A fully privatised Voc. Training and Education System: Learning from others

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Chile is one country with a long established for-profit VET sector. Vocational education in Chile underwent radical deregulation during the 1980s, as part of broader privatization reforms implemented by the military dictatorship. The government transferred some public vocational schools to private corporations and encouraged the establishment of new private for-profit providers known as Technical Education Centres. The remaining public technical schools were forced to reform their curriculum in line with the needs identified by local industries.

Several concerns have been raised about the growth in for-profit VET. There is considerable evidence that the quality of programs offered by for-profit VET companies is inferior to not-for-profit and public providers.

Privatization of VET, either directly through the development of a for-profit sector or more subtly through the imposition of markets on VET systems, has major consequences for teachers’ remuneration, working conditions, autonomy, job security and tenure, and professional development. Privatization initiatives also have a direct impact on students, institutions and entire systems in ways that do not serve the public interest.

The market reforms introduced in Australia have failed on a number of key grounds. They have resulted in higher transaction costs and have increased the reliance of a large proportion of private providers on public funding. Quality has also suffered as a result of the diversion of resources away from instruction and student services to administration and marketing. Overall, the evidence shows that the imposition of market forces on the VET system has created incentives to reduce costs, rather than improve quality.

Source: Education International Task Force on Vocational Education and Training, Education International, 6th World Congress, , http://bit.ly/1PuYkL4

1. Introduction

In an increasing number of countries, privatization of vocational education and training (VET) has become a major policy thrust of governments. In the wake of the global economic recession and the rise in public sector deficits, many more governments are looking to the privatization of public services such as VET as a simple solution to what are in fact complex fiscal and economic problems.

This paper reviews the major privatization trends in VET in recent years, with a focus on the for-profit sector and market-based reforms. It is argued that privatization of VET has major consequences for the terms and conditions of employment, professional autonomy, and rights of staff. There are, it is noted, also significant negative consequences for VET students and for systems as a whole.

The paper concludes with concrete recommendations for Education International and its affiliates

2. The many faces of VET privatization

Privatization is understood broadly as both the transfer of the ownership or control of public sector services or assets to the private sector, and as the importing of “ideas, techniques and practices from the private sector in order to make the public sector more like businesses and more business-like.” (1)

Globally, VET is the most privatized sector within education. A survey of the relevant literature (see Appendix) reveals that many countries have experimented with both the direct and indirect privatization of public VET in recent years. This has included initiatives sell-off public institutions to for-profit providers, to encourage public institutions to compete with one another and with private providers, to expand “costrecovery” financing systems, and to establish public-private partnerships. Globally, a number of various forms of privatization can be indentified, including:

The direct transfer or sale of public providers and services to private providers.

 Regulatory changes that allow for the recognition and operation of private and for-profit providers.

 Outsourcing and contracting out of aspects of public VET services to private providers.

 establishment of joint ventures and public/private partnerships; (2)

 private sector/corporate management principles applied to VET;

 privatization of financing (e.g. tuition fees/user fees, student vouchers, external funding requirements etc.)

 introduction of quasi-markets and competition (e.g. competitive tendering, funding tied to performance outcomes, etc.)

While there are many forms of privatization in VET, the two most common trends today appear to be the growth in private and for-profit institutions and providers, and the imposition of market reforms on the delivery and funding of VET.

For-Profit VET

While private, not-for-profit VET institutions have operated for some time in many countries, the fastest growing component in recent years has been the for-profit sector. In countries like the United States, for-profit VET now represents the fastest growing component of post-school education. Even countries that do not legally permit for-profit education generally, there is ambiguity over the status of for-profit VET providers (e.g. Poland, Portugal, Uruguay).

At the other extreme, some countries permit only for-profits in the post-school VET sector (e.g. Chile).

For-profit VET institutions cannot be described in simple terms. They vary significantly in terms of their mission, curricula and ownership structures. While generalizations are difficult to make, there nevertheless do appear to be some common tendencies worth noting.

First, the for-profit provision of VET appears to be growing where the private not-for-profit sector as is well established and holds a large share of total enrolments, For example, roughly two-thirds of Brazil’s private post-school institutions are for-profit. In the Philippines, nearly half of all students are enrolled in for-profit VET. Chinese forprofit VET institutions have proliferated with the encouragement of the ministry of education. As in other countries, however, for-profit providers are not eligible for government subsidies.

Across the Middle East and Africa, several states welcome and encourage for-profit VET. Canada, the United States, Australia and New Zealand all have extensive numbers of for-profit training institutes and career colleges.

Chile

Chile is one country with a long established for-profit VET sector. Vocational education in Chile underwent radical deregulation during the 1980s, as part of broader privatization reforms implemented by the military dictatorship. The government transferred some public vocational schools to private corporations and encouraged the establishment of new private for-profit providers known as Technical Education Centres. The remaining public technical schools were forced to reform their curriculum in line with the needs identified by local industries.

[Six years ago the ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) found Chile faced some significant challenges in its Privatised Voc. Ed. & Training System:

• The various elements of the VET system are weakly connected to each other, both in institutional and curricular terms.

• The initiative to create a qualifications framework is a welcome attempt to address this challenge, but its implementation faces a number of obstacles.

