Qualifications and the incentives to learn

2. Qualifications and the incentives to learn Professor Ewart Keep SKOPE Cardiff University

3. The policy goal of participation Across the developed world, policy aims for higher levels of participation and achievement by: • Young people in initial E&T • Adults in continuing education, CPD and lifelong learning

4. The UK problem • Low achievement within compulsory schooling • Middling post-compulsory participation (much remedial), adult learning skewed towards top end of occupational ladder. • Polarised achievement across population, poor showing in OECD league tables

5. How can research help? Research AND policy thinking on what governs participation and achievement tends to be highly fragmented. Synthesis AND systemic approaches are in very short supply. The field is broken into chunks: • Aspiration • Parental attitudes • Class and social mobility • Gender • Ethnicity • Rates of return/wage premia on types of qualifications, levels of qualification and different sorts of learning • Labour market structures and progression • Curriculum • Pedagogy • Assessment • Barriers to learning

6. Competing schools of thought • The learning process – need for new curricula, pedagogies, assessment systems &qualifications • Market failure (making the case that skills pay) and barriers to learning • Personal efficacy and aspiration failure (individual, community and class-based)

7. Example 1: Rates of return • Dominant analytical frame in UK • Vast number of studies looking at many different types/levels of qualification and sections of student/learner population • Backward looking • Averages often artificial and misleading • Descriptive device – little explanation of results • Often blind to other factors (e.g height, appearance, psychological traits, etc)

8. Example 2: Barriers to learning Exploration of a wide range of barriers, such as: • Lack of finance • Time poverty • Fear of failure • Lack of transport • Lack of relevance (including to work)

9. Each is interesting, but… Examined in isolation each body of research tells only a fragment of the story, and policies follow this approach. The inter-relationships and trade offs between the different forces at play, and their capacity to mutually reinforce one another, is lost from view. Policy often implicitly favours mono causal models.

10. Why has this happened? • Structure of incentives facing academics – REF and disciplinary boundaries. Synthesis = zero REF ratings. In many areas, nothing that cannot be boiled down to an academic journal article counts. Lack of inter-disciplinary fora. • Structure of research commissioning by different parts of government – each researches their own slice of the problem. • The research has been commissioned and conducted in a non-cumulative fashion.

11. Incentives – a missing link? In order to make sense of what we already know, we need to bring together and understand holistically how and why choices are made. We also need to have a clearer and more complete map of the incentives that act on people when making their choices.

12. Incentives as a key focus Understanding the incentive structures individuals face could be key to making progress, but first we have to: • Know what the various incentives are • How they interact • What force they exert (not least relative to one another) • Have some model of how they might be altered

13. A framework for thinking about incentives? What follows is one (evolving and incomplete) attempt to develop a framework to map, analyse, explain (and possibly think about how to alter) the incentives to learn. It engages with ‘theories of the middle range’ It aims to provide a focal point for a more integrative analysis of different streams of data on a range of economic, social and cultural structures and forces.

14. Incentive generation through: The PULL of opportunities, both to learn and to utilise that learning, for pleasure (intrinsic reward), to benefit others (altruistic reward), or (financial) gain. The PUSH of resources, expectations and social relationships which enable and sustain learning - e.g. educational institutions, teachers, courses, libraries, systems of student financial and pastoral support, and also cultural and social expectations and encouragement (e.g. well-educated parents who help a child to learn through support, exhortation and example).

15. Incentive Generation Sequence RESOURCE PUSH AND OPPORTUNITY PULL INCENTIVES OF VARYING FORCE EFFECTS OF VARYING STRENGTH

16. A typology of incentives • Type 1 Incentives: generated within the E&T system, producing intrinsic rewards through the act of learning. Develop and sustain positive attitudes towards participation and progression. • Type 2 Incentives: generated in wider society and the labour market, and the rewards they create are external to the learning process itself.

17. Examples of Type 1 incentives • Curriculum design and pedagogic styles that increase the intrinsic interest of learning. • Forms of assessment that are designed to encourage further participation rather than ration access to the next level. • Institutional cultures in schools and colleges that nurture potential and celebrate achievement.

18. Discussion of Type 1 incentives Endless waves of educational reform around making: • Curriculum • Pedagogy/teaching styles • Assessment and certification • Institutional structures • Technology In England, the evidence suggests that the limits of the PUSH that this can achieve have been reached (or indeed passed) – hence compulsory raising of learning age.

19. Examples of Type 2 incentives • Wage returns to particular qualifications or skills. • Other benefits (intrinsic interest of job, opportunities for progression, travel, etc). • Social status from higher level occupation. • Licence to practice and mandatory CPD regulations • Cultural expectations within society or particular ethnic or class segments therein. • Non-economic benefits to do with enhanced satisfaction in other aspects of adult life –sporting, cultural, parenting, etc.

20. A new incentive sub-category Type 1b Incentives In recent times, in the UK, the failure of Type 2 incentives to prove strong enough to catalyse major increases in participation have led policy makers to introduce a range of subsidy-based incentives to act in lieu of signals from the labour market. They assume that Type 2 incentives cannot be changed, so substitutes are needed.

