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Banorte-Ixe Research
Mexico
Education reform – So much for
PRI’s “old school” huh?

Yesterday President Peña-Nieto sent an education reform to Congress

In contrast to Pink Floyd’s “We don’t need no education”, in Mexico
we urgently need it

On one hand, the percentage of the population that has finished
secondary school in Mexico is embarrassingly low at 35%, while the
average for OECD and G20 countries is 75% and 72%, respectively

On the other hand, Mexico ranks in the 50th place, right above Trinidad
and Tobago and Montenegro in the OECD PISA standardized tests

It is our take that is not just a matter of spending more, as Mexico
spends around 5.3% of GDP on education, slightly below the OECD
average of 5.8%, and above the G20’s 5%, but to cut deep into the
education system

The education reform that President Peña-Nieto sent to Congress
yesterday proposes five important modifications to the system and to
the law that regulates it:
(1) Recover the full authority to dictate the schools’ syllabi;
(2) Create a full-fledged professional structure for teachers;
(3) Create an autonomous institution to certify and evaluate the
education of the country, including both, students and professors;
(4) Conduct periodic census to have a national registry of schools,
professors, and students; and
(5) Extend the school day from 6 to 8 hours in 40 thousand “full time”
schools, where food will be served to students for free

This reform proposal should leave no doubt that this new
administration has nothing to do with the “old school” PRI, and that
the country is poised to grow much more on a sustainable basis in the
short-, medium-, and long-term
An education reform – Another bold step to achieve sustainable growth. In
his first ten days in office, President Peña-Nieto has been able to prepare a zerodeficit budget proposal for fiscal year 2013, appointed a first-class cabinet,
committed with 13 presidential directives –which incorporate structural reforms
and important changes to improve Mexico’s economic growth and
development-, and signed an agreement with the main political forces of the
nation to achieve the approval of the aforementioned initiatives. On top of these,
President Peña-Nieto sent yesterday an education reform to Congress.
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December 11, 2012
www.banorte.com
www.ixe.com.mx
@BanorteResearch
Gabriel Casillas
Chief Economist and Head of Research
[email protected]
Delia Paredes
Executive Director of Economic Analysis
[email protected]
Alejandro Cervantes
Economist, Mexico
[email protected]
The urgent need for an education reform in Mexico. In contrast to Pink
Floyd’s “…we don’t need no education…” lyrics in their masterpiece album
“The Wall”, we urgently need education in Mexico. There are several reasons
that we elaborate in this note why Mexico needs important changes to its
education system, particularly the low percentage of the population that has
finished secondary school in Mexico, as well as the low grades Mexican
students have got in the OECD PISA standardized tests. The urgency also stems
from the young structure of the population, with an average age of 26 years old.
If we do not improve the education system in Mexico now, it might be too late.
Given such a young population, how many citizens are currently studying?
and what? According to the Ministry of Education, there are 34.8 million
students enrolled in schools across the nation. This represents around 30% of the
country’s population. It is worth noting that in line with the country’s average
young age, students in primary school account for 43% of the total student
population. Taking a look at the breakdown by source of funding, 87% go to
public schools, and 13% attend classes at private schools (please see Table 1
below). These percentages do change depending on the level of schooling.
While public schools rule in lower-secondary schools with 92.2% of all the
students, there is a dramatic change at the graduate level, in which nearly 52%
of the students attend private universities.
Table 1. Students enrolled in Mexican schools
Thousand students
Type of school
Total
Public
Private
Total
Share
of total
Number
%
