Policy Rants: Getting Free Education Right

By webadmin on 11:26 am Aug 09, 2012
Category Archive

Taufik Indrakesuma

A recent article on the Jakarta Globe states that the Indonesian government is expanding its mandatory education policy from 9 years to 12 years, or to the end of secondary school. Furthermore, the Jakarta provincial government is planning to implement mandatory education ahead of the other provinces, starting from the following school year.

In order to support this policy, the government is also implementing free public high schools and subsidized private high schools. The article mentions some hefty budget allocations from the Jakarta government in order to carry this out.

At first glance, this is a good news, as the policies are aimed are to make Indonesia’s human resources more competitive and to give poor families an equal opportunity for education. The fact that education is now viewed as a basic human right, and not to mention the large amount of money being spent on the program, the move is sure to be popular with the masses.

There’s only one problem: the implementation is all wrong.

The first problem is the policy is poorly targeted. The policy is clearly intended to benefit the poor, yet it takes the blanket approach of making schools free for everyone, not just those who have difficulty paying for it.

This is like the fuel subsidy problem, where households that have both the willingness and ability to pay for the goods end up getting a subsidy that they don’t really need. Considering that there is such a large amount of money being allocated to fund the mandatory education expansion, spending it in a wasteful manner would be regrettable.

The second problem is the policy doesn’t shape the people’s decisions and behaviors in a way that would be optimal for the goal of labor competitiveness. What the government fails to account for is that general high schools (SMA) provide knowledge that is mostly theoretical and generally serves as a foundation for a university education. Unfortunately, the primary beneficiaries of free education — poor households — are not likely to attend university after high school, due to cost barriers and the need to start generating income. Thus, if the government’s aim is to mold the less fortunate children into educated and work-ready labor force, sending them to SMA isn’t the best way to achieve it. Instead, vocational schools (SMK) would be much better suited for it.

When you look at the two problems posed above, one solution sticks out: Focusing the money for the free education program into vocational high schools instead of general high schools.
Focusing all the money into free vocational high schools means that you can spend more money per student. You can build better facilities (especially important because vocational high schools are highly practical and hands-on), attract better teachers, or just cover a larger portion of student expenses. Alternately, the government can maintain the level of spending per student and just end up saving a large portion of that earmarked budget.

Funneling the money into improving and subsidizing vocational education also shapes the people’s behavior, making less fortunate households more likely to attend vocational schools. Again, if we can agree on the assumptions that: a) general high school isn’t as good for poorer households because they are unlikely to continue to university, and b) vocational high school is the perfect place to get your teenage child to graduate in a work-ready condition, then this behavioral nudge is clearly a net positive.

Of course, there are the several cases of poorer households who want to send their child to university, and this kind of recommendation could be seen as denying those households access to their aspirations. In this case, I’d pose a couple of rebuttals.
First, the “dream” of sending your children to university has been heavily influenced by the negative stigma against vocational education, and I’d say that sending your child to a good vocational school is just as good an end-point as university.
Secondly, in the corner cases of exceptionally bright children in poor households, there are several scholarship options that would be well within their reach, meaning that university education would still be possible for them without free general high schools.

To conclude, this policy is a great idea, but a great idea without proper implementation is a wasted one.