In the 1960s, The Philippines was second only to Japan among its neighbours in terms of industrial sophistication. Factories of assembly lines for everything from cars and televisions to whitegoods sat alongside chemical plants that produced drugs, cement and fertiliser. The future of The Philippines, an English-speaking former US colony, looked bright.
To its north, by contrast, South Korea was considered a land of the peasant in East Asia. South Korea had few natural resources and a weak industrial base, and its economy struggled for a decade after the war. According to the World Bank, in 1960 The Philippines had a gross domestic product per capita of $US254, almost double that of South Korea at $US158.
Today South Korea’s GDP per capita is about 10 times that of The Philippines. What happened? The Philippines was beset with corruption, debt and economic mismanagement, and never graduated beyond a low-cost, labour-driven industrial nation. South Korea, on the other hand, pursued a path towards higher productivity through innovation.
A key driver? The rapid expansion of education — especially higher education — explains the successful transition of South Korea to high-income status.
In South Korea, the OECD reports about 45 per cent of all workers are tertiary educated today, jumping to 68 per cent for 25 to 34-year-olds.
About 70 per cent of South Korean school-leavers head to college or university, suggesting the tertiary education attainment level could be plateauing. To put this achievement in context, in 1945 barely one in five South Koreans was literate.
Let’s pivot to Germany, another sophisticated innovation economy. At $US41,324 in 2015, Germany’s GDP per capita was more than 50 per cent greater than South Korea’s based on World Bank data. Are even more university degrees the secret sauce to Germany’s industrialisation success, too?
Looking at university education attainment levels, in 2014 about 28 per cent of working Germans aged 25 to 34 had the equivalent of a four-year degree or higher. This ratio — less than one in three Germans with a degree — is consistent across all age groups of workers. And this ratio has barely budged in decades.
Unlike South Korea, however, Germany has had a much-vaunted national vocational training program for 50 years. Apprenticeships are a prestigious alternative to going to university, catering for about 60 per cent of the country’s school-leavers.
More than 1.5 million students are in apprenticeships, with more than 500,000 new trainees joining each year. After three years of experiential learning, these highly skilled, job-ready workers are productive from day one in Germany’s industrialised economy.
There are at least three important lessons for the Australian tertiary education system — both the vocational and higher education sectors — from the South Korean and German industrial experiences. First, valuing higher education over vocational education can result in negative socioeconomic outcomes. About a third of South Korea’s unemployed have been to university and 30 per cent of the six million underemployed have degrees.
Second, the “dropout stigma” in South Korea results in the perverse signalling to society that someone without a university education must be deficient in some way; a second-class citizen.
Third, a balanced tertiary education system across vocational and higher education sectors leads to better overall economic outcomes. Germany is helping many countries — including those with successful university systems such as the US — import its successful apprenticeship model.
In Australia, the clear federal funding settings for higher education through the demand-driven system — in contrast to the messy federal-state funding arrangements for vocational education — has advantaged university enrolments significantly in recent years.
To return balance across Australia’s tertiary education system, a more consistent and coherent national funding policy setting across both sectors would be a good start.
But it should not be a zero-sum funding game between the two sectors, especially because of the complexities of the new era of industrialisation we are entering.
The fourth industrial revolution will see a paradigm shift in the way goods and services are produced.
Production will be distinguished by a modularised and distributed structure characterised by decentralised information, self-organisation and co-ordination among modules. A batch of one will be as economically produced as the large volumes in today’s mass production.
Rather than the present bifurcated, incoherent model, imagine Australia with a tertiary education ecosystem where the student is able to self-organise an ensemble of modular courses and experiences integrated across the vocational and higher education spectrum, tailored to their needs and desires. Boundaries between vocational and higher education would need to become increasingly porous. If so, we need to start rethinking some core concepts.
“Pathway” may begin to move away from being defined as linear and unidirectional towards nonlinear and modular “mapping”. Rather than defining “articulate” vertically from vocational towards higher education, we may think about how to “curate” from offerings across tertiary education and industry.
Our awards will need greater flexibility to be less content-focused and allow for a significantly greater emphasis on experiential learning. And funding would follow the student seamlessly, no matter their journey across the tertiary education ecosystem.
In a world that is becoming increasingly flatter and faster, disruption and change will be business as usual. Learning and work will become ever more integrated and continuous for individuals and organisations.
Just as the 2017-22 Philippine Development Plan prioritises higher and technical education to ensure its global competitiveness, our tertiary education institutions and system must play a leading role in driving productivity in this new industrialisation. Australia has a once-in-a-generation opportunity to rethink its tertiary education system with this future firmly in focus.
Written by Sean Gallagher, Director of the Centre for the New Workforce at Swinburne University of Technology. Originally published by The Australian.