Number
%
34,821
100.0
30,286
87.0
4,535
13.0
Kindergarden
4,706
13.5
4,050
86.1
655
13.9
Primary school
14,909
42.8
13,663
91.6
1,247
8.4
Lower-secondary school
6,167
17.7
5,684
92.2
483
7.8
Upper-secondary school
3,950
11.3
3,249
82.3
701
17.7
2
0.0
2
78.0
0
22.0
2,811
8.1
1,932
68.7
879
31.3
229
0.7
110
48.1
119
51.9
Technical
Undergraduate
Graduate
Source: Ministry of Education
Unfortunately education is troubled in Mexico. It is a well-known fact that
education in Mexico is experiencing quite troubled circumstances, particularly if
you consider two hard facts: (1) The percentage of the population that has
finished not even tertiary, but secondary school in Mexico is embarrassingly
low at 35%, while the average for OECD and G20 countries is 75% and 72%,
respectively, as it depicted in Chart 1 (below on the left); and perhaps the most
compelling issue, (2) the students’ humiliating performance in the OECD PISA
standardized tests on the three levels: math, science, and reading (PISA stands
for Program for International Student Assessment). In this context, Mexico
ranks in the fiftieth place, right above Trinidad and Tobago and Montenegro
(please see Chart 2, below on the right). These two figures provide a strong
support for the urgent need for a significant education reform in Mexico. On the
other hand, it could also make you think that perhaps the country needs to assign
a larger share of GDP to education.
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Chart 1. Population that finished upper-secondary school
Chart 2. Where countries rank in academic performance
%, Share of total
Czech Republic
Slovak Republic
Estonia
United States
Poland
Canada
Russian Federation
Sweden
Switzerland
Germany
Finland
Slovenia
Austria
Israel
Hungary
Norway
South Korea
Luxembourg
Denmark
United Kingdom
OECD average
Netherlands
New Zealand
Australia
G20 Average
Ireland
France
Chile
Belgium
Iceland
Greece
South Africa
Italy
Spain
Brazil
Mexico
Portugal
Turkey
China
Shanghai-China
Hong Kong-China
Finland
Singapore
South Korea
Japan
Canada
New Zealand
Chinese Taipei
Netherlands
Australia
Liechtenstein
Switzerland
Estonia
Germany
Belgium
Macao-China
Poland
Iceland
Norway
United Kingdom
Denmark
Slovenia
France
Ireland
United States
Hungary
Sweden
Czech Republic
Portugal
Slovak Republic
Austria
Latvia
Italy
Spain
Luxembourg
Lithuania
Croatia
Greece
Russian Federation
Dubai (UAE)
Israel
Turkey
Serbia
Chile
Bulgaria
Uruguay
Romania
Thailand
Mexico
Trinidad and Tobago
Montenegro
Jordan
Brazil
Colombia
Kazakhstan
Argentina
Tunisia
Azerbaijan
Indonesia
Albania
Qatar
Panama
Peru
Kyrgyzstan
74
72
35
0
20
40
60
80
100
Math
Science
Reading
50
0
Source: OECD Education at a Glance 2012
500
Source: OECD PISA evaluation results, 2009
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1,000
1,500
2,000
It is not a matter of spending more. Comparing what the Mexican government
spends on education as a percentage of GDP vis-à-vis other countries, it is clear
that the real problem is not the amount of public spending. Mexico spends
around 5.3% of GDP on education, slightly below the OECD average of 5.8%,
and above the G20’s 5%, as it is shown in Chart 3 below on the left. As a result,
we believe it is not just a matter of expanding public spending, but a matter of
how these resources are used. Just take a look to the relatively low average
annual salaries for teachers in Mexico. According to the OECD, teachers in
Mexico are able to earn up to nearly US$ 31,000, 32% below the average for the
OECD countries of slightly above US$ 45,000 (Chart 4). How can you reconcile
that Mexico spends about the same (in percentage of GDP terms) as the average
of the OECD countries, and at the same time, pay salaries well below them?
Chart 3. Public spending on education
Chart 4. Public schools teachers' annual salaries
%GDP
Denmark
Iceland
Norway
Sweden
New Zealand
Finland
Belgium
Ireland
Estonia
Argentina
Austria
Netherlands
France
Israel
Portugal
OECD average
Brazil
Slovenia
United Kingdom
Switzerland
United States
Mexico
Hungary
Poland
Canada
Germany
South Korea
Spain
Australia
G20 average
South Africa
Russian Federation
Italy
Chile
Czech Republic
Slovak Republic
Japan
India
Indonesia
US$ in PPP terms
Luxembourg
South Korea
Germany
