“Education spending is an investment in our future and should not be part of the government’s fiscal balance”, said the Nobel Laureate Economist Christopher Pissarides, Regius Professor of Economics at the London School of Economics.
Primary role of education is its contribution to longer-run economic growth. It has a big role to play in the success of Europe 2020, in terms of the quality of jobs and productivity growth. Our first and most important concern should be not to allow the austerity to put at risk this function of education. To ensure that recession does not have a negative impact on education, a minimum of expenditure on education should be off the fiscal balance sheet (e.g., through special EU loans/grants).
It is reasonable to allow annual spending up to 5% of GDP in the last pre-recession year, or the country’s actual spending in the same year, whichever is higher. This maintains the standards in advanced countries and encourages growth in the ones below the mean. The budget increase should be linked to structural reforms and R&D investments. Each country has set qualitative and quantitative goals within EU policy 2020 that should be respected in order for Europe to become more competitive.
A consequence of the second role of education is that the best time to increase educational attainment, from the social point of view, is recession. Education is an investment: the main social cost of this investment is the foregone output of the student. The return is the higher productivity and lower unemployment of the beneficiary as much as 12% currently in Europe.
The objectives of this initiative are to combat inequality by providing equal opportunities for education and training to all young people in Europe, to ensure adequate and appropriate infrastructures and tools for high quality education in Europe in times of crisis and to enhance and safeguard growth, development and democratic institutions. Europe has to invest in education so as to enhance its competitiveness towards USA and China. This is a win-win situation for all member states of the EU, below and above the eurozone average on public expenditure for education.