Education sector dynamics
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1 July 2015 Education sector dynamics Issue 1 In this issue At a glance 1 Educational system in Cyprus 2 Tertiary education 3 Expenditure on education 5 Current challenges 8 Abbreviations 11 Country codes 11 Definitions 12 References 12 At a glance 1 The educational system in Cyprus is centralised and fully regulated by the Ministry of Education and Culture (MoEC). Full-time education is compulsory for children aged between 5 and 15 years old, while state schools, including tertiary educational institutions, are government financed. In addition to the state school system, there are many accredited independent private schools (both primary and secondary) as well as several private universities. In 2014, Cyprus comfortably exceeded two of the headline targets for education set under the Europe 2020 strategy: the share of early leavers from education and training as well as the tertiary education attainment rate. In contrast, following the sharp increase in youth unemployment 1 during the recent sovereign debt crisis, the percentage of Cypriots with higher education qualifications in employment is 77.3%, lower than the EU-28 average by 4.8%. rd Based on the latest available data (2011), Cyprus ranks 3 in the European Union with regard to public expenditure on education as a share of GDP (7.9%). Additionally, Cyprus has the highest maximum statutory salary for teachers amongst the EU-28 member states, equivalent to 306% of GDP per capita. However, the relatively high expenditure on education and the high attainment rates are not reflected in the education learning performance of Cypriot citizens, especially in the fields of Science and Mathematics, where Cyprus ranks at a disproportionately low position in the EU. As part of the implementation of the Memorandum of Understanding on Specific Economic Policy 1 Conditionality (MoU), agreed with the Troika, the Cypriot authorities have commissioned an independent external review of possible reforms of public administration. This includes a review of the appropriate system of remuneration and conditions of employment in the public sector (e.g. annual vacation leave, sick leave, maternity leave, working time), in relation to the private sector and to other EU countries and based on best practices. Since 2011, the government has imposed successive reductions in teacher salaries and benefits (detailed in Figure Reductions in teachers pay, page 7) and is currently working on the introduction of a legislation that will incorporate significant reforms in the educational system aiming at both reducing government spending, while at the same time enhancing students performance. Key indicators 1 1 *2012 figures, **2011 figures Sources: CyStat, Eurostat
2 Educational system in Cyprus h Age (yrs) Source: Eurostat, Eurydice Educational attainment of Cypriots* UNDER GRADUATE POST GRADUATE 0 *Not stated: 1.9% Source: CyStat Early leavers from education and training 2 The percentage of early leavers from education significantly decreased over the last few years. In 2014, the percentage of early leavers recorded the highest Year on Year (YoY) decline over the last 7 years, declining by 25% compared to the 2013 figures. As a result, only 6.8% out of the total number of year old students dropped out from education and training. It should be noted that young men are almost four times more likely to drop out from school prematurely than young women (11.2% versus 2.9%). Students aged between 14 and 16 who drop out from secondary school can enter the Apprenticeship Scheme, administered by the Ministry of Labour and Social Insurance and run by the Cyprus Productivity Centre and the Ministry of Education and Culture Targets The Europe 2020 targets aim at reducing the number of early leavers from education to less than 10% of the total population participating in education and training. As a result of the significant reduction in early school leavers recorded in 2014, Cyprus performed better than the EU-28 average in this area (6.8% versus 11.1% respectively), and achieved its national target of 10% considerably earlier than the target timeline of The percentage of early leavers from education represents the percentage of year old students who have dropped out from primary, lower or upper secondary education. According to the CyStat survey, the early leavers stated they did not receive any education or training in the four weeks preceding the time of the survey. 2 Education sector dynamics July 2015
3 Early leavers from education and training (% of population aged 18-24) (%) Source: Eurostat Tertiary education Over the period 2009 to 2012, students attending their higher education studies in Cyprus declined by 0.8%. This reduction is mainly attributed to the decrease in the number of foreign students studying in Cyprus, which downsized by one fourth (-24.8%) since On the contrary, the number of Cypriot students attending their studies in Cyprus is in a rising trend, growing by 11.8% for the same period. Tertiary education indicators Source: Cystat Cyprus has eight public and private universities with an average course duration of four academic years. Regarding educational institutions with no university status, Cyprus has five public higher educational institutions with courses ranging from one to three academic years, and thirty eight private higher educational institutions that offer academic and vocational programmes of study at both undergraduate and postgraduate levels of education (detailed in Table Public and private institutions of tertiary education, page 11). The national competent authority for the recognition of higher education qualifications is KYSATS. Tertiary education institutions Source: Ministry of Education and Culture Education sector dynamics July