Austria
Ireland
Japan
Canada
Portugal
Netherlands
Belgium
United States
Spain
Denmark
France
Scotland
Australia
Switzerland
OECD average
England
New Zealand
Norway
Italy
Finland
Greece
Sweden
Israel
Slovenia
Chile
Mexico
Iceland
Turkey
Czech Republic
Argentina
Hungary
Estonia
Poland
Slovak Republic
Indonesia
5.8
5.3
5.0
0
2
4
6
8
10
Initial
15 years
Max
45,100
30,602
0
Source: OECD Education at a Glance 2012
20,000
Source: OECD Education at a Glance 2012
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40,000
60,000
80,000 100,000
Where does the money go? You can think that Mexico needs higher spending
on infrastructure compared to the rest of the OECD countries. This would be
mainly explained by the number of schools already built in developed countries
vis-à-vis the needed ones in Mexico. However, you also have to take into
account that the quality standards of classrooms, teaching equipment, labs, and
other facilities in the OECD countries ex-Mexico are way much higher than in
Mexico, and there are also higher costs associated with these “amenities”. In
this context, it is our take that an important part of public spending in Mexico
that does not permeate to the teachers’ salaries is captured by “the system”. The
educational system in Mexico involves an extremely powerful union leader -in
power since 1989-, with more than one million teachers under her command,
making promises to keep the teachers’ jobs ad infinitum. Unfortunately we are
not joking when we say “eternal job posts”, i.e. teachers in Mexico are able to
avoid any sort of evaluation, while they are also able to inherit their position to
family and friends. But as in every situation, there is no free lunch here. The
union collects quite onerous pseudo-taxes in exchange for their services. In our
view, this provides an answer to why Mexico cannot achieve high standards in
education.
The main axis of the education reform is to weaken the current structure.
The education reform that President Peña-Nieto sent to Congress yesterday
proposes five important modifications to the system and to the law that regulates
it (article 3 of the Mexican Constitution): (1) Recover the full authority to
dictate the schools’ syllabi; (2) create a full-fledged professorship structure for
teachers; (3) create an autonomous institution to certify and evaluate the
education of the country, including both, students and professors; (4) conduct
periodic census to have a national registry of schools, professors, and students.
INEGI will be in charge of this responsibility; and (5) extend the school day
from 6 to 8 hours in 40 thousand “full time” schools, where food will be served
to students for free.
Recovering full authority of education policies is paramount. In our view,
the first modification proposed by President Peña-Nieto and Minister of
Education Chuayffet is important because back in year 1993 there was a
modification in the law stating that “…even though the federal government is in
charge of the general guidelines of the syllabi of schools (evaluation policies
included), the government must take into account the opinion of the state
governments as well as all the sectors involved in education…”. This, in our
view, opened the door for the teachers’ union to get involved in the education
system in Mexico from top to bottom. This allowed them to avoid certification
and evaluation processes as well. The abovementioned modification will be like
a trebuchet shot to start weakening the structure of the powerful union, and
allow the Ministry of Education to evaluate the teachers.
Another week, another reform. The education reform is just another brick in
the wall of reforms that will strongly hold the country’s new structure to be able
to take off. This reform proposal should leave no doubts that this new
administration has nothing to do with the “old school” PRI, and that the country
is poised to grow much more on a sustainable basis in the short-, medium-, and
long-term.
Disclaimer
The information contained in this document is illustrative and informative so it should not be considered as an advice and/or
recommendation of any kind. BANORTE is not part of any party or political trend.
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