If you live in Peru or another Latin American country, there is high chance that you are aware of this paradigm: “to succeed in life, one has to enrol in a University”. Studying in a Technical or Vocational Institution, or even not enrolling in higher education at all, still carries a sense of professional failure. However, recent studies by local and international organizations reveal that while access to higher education is increasing across Latin America, there is an increasing gap between labour demands and the professional qualifications of higher education graduates. Specifically, while the demand for highly specialized technical professionals in STEM disciplines (Science, Technology, Engineering and Mathematics) is increasing, most students are still studying for degrees in other fields which are less in demand. In response, Latin American governments should direct policy efforts towards improving the quality of technical and vocational institutions. Also, they should incentivize the study of STEM careers through specific financial aids, as well as providing more accurate information to potential students about labour demands and career opportunities.
The Current Situation of Higher Education Institutions
In the last years, Higher Education Institutions (HEI) in Peru and Latin America have been growing in number, but not necessarily improving in terms of quality. This contributes to the existence of a gap between labour demands and professional qualifications (OCDE, 2015). According to a recent World Bank study on Higher Education (HE) in Latin America (2017), between 2000 and 2013, the main trend was the increase in access to HE, supported by important participation from the private sector and the creation of public scholarships and student loans. In this period, gross enrolment rate in HE rose from 21% to 43% in the region, with Chile, Colombia, Ecuador and Peru being the countries where enrolment grew the most. In the same period, the private share of HEI increased from 43% to 50%.
In Peru, enrolment in private HEI doubled between 2002 and 2015, whereas it decreased by 9% in public institutions (MINEDU, 2015). This increase is explained because of the expansion of current HEI and the creation of new ones, both as a response to a higher demand from students. As an example, between 2000 and 2013 the number of universities in Peru doubled from 72 to 140 (Gestion, 2014). Since HE is still the education level with the most unequal access in the region, low and middle-income students where the ones who benefitted the most with the access policies.
In the aforementioned study, the World Bank (2017) defines that a good HE system offers “quality, variety and equity”. However, the period of increasing growth in the number of HEI in Peru, wasn’t accompanied by a quality assurance policy, which resulted in a big number of low quality institutions across the country (Lavado, Martinez & Yamada, 2014). Taking into account that the bigger share of new HE students are from low and middle-income families, which is also strongly correlated with low and middle learning achievements in school (World Bank, 2017), this suggests that the increase in HE enrolment might not be having an impact in learning outcomes and professional development.
One way of understanding the impact of education quality is to think of the return on investment. In the study by Yamada and Martienz (2016), they take into account how much a HE graduate earns, how much he would have earned if he hadn’t go to higher education (only secondary school) and the cost of his higher education. The bigger this ratio, the higher the returns on his investment, hence the bigger impact his HEI had on his salary (controlling for other variables). What happens in Peru? While studying in a high quality HEI in Peru has an average investment return rate between 10% and 13%, studying in a low quality HEI has a negative average return of investment (Yamada & Martinez, 2016). Drawing on equity, seems like trading-off quantity for quality can make things worse off for those at the bottom of the income distribution.
Choosing a career
But, it’s not only about the quality of the institutions. Students in Peru are choosing careers following the success paradigm, instead of following the opportunities and demands from the labour sector. According to a national representative survey in Peru (IPSOS, 2016), from those who decide to pursue a career in HE, 70% choose to study in a university, while 30% choose a technical or vocational institution. Given that there is an increasing demand for more technical professionals than university graduates, around 40% of professionals in the country are over-schooled, under-payed or occupying positions that do not correspond to their academic degree (Lavado et al., 2014). In detail, this shows that around 40% of professionals (mostly university graduates) are working in a position more suited for a different type of professional (like technical professionals), and earning less than what they should, given their academic degree. Therefore, this is a way of representing the misbalance between the careers being chose by students and the demands of the labour sector. Looking at the region as a whole, the World Bank (2017) shows that 81% of working age people chose a bachelor’s degree, while only 19% chose a short-cycle program.
Choosing a university over a technical or vocational institution is not the only problem. According to the OECD (2015), most regions of the world suffer from a lack of professionals in the STEM disciplines (Science, Technology, Engineering and Mathematics), which are the ones most demanded by labour industries. The table above supports this idea, by showing that, on average in the region, 4.9% professionals pursue a degree in science and 11.7% in engineering, while 19.1% and 39.5% pursue a degree in education or social sciences, business and law, respectively. Professionals are under-payed and over-schooled because they don’t access the right type of HEI, because most institutions have low levels of quality, and because they don’t choose the careers that labour industries need.