4 rd In 2014, Cyprus ranked 3 in the EU-28 in the number of graduates of higher education per capita (52.5%). Only Lithuania (53.3%) and Luxembourg (52.7%) were ranked higher, while the EU-28 average is 37.9%. All EU member states have set national targets for the number of citizens enrolling in higher education by 2020; the target for Cyprus (40%) has already been comfortably surpassed. Student population by country of origin (2010 figures) and growth rates* *Growth since 2004 Source: CyStat Tertiary education attendance and employment opportunities On average, 77.3% of the tertiary education graduates in Cyprus aged between 20 and 64 years old were employed in 2014, while only 64.6% and 54.6% of those with secondary and primary level qualifications respectively were employed. Cyprus lags behind the 2014 EU-28 averages of employed graduates for the tertiary and secondary education (82.1% and 70.1% respectively), while the percentage of employed primary education graduates is higher than the EU-28 average (51.9%). Tertiary education attendance and employment opportunities % Source: Eurostat Main goals of tertiary education in Cyprus Ministry of Education and Culture Fulfilment of local and international needs Modernisation of higher educational system Development of a culture of quality assurance in education Fostering excellence in teaching that will ensure the expected learning outcomes are met Increase the link between education and labour market Supporting a healthy framework of autonomy Source: Ministry of Education and Culture 4 Education sector dynamics July 2015
5 New era in the tertiary education In light of the main goals set by the MoEC, a series of significant developments took place in the sector in the last few years: New legislation on the formation of an agency of quality assurance and accreditation in higher education The agency s policies follow the European standards and guidelines to enhance internal and external quality assurance procedures. Inter alia, the accreditation of private universities is a key responsibility of the agency. Establishment of post-secondary vocational training institutions The MoEC established vocational training institutions aiming to satisfy the increasing demand for lifelong learning and continuing education and enhance the link between education and the labour market. Development of medical programmes at Cypriot Universities In 2011, the University of Nicosia founded the first Medical School in Cyprus, establishing the first 4-year medical programme (Bachelor in Medicine and Bachelor in Surgery), in collaboration with St. George s, University of London. The medical school of the University of Cyprus officially started operations in September 2013 and at the same time, the European University of Cyprus accepted its first students in its School of medicine. The duration of the studies leading to a Bachelors in Medicine degree is six years. European University of Cyprus-Member of the Laureate International Universities Since 2005, the European University of Cyprus belongs to the largest international university organisation, Laureate International Universities, which comprises 80 campus and online universities that operate in 29 countries with over 950,000 students worldwide. Expenditure on education In 2015, the approved budget for education increased by 13.9% to 986m (or 5.6% of 2014 GDP), compared to 866m the year before, rising above its 2013 levels ( 921m). The overall increase in the state budget is mainly attributed to the sharp increase in the approved budget for higher and tertiary education, which increased by 56.2% YoY. 16.1% of the 2015 MoEC budget (or 158.6m) are funds allocated to infrastructure and development expenditure (eg. educational equipment), with the majority allocated to the higher and tertiary education (69.3%). 83.9% of the current expenditure is allocated mainly to personnel salaries and benefits and to a smaller degree on other operating expenses. MoEC budget (m) *Actual expenditure ** Revised budget for 2014 and approved budget for 2015 Source: Ministry of Finance Education sector dynamics July
6 In 2011, Cyprus (7.9%) came second only to Denmark (8.8%) and Malta (8%) in public expenditure relative to GDP on education amongst EU-28 member states (EU-28 average 5.3%). Public expenditure on secondary education constitutes the greatest share (3.1% of GDP), followed by the expenditure on primary education (2.3% of GDP) and tertiary education (2.1% of GDP). Expenditure on education % of GDP Expenditure on education by level of education EU-28 Cyprus Source: Eurostat Remuneration of teaching staff According to figures released by Eurydice in 2014, Cyprus has the highest maximum statutory salary for 3 teachers at all education levels in Europe with the rate being at 306% of GDP per capita, followed by Montenegro (284%), Portugal (261%), Germany (209%) and Spain (206%). In contrast, the Czech Republic, Estonia, Slovakia, Lithuania and Latvia have a maximum statutory salary at all three levels of school education that is lower than their GDP per capita. However, when considering the minimum annual statutory salaries for full time teachers in public schools at all education levels, Cyprus ranks 5 th in Europe with the rate being at 126% of GDP per capita. The countries with higher rates than Cyprus are Montenegro (179%), Germany (152%), Spain (139%) and Portugal (136%). After January 2012, there was a 10% reduction in the annual gross salaries of newly appointed teachers in Cyprus public schools. The economic downturn directly affected teachers salaries in all levels of education, leading to an 8% reduction in their purchasing power in real terms in relation to 2009, as measured by the minimum annual statutory salary at all education levels. Maximum statutory salary for teachers at all education levels GDP per capita (%) Source: Eurydice 3 Education levels refer to primary, lower secondary (Gymnasium), and upper secondary (Lyceum). 6 Education sector dynamics July 2015