21. Analysing type 1 & 2 incentives There are a number of ways you can cross-cut Type 1 & 2 incentives: • Coverage • Strength • Duration • Complexity and uncertainty • Complementarity

22. Positive and negative incentives Both Type 1 & 2 incentives can generate either positive or negative effects. For example, the wage returns for an adult worker to getting a qualification may be positive, but the time/quality of life costs of out of working hours learning produce a stronger negative incentive. Many people do not enjoy schooling, feel they ‘failed’ and this subsequently puts them off adult learning.

23. Incentive coverage • The strength, scale and certainty of many Type 1 incentives are dependent upon course, teacher, and institution. • Incentives are mediated by individuals’ innate ability and preferences (e.g. many might wish to become a professional footballer, but not all will have the ability). • Unequal societies and polarisedlabour marketstend to produce unequally structured and distributed Type 1 & 2 incentives

24. Incentive strength Some incentives are absolute - e.g. LtP regulation means the qualification is essential. In many OECD countries this incentive has a large impact on participation and achievement in initial E&T. Other Type 2 incentives vary greatly in their strength, and the tendency to use average RoRs disguises this: • Large/Strong Incentives= academic, higher level, and elite institutions. • Small/Weak Incentives= vocational, lower level, and low status institutions – Wolf Review

25. Incentive strength (continued) In some cases the incentive strength will be large enough to over-ride narrow economic rationality. More follow journalism, and performing arts courses than can reasonably expect to gain employment in these occupations.

26. Incentive duration • The immediate impact of many Type 1 Incentives is transitory, but they can produce lasting positive dispositions towards the act of learning. • Many Type 2 Incentives operate across an entire working lifetime (e.g. professional progression structures and CPD systems) encouraging both engagement with initial E&T and also with continuing adult learning.

27. Complex patterns of return Many Type 2 Incentives are complex and uncertain - e.g. the outcomes of acquiring a qualification vary according to: • Age • Gender • Type and level of qualification • Subject and occupation it is related to • Location in which learning takes place (workplace v. non-workplace) and status of learning provider and awarding body. • Who pays for it.

28. Participation does not = achievement Many policy makers fail to apprehend that participation imposes costs, while not guaranteeing achievement. Too often the policy literature on E&T slides from participation to achievement to labour market outcome, while ignoring the risks. Perhaps those choosing not to participate realise/calculate they have a lower chance of achieving and are making a rational choice?

29. Complexity = Uncertainty Those at the lower end of the ability range/labour market often face the weakest and most uncertain Type 2 labour market incentives. For those who cannot aspire to enter Higher Education, the choices may be poor, and non-participation rational.

30. Grouping and complementarity Incentives can reinforce or undermine one another. Good jobs produce strong incentives - pay levels, social status, progression & intrinsic interest. Bad jobs the opposite. In the UK, the geography of both good and bad jobs is becoming more concentrated. In areas where bad jobs are growing, the incentives to local people to invest in learning may be weakening. Boosting one incentive can reduce another. For example, expanding HE will reduce the range of labour market opportunities and incentives available to non-graduates. Win / Win scenarios are quite hard to contrive.

31. Qualifications and incentives: where the problems are! The bottom end of the labour market - why are incentives weak: • Weak occupational identities and low skill requirements • Narrow conceptions of vocational learning and skill, that do not support progression • Competence-based qualifications that embody 1 & 2 • A weakly-regulated labour market, little LtP • Hold of VQs on recruitment limited • Opportunities for labour market progression limited

32. And low end work is NOT vanishing • Work by the IPPR (Lawton, 2009) makes it clear that the overall number of low paid jobs in the UK will not decline this side of 2020 and may rise. • The New Economics Foundation (2012) show that the range of jobs available to non-graduates is shrinking and that most of the job growth for non-graduates is likely to be in the lowest paying sectors. Upskilling these workers will have marginal impact.

33. The retail sector as an example: • Largest single occupational group in UK = retail assistants • More people employed in retailing than in the whole of manufacturing • Dominant model for other sectors – fitness centres, banking, etc. • Morrisons is now England’s largest provider of ‘apprenticeships’ – vast bulk Level 2 in ‘customer service’

34. Qualifications and retail ‘careers’ • Internal labour markets are limited, there are few upward rungs. • Those trying to climb them meet graduates cascading down from above – 29 per cent of all recent graduates working in management roles do so in retailing. • Much lower end work is relatively de-skilled, and the specification of the vocational qualifications reflect this reality. • Skill utilisation is often extremely poor (Wright and Sissons, 2012)

35. Some young male retail workers’ reactions to ‘training and quals: • “This woman would come in once a week and review us serving a customer or something and then ‘wahey’ we got a certificate…[employers] are not sitting there saying ‘I hope someone with an NVQ in retailing comes along because we could really do with someone like that” • They wasn’t actually giving us any training…It was a total waste of time. It’s like, if the government really wants everyone to have a qualification by their name, yeah sure it’ll work, but it’s not going to achieve anything” (Johnson, 2012)

36. Incentives = certainty…and reasonable returns • Recent UKCES research on the barriers and motivators for learning for low waged employees (McQuaid et al, 2012) showed that staff have a realistic expectation of their current jobs and the training it provides. The bad news is that to motivate them to invest time and money in whole qualifications there would need to be the promise of significant and reasonably certain wage gains.