Why does this matter?
There are two main reasons. First, as the World Bank (2017) very clearly states, “through higher education, a country forms skilled labour and builds the capacity to generate knowledge and innovation, which boosts productivity and economic growth”. This gap between what industries need and what HEI offer diminishes the potential of important industries (textiles, agriculture, farming, technology, tourism) to develop at a higher speed, resulting in reduced innovation and leadership among professionals.
Second, regarding personal and professional development, it has been said that a big group of new enrolled students come from low and middle-income families. However, the careers most chosen by them have the lowest returns to wages: education (-18.5), social sciences and communications (27.6), business and management (28.6). This might have an impact on drop-out, changing careers, or not working in the field of study, all of which means more difficulties for supporting their families and for their economic and professional growth. The highest return shown is vocational or technical training in sciences, engineering, and manufacturing (70.7).
To this point, the Latin American Region has done a great effort to increase access to higher education. However, as the evidence suggests, the next steps is to comply with certain minimum quality standards, and increase the proportion of young professionals studying technical and vocational careers in the fields most required by the main industries in each country. By doing this, countries like Germany, Austria and the Netherlands have been able to reduce unemployment by 10% (Yamada & Martinez, 2016). One advantage of short-cycle programmes (technical and vocational) is the rapid entrance to the labour force, and the possibility of shifting work and study easily, which can even start in the last years of High School, as happens in Germany and Finland (apprenticeship programmes).
Also, because of technological development, what counts as marketable skills are evolving rapidly, demanding different levels of specialization and adaptation from professionals. Transition between jobs, projects and careers won’t be a strange thing in the future (World Bank, 2017). Therefore, professionals will need to involve in short-cycle training programmes that enable them to grow professionally in a changing environment. Nevertheless, the higher education challenge also implies developing core skills, mainly mathematical, communicational and problem solving (OECD, 2016) across disciplines. This especially important in the Latin American region, because of the unequal quality of schools and learning outcomes.
Seems like a utopic task to fulfil, but some higher education systems around the world have started to figure things out. The main goal is to keep in sight what the country needs from its professionals and industries, how fast and well are HEI adapting and what does the higher education system needs in order to support these fast changes. Professionals, apart from growing professionally, have to be critical with their environment, and contribute to the development of their country in all of its domains. The ball is rolling, and it’s time for Latin American countries to make important decisions and shift their education systems towards developing better professionals for a rapidly changing world.
Alfageme, A. & Guabloche, J. (2014). Educación técnica en el Perú: Lecciones aprendidas y retos en un país en crecimiento. Revista Moneda, 157(5), 25-29. From: http://www.bcrp.gob.pe/docs/Publicaciones/Revista-Moneda/moneda-157/moneda-157-05.pdf
Gestion (5th July 2014). El número de universidades en el Perú se duplicó en solo 13 años. From: https://gestion.pe/economia/numero-universidades-peru-se-duplico-solo-13-anos-2102202
IPSOS (2016). Encuesta: Actitudes hacia el sistema educativo (segmento postulantes).
From: https://www.ipsos.com/sites/default/files/2017 02/Actitudes_hacia_el_sistema_educativo_2016.pdf
Lavado, P.; Martínez, J. & Yamada, G. (2014). ¿Una promesa incumplida? La calidad de la educación superior universitaria y el subempleo profesional en el Perú. From: http://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2014/documento-de-trabajo-21-2014.pdf
OCDE (2016). Skills Matter: Further results from the survey of adult skills. OECD Skills Studies. Paris: OECD Publishing. http://dx.doi.org/10.1787/9789264258051-en
OCDE (2015). OECD Reviews of Vocational Education and Training. Key messages and country summaries. From: http://www.oecd.org/edu/skills-beyond-school/OECD_VET_Key_Messages_and_Country_Summaries_2015.pdf
World Bank (2017). At a Crossroads. Higher Education in Latin America and the Caribbean. Washington: International Bank for Reconstruction and Development.
Yamada, G. & Martínez, J. (31 January 2016). ¿Universidad o Instituto? La hora de la reforma de la educación superior. From: http://elcomercio.pe/economia/peru/universidad-instituto-hora-reforma-educacion-209625
Hans Frech La Rosa is a first year MPA student, originally from Peru. He holds an Educational Psychology degree from Pontificia Universidad Católica del Perú. Before starting his graduate studies in LSE, Hans worked as a policy specialist for the Ministry of Education in Peru, and has conducted qualitative and quantitative research in development and education.