7 Reductions in teachers pay Source: Eurydice Expenditure on education relative to learning performance PISA scores* in Mathematics and Science versus public expenditure on GDP Cyprus high expenditure on education does not translate into improved learning performance for students, according to a World Bank report in The results of the Cypriot students in Science and Mathematics amongst member states are discouraging. Public expenditure on education (% of GDP) According to the 2012 PISA scores, Cypriot adults had the worst performance in Sciences and the nd 2 worst performance in Mathematics. Also, older 4 results exacted by TIMMS (2003 and 2007), placed Cyprus students below the OECD (Organisation for Economic Co-operation and Development) average in Mathematics and Science and below the anticipated results expected as a result of the high expenditure on education. 4 Source: OECD PISA scores in Mathematics Public expenditure on education (% of GDP) The discouraging results are not only confined to Mathematics and Science. Cyprus performs worse than the EU average in terms of Science, Technology, Engineering and Mathematics (STEM), as only 0.9% of the population aged years old hold a STEM degree. Source: OECD PISA scores in Science *PISA scores are for the year The public expenditure on education is for the year 2011 or the latest available year. 4 PISA: Programme for International Student Assessment TIMMS: Trends in International Mathematics and Science Study Education sector dynamics July
8 Expenditure on tertiary education In 2011, the total government expenditure on public and private educational institutions per student of tertiary education in Cyprus reached 40.3% of the GDP per capita. Looking at the rest of the EU-28 countries, only Malta (53.5%) spent more on public and private tertiary educational institutions in Expenditure on public and private educational institutions of tertiary education per student compared to GDP per capita in 2011 (%) Source: Eurostat Student grants Undergraduate and postgraduate students in public and private universities in Cyprus, or recognised universities abroad, have the right to apply for a subsidy by the government. The annual subsidy per student, given that no tuition fees are paid, currently ranges from 1,450 to 1,710. This subsidy is only available to students whose family s gross annual income does not exceed 59,000 and the total value of their assets at current prices does not exceed 1,200,000. There are additional subsidies of 725 to 855 for families that have more than three children and for students who pay tuition fees. Students who attend Ph.D studies have no right to the subsidy. Current challenges MoU Reduction in the budget for education The fiscal measures prescribed under the MoU (June 2015), targeted at the decrease in social transfers by at least 28.5m in The Ministry of Education and Culture aims at reducing the impact of the decline by implementing structural reforms in the educational system, including the streamlining and better targeting of child benefits and educational grants. In the context of implementation of the restructuring and modernisation of the current educational system, in March 2015 the Ministry presented to the teachers organisations proposals with regard to the teachers appointment system, the teachers in-service education and training system and the reform of the current curriculum programme in the primary and secondary education. In the framework of the implementation of the new curriculum, a Special Committee is expected to be established by the Ministry that will oversee its implementation. With the beginning of the new school year in September 2015, the new school timetables of the secondary education will be introduced. The actual expenditure for education by the MoEC for 2013 decreased by 4.6% compared to 2012, (2012: 965.7m, 2013: 921.4m). As a result, the number of teachers, as well as investments in infrastructure and expenditure on equipment and software, decreased. 8 Education sector dynamics July 2015
9 To address excess employment in the education sector, the authorities could consider increasing working hours, increasing class size, extending school schedules, and rationalizing non-teaching staff, IMF, October Youth unemployment A major challenge Cyprus has to deal with is the high and rising unemployment rates. Since 2008, unemployment rates have increased fourfold (2008: 3.7%, 2014: 16.1%). The youth unemployment rate also increased substantially to 35.9% in 2014, up from 9% in Cyprus has already taken a number of measures in an effort to tackle youth unemployment. One of these is 5 the introduction of a Youth Guarantee Implementation Plan in December 2013, covering the period from 2014 to The total estimated cost of the Scheme in Cyprus is 62.1m (International Labour Organisation (ILO), 2012). The cost of young people not in employment, education or training, is estimated at 425m, or 2.39% of the country s GDP for 2011, as per the European Foundation for the Improvement of Living and Working Conditions findings. Cyprus is making substantial efforts to implement the Youth Guarantee, but policy responses are not comprehensive enough to ensure that all the youth not-in-employment-education-or-training (NEET) are covered by a Youth Guarantee, EC, March Investment in high quality skills lifelong learning The Treaty on the Functioning of the European Union contains a commitment to promote lifelong learning for all European Union citizens. Lifelong learning comprises continuing education or training, including in-company skills development. Participation of Cypriots in lifelong learning is below the EU average (6.9% versus 10.7% in 2014). Cyprus is actually one of the few EU countries that has set a national target for adult participation in lifelong learning by 2020 (12%). Achievement of this target is expected to help improve key skills of the workforce and reinforce occupational mobility towards high growth and high value added activities. 5 The measures in the Youth Guarantee Plan include: 1) Guidance for early school leavers, employment subsidies, vocational education and training 2) Skill enhancement schemes 3) Promotion of entrepreneurship 4) Public and social work programmes 5) Structural reforms including the enhancement of the capacity of public employment services to provide individualised services and to conduct outreach activities Education sector dynamics July