37. And the evidence shows that…. • Returns to many L2 VQs are variable, complex and sometimes poor. • Returns to L2 NVQs are very low and uncertain. • Average returns are very misleading, as there is huge variation around the average.

38. Why low returns? - labour economics 101 Interns Anonymous website: Posts that were previously being offered to new graduates are now being staffed by unpaid interns…why would a company fork out £15K-£20K per year for an entry-level fashion designer, when they have an endless supply of people willing to do it for free? Wolf Review of Vocational Education, 2011: 31 Other things being equal, high (wage) returns to a particular form of qualification mean high demand for, or short supply of, the skills and qualities to which it attests

39. Scarcity is in short supply… Over-qualification in England: • 1986 – 29.3% • 1997 – 31.7% • 2006 – 39.6% SOURCE: Felstead et al, 2007: 83.

40. With the result…. “the proportion of degree qualified 24-29 year olds in the UK who are working in jobs that do not require this qualification is 26%....compared with an OECD average of 23%. This also occurs at intermediate level, but the extent is far lower (12%)….despite lower mismatch levels than at graduate level, when we look internationally the UK has the 2nd highest rate of under-employment at intermediate level in the OECD…large proportions of young people risk being under-employed in terms of their skills while at the same time non-graduates are significantly disadvantaged” UKCES Youth Inquiry, 2011: 14

41. Forecasts from Working Futures: • UKCES and the Joseph Rowntree Foundation explored the future shape of the labour market in 2020. They wanted to see if hitting the Leitch targets would reduce poverty. It didn’t! • They also found that by 2020, if nothing changes, in England across the lowest 3 deciles of earnings (the 30% of the labour force with the lowest wages), at least 30% of these workers will have an NQF levels 4-8 (i.e. sub-degree of above).

42. And… • None of these problems can be solved by yet more interventions inside the E&T system, including reform of VQs, unless they are matched by interventions inside the labour market. • The major incentive problems are with Type 2 incentives, not Type 1.

43. Implications for Policy • A close analysis of existing incentives may not support the ‘happy ending’ that policy has already decided upon. • Choices that appear ‘bad’ to policy makers may be more rational than policy makers choose to believe. • A strong reliance on Type 1b Incentives is a good way to waste money. The real problems lie with cultural expectations, class structures, the shape of labour market and the lack of labour market regulation

44. More implications Because policy makers misread the incentive structure, they set schools and colleges up to fail, expecting them to produce Type 1 incentives that can compensate for: • unemployment and poverty • lack of supportive parents and family life • poor housing • drug and alcohol abuse • limited local amenities • a local labour market that offers limited opportunities i.e. a PUSH to compensate for lack of PULL factors

45. Polarisedlabour market = polarised incentives The larger the Higher Education sector, the smaller the range of good jobs open to non-graduates. If the ‘top half’ of young people go into HE and ‘graduate jobs’, what do the bottom half go into (and the bottom half of the bottom half)? In a world where the number of good jobs is finite, and the number of less good (low paid) jobs may either be stable or growing, there are real issues about the incentives on offer to those destined to enter such work.

46. Individualisation fails “We need to change the culture in this country around skills, so that when someone complains they are in a low-paid, dead-end job, people ask them what they are doing to improve their skills” – UK Government, 2007. • But while you can train (or accredit) away low qualified workers, you cannot necessarily train away the jobs they occupy. • Low pay is often the result of power imbalances (weak TUs, lack of collective bargaining) rather than skill

47. The individual does not control… • The product market strategies, models of production design, work organisation, job design and people management that their employer chooses. • A more skilled worker may not be able to change them. • The leverage that publicly-funded training interventions have to change them is also open to doubt.

48. The central paradox • A continued belief in ‘flexible’ labour markets • A concern that there are too many bad jobs that are not vanishing of their own accord • Concern about social and income inequality, and lack of social mobility • A rejection of collectivist solutions to 2&3 • An inkling that publicly-funded increases in E&T, of itself, will not solve these problems

49. The answer? Primary Answer: Structural problems can only be addressed via structurally-rooted solutions. Without change in the way the labour market (rather than the E&T system) operates, the incentives to learn faced by lower end workers will remain poor, patchy, weak and uncertain. VQ reform, on its own, will produce limited results.

50. The answer? Secondary Answers: The capacity of lower end vocational courses and certification to support: • Wider learning and understanding (beyond the job task) • Economic empowerment • Subsequent learning and progression (intellectual and career-related) • Citizenship and wider community roles need to be expanded. Why are we aiming so low at present?