi-skilled workers. Imagine how much more productive they would be if they were to get a better education, remain at home, and do productive work in Sri Lanka. These numbers suggest that the nation’s economic prosperity in the 21^st century will depend largely on how well we educate our younger generation.

In 2010 Government spending on education was only 2.1% of GDP. FUTA is right to point out that this is well below the international norm. The 2.1% is less than the South Asia average of 2.5%. The figure for India was 3.9%, Pakistan 2.4%, Bangladesh 2.2 and Nepal 4.7%. The average for Lower-Middle Income countries (Gross National Income per capita between $1.006 and $3,976 to which Sri Lanka belongs with a GNI per capita of $2,240) globally was 4.0%. Outside South Asia also countries that meaningfully can be compared with Sri Lanka do much better than us. For example, in 2010 the Malaysian government spent 5.8% of GDP on education and the Philippines 5.1%.

It is true that if private spending (private tuition plus fees for private fee-levying institutions) on education were factored in, the percentage for Sri Lanka would rise above 2.1%. But the same would be true for almost all the other countries that also have similar private spending. Thus, FUTA is right to note that we grossly underspend on public education.

There are significant long-term consequences of such under-spending. First, public education at all levels helps the poorer segment of the population who otherwise would be left behind. Thus, from an equity point of view, it is absolutely essential that public spending on education should be increased.

Second, the quality of education matters in the highly competitive 21^st century globalized economy. The FUTA website (http://futa-sl.blogspot.com/) carries a link to a global ranking of universities. Moratuwa ranked 2324 is the best among the Sri Lankan universities. Peradeniya’s rank is 2615. Only five Sri Lankan universities manage to secure a rank in the top 5000. In contrast the University of Singapore is ranked 75, Mahidol in Thailand 202, and the Indian Institute of Technology in Bombay 492. It is true that the criteria used for ranking could be somewhat arbitrary. Nevertheless, these results cannot totally be dismissed. They are indicative of the challenge that Sri Lanka faces in producing high quality graduates with the right skills set.

FUTA’s demand to increase public spending on education can also be justified for two other main reasons that go beyond university education. First, there is a compelling case for improving the quality of school education, especially in the rural areas that have under-resourced schools.

Second, and equally important, Sri Lanka has to move beyond the current relatively low productivity economy that relies heavily on tea, garments, rice, tourism, and export of semi-skilled and unskilled labour to the Middle East and elsewhere. That means more high-value-added manufacturing and high-end services are essential. For both we need high quality technical education that Technical Colleges that are situated between A-Levels and University can deliver. Just now this is a grossly under-funded sector of our education system. The 6% spending target can help alleviate that situation. 

The government has a genuine fiscal problem in spending more for education. Expanding the budget deficit is not an option, especially if it wants another large stand-by loan from the IMF. There is a solution although it may be a bitter pill to swallow politically. One part of that solution is to cut wasteful spending on under-utilized showpiece infrastructure projects and reduce losses in state-owned enterprises. The other is to cut military spending.

The war is over. The public believes, quite rightly, the government’s claim that the LTTE and terrorism have been defeated for good. If that is the case it should be possible to reduce military spending to help increase spending on education, health and other such sectors. In 2010 the average spending on the military in South Asia was 2.4% of GDP and in Sri Lanka 2.8%. Suppose the Sri Lankan figure is reduced to the South Asian average of 2.4% and the money is transferred to education, our schools, technical colleges and universities would have an additional $19m. (Rs 2,110m). That is a good beginning to move towards the 6% target.  

Professor SWR de A Samarasinghe, formerly of the Dept of Economics, University of Peradeniya, and ICES Kandy, and now Professor at Tulane University, USA.