10 Integration of digital technology nd Based on the Digital Economy and Society Index (DESI), in 2015, Cyprus ranked 22 out of the EU-28 member states, and according to the data, Cyprus lags on the demand side. Indicatively, 28% of the population has never attempted to use the internet and only 48% possess at least basic levels of digital skills. On the other hand, the supply side of the market seems to exhibit overcapacity, as 77% of the households have access to fast broadband connections compared to the EU-28 average of 62%. Furthermore, data released by the Cyprus Statistical Service illustrate a scarcity of IT resources in education. The proportion of computers that are available for pupils/students is relatively low at all levels of education, varying from 14.9 and 25.6 computers per 100 pupils for primary and secondary education respectively, and 17.6 computers per 100 students in the tertiary level. Computers connected to the Internet per 100 pupils/students Source: CyStat Research and development Increasing the size of the educated pool together with their efficiency and knowledge will result in higher and more sustainable growth rates for Cyprus. Importantly, a not inconsiderable 7.4% of EU budget was devoted to research and innovation in Significant funding opportunities from EU s horizon 2020 research and innovation programme exist in Cyprus, providing support to research beneficiaries. Notably, 451 organisations participated in the European Union s Research and Innovation funding programme for (FP7) attracting 92.3m in research funding. It is of note that the University of Cyprus was amongst the top 10 beneficiaries, with a total of 104 participants, attracting more than one third of the total funding ( 30.2m or 33.4% of the total FP7 funding). Even though there are many projects still being implemented under the FP7, the current EU Research and Development funding programme in force is the Horizon 2020, which will provide 80b over the 7 year period ( ) in the participating countries. 10 Education sector dynamics July 2015
11 Abbreviations Public and private institutions of tertiary education CyStat-Cyprus Statistical Service DESI-Digital Economy and Society Index EC-European Commission ECB-European Central Bank Eurostat-European Statistical Service GDP-Gross Domestic Product ILO-International Labour Organisation IMF-International Monetary Fund MoEC-Ministry of Education and Culture MoU-Memorandum of Understanding on Specific Economic Conditionality NEET-Not in education, employment or training OECD-Organisation for Economic Co-operation and Development PISA-Programme for International Student Assessment STEM-Science, Technology, Engineering and Mathematics TIMSS-Trends in International Mathematics and Science Study YoY-Year on Year Country codes AT: Austria BG: Belgium CH: Switzerland CY: Cyprus CZ: Czech Republic DK: Denmark EE: Estonia EL: Greece ES: Spain FL: Finland FR: France HU: Hungary HR: Croatia IE: Ireland IT: Italy LT: Lithuania LU: Luxemburg LV: Latvia NO: Norway PL: Poland Source: Ministry of Education and Culture PT: Portugal SE: Sweden SI: Slovenia Education sector dynamics July
12 1 Definitions Centralised educational system: The financial resources, school curricula and additional programmes, as well as the teaching staff are regulated by the Government. Youth unemployment: Includes all the youth (people between the ages of 15 and 24, inclusive) who are unemployed. School expectancy: Corresponds to the expected years of education over a lifetime. Lifelong learning: Refers to persons aged 25 to 64 who stated that they received education or training during the survey. Troika: EC, ECB and IMF References Analysis of the Function and Structure of the Ministry of Education and Culture of the Republic of Cyprus, World Bank, May Annual Report 2013 Cyprus Ministry of Education and Culture, Assessment of the 2014 national reform programme for Cyprus. Commission Staff Working Paper, European Commission, Education and Training Monitor 2013 Cyprus, European Commission, Eurozone Job Crisis. Trends and Policy Responses, International Labour Organisation, Key Data on Education in Europe 2012, European Commission, National Student Fee and Support Systems 2013/14 Eurydice Facts & Figures, European Commission, NEETs - Young People not in employment, education or training: Characteristics, costs and policy responses in Europe. Publications Office of the European Union, Luxembourg, Eurofound, Teachers and School Heads Salaries and Allowances in Europe 2013/2014 Eurydice Facts & Figures, European Commission, The EFA 2000 Assessment: Country Reports: Cyprus, EFA, The structure of the European education systems 2014/2015, Eurydice, Digital Economy and Society Index 2015, European Commission, Education sector dynamics July 2015
13 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com Ernst & Young Cyprus Ltd. All rights reserved. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. This material has been produced by Emergo Wealth Ltd. ey.com/cy Education sector dynamics July
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