• The literacy and numeracy skills of 15 year olds in Chile are not as strong as they should be, and this is likely to be a particular problem among those in vocational education and training programs.

• Workplace training, as part of VET programs, is weakly developed. Many upper secondary VET students do not participate in workplace training and the mechanisms to assure its quality of are weak.

• Many VET teachers and trainers have the same qualification as the one they teach towards and do not have any other qualifications.

• Arrangements to link the mix of VET provision to labour market needs are weak.

• There are no systematic mechanisms for the assessment of learning outcomes in upper secondary VET.

• Careers guidance for VET students is relatively weak. OECD,  http://bit.ly/1B9GoKd

Concerns

Several concerns have been raised about the growth in for-profit VET. There is considerable evidence that the quality of programs offered by for-profit VET companies is inferior to not-for-profit and public providers. As illustrated below, for-profit career colleges in the United States have been under intense scrutiny following a Congressional investigation uncovered poor student outcomes and widespread fraud in the industry.

An American Scandal: For-Profit Career Colleges in the United States

The for-profit education and training industry in the United States is valued at about $US 120 billion a year. A Congressional investigation of the industry in 2010 found evidence of widespread fraud, questionable marketing practices, and poor student outcomes. About a third of for-profit school graduates are actively repaying their student loans, compared to about 55% for public colleges, according to the Government Accountability Office report. The report also found that recruiters at 15 for-profit colleges encouraged investigators posing as students to commit fraud on financial aid applications or misled them about tuition cost and potential salaries after graduation. [Source: United States Government Accountability Office, “For-Profit Colleges: Undercover testing finds colleges encouraged fraud and engaged in deceptive and questionable marketing practices,” (Washington, August, 2010).]

Terms and conditions of employment

In addition, concerns have been raised about how for-profit education affects the terms and conditions of employment. For-profit provision is often justified on the grounds that it will increase “efficiencies” in the delivery of VET. In practice, however, efficiencies are often achieved through reductions in labour costs, not in quality improvements. For instance, there is evidence in the United States and Latin America for-profit providers offer fixed-term employment contracts only, thus increasing the precariousness and casualization of VET staff.

Market reform in VET: The case of Australia

Market reform of VET refers to a privatization process that involves the introduction of market mechanisms into VET. This normally includes the use of competitive tendering for government funds, whereby public and private VET providers must compete for financing and for students. Another element of this is the introduction of a “user choice” or demand-driven system.

Under this model, government reduces its role as planner and funder of VET, and instead acts as a market regulator to ensure competition. Both public and private VET providers are seen as “sellers” of programs and services who compete with one another for government funds and fee-paying clients. Employers and students are viewed as customers or consumers of VET who pay more of the cost and choose their VET provider and curricula.

The case of Australia offers an interesting example of the process of market reforms and their consequences. Australia redesigned its VET system along a competitive market model nearly two decades ago. In place of the previous centralized system of planning, funding and provision of VET, the Australian government in the early 1990s began recognizing and encouraging the establishment of private providers, and introduced competitive funding and user choice.

The public Technical and Further Education (TAFE) institutes were forced to compete with these new providers for a reduced pot of funding. Students were forced to pay more of the costs of their education. Between 1997 and 2008, total government funding fell in real terms by more than 20% per annual hour of training. (3) The market design approach was intended to provide for more choice, greater efficiency, and improved quality while maintaining access and equity.

However, the market reforms introduced in Australia have failed on a number of key grounds. They have resulted in higher transaction costs and have increased the reliance of a large proportion of private providers on public funding. Quality has also suffered as a result of the diversion of resources away from instruction and student services to administration and marketing. Overall, the evidence shows that the imposition of market forces on the VET system has created incentives to reduce costs, rather than improve quality.(4)

The impact on VET teachers and students has been marked. Cost-reductions have resulted in larger class sizes, a downward pressure on salaries, reduced face-to-face teaching hours, fewer course offerings, and the increased use of fixed-term employees. A 2006 study undertaken by the Australian Education Union documented high levels of student poverty, prohibitive course costs and an increased tendency to shift costs onto students.

The inquiry also found that:

 In industry-based programs, VET teachers worked long hours with no support systems;

 VET teachers were forced to invest their own time and money into maintaining their vocational knowledge; and

 VET teachers were forced to take on extra responsibilities for frontline employment and human resource tasks, including mentoring casually employed staff.(5)

4. Conclusion

This brief review has shown that the privatization of VET, either directly through the development of a for-profit sector or more subtly through the imposition of markets on VET systems, has major consequences for teachers’ remuneration, working conditions, autonomy, job security and tenure, and professional development. Privatization initiatives also have a direct impact on students, institutions and entire systems in ways that do not serve the public interest.

1 Stephen J. Ball and Deborah Youdell, Hidden Privatisation in Public Education (Brussels: Education International, 2008), p. 9.

2 The issue of public-private partnerships was dealt with extensively by the report of the EI Task Force Report, Public Private Partnerships in Education (Brussels: Education International, 2009).

3 P. Kell, TAFE Futures: An Inquiry into the future of technical and further education in Australia (Melbourne: AEU, 2006), p. 21.

4 D. Anderson, “Trading Places: The impact and outcomes of market reform in vocational

5. Kell, op. cit. p. 27.

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