Republic of Montenegro: Public Expenditure and ... - Vlada Crne Gore

Chapter 2: Composition of Public Expenditure
and Key Sources of Fiscal Pressure 33
continuing their education, were more likely than not to be unemployed a year later. This is true
for every type of program but it is especially true for those who attended three year programs
(and 80 percent of those who graduated from craft programs and 51 percent of those from ‘field
of service’, which includes programs for the service sectors like tourism). What is especially
worrying about these three-year programs is that those entering these are from poorer families:
93 percent of those students in 3 year programs had parents with no university education,
compared with only 63 percent in four year programs (the figure for ‘craft programs’ is an
astonishing 96 percent). So these students are trapped in a cycle of poverty.
2.51 In general, the prospects for secondary education graduates in the labor market are
poor. This suggests that any skills they learn at school directly relevant for specific jobs are
inadequate and likely to become obsolete due to the lack of use during unemployment after
graduation (which could last some time—78 percent of the unemployed graduates in the survey
were unemployed for the entire year after graduation). This conclusion is reinforced when one
considers that 67 percent of graduates who are employed are employed in the service sector,
where general skills are more highly valued (and training for the job takes less time).
2.52 This leads to the conclusion that secondary school graduates are better off with
strong general education skills which will enable them to seek a wider range of employment,
learn new skills quickly, and are less likely to ossify during spells of unemployment. This
implies that a shift towards more general education studies would have stronger labor market
outcomes – even for those who do not go to university. This would represent a dramatic shift in
the way that secondary education is provided in Montenegro, where more than 30 percent of all
students are in ‘field of service’ or craft programs, which offer a very narrow curriculum focused
around vocational skills. Montenegro has begun a reform of vocational education; usefully it is
involving employers in the changes. The impact of this reform clearly needs to be measured.
However, the reform focus is on enhancing the practical aspects of vocational education; as such,
it is not likely to address the concerns raised here.
Table 2.13. Savings from Adjusting School Reform Compared to Current Projections
2006 2007 2008 2009 2010 2011 2012
Cost of reform
schools 3,612,000 6,432,584 5,709,653 3,482,917 3,277,004 1,640,000 1,578,400
Estimated budget for
non-wage costs 3,531,777 4,441,349 4,441,349 4,441,349 4,441,349 4,441,349 4,441,349
Budget gap 80,223 1,991,235 1,268,304 (958,432) (1,164,345) (2,801,349) (2,862,949)
Savings from:
• reducing
computer
inputs by 50% 662,500 1,478,000 1,327,500 1,292,500 1,337,500 625,000 620,000
• slowing pace of
new reform
schools 0 1,847,965 1,324,346 (830,181) (1,085,653) (558,658) (231,658)
Total savings 662,500 3,325,965 2,651,846 462,319 251,847 66,342 388,342
Notes: Budget estimated on average of 2004-2006.
Sources: Ministry of Education and Science, authors’ calculations.