Thursday, February 27, 2020

Nordic countries lead social mobility- Ireland and Korea among rich laggards

Kim family characters in 'Parasite' searching for Wi-FI signals from dingy flat in Seoul

'Parasite' the Best Picture winner at the 92nd Academy Awards this month, has shone a bright light on the grim social divisions and poor social mobility in South Korea.

While Bong Joon-ho, who won the Best Director and Best Original Screenplay at the Oscars (which Bong shared with co-writer Han Jin-won), has been accused of stereotyping the Soeul working class, the successful Asian economy is not alone in having stark urban social divisions amidst prosperity.

In 2017, the British Social Mobility Commission reported that 62 of the 65 parts of the country that it identified as “social-mobility cold spots” — where residents had the worst education and employment prospects — voted for Brexit.

I made a post in June 2018 on research by the Organisation for Economic Cooperation and Development (OECD) on social mobility which found that in Ireland, the UK, South Korea, and the US, it would take five generations — or roughly 150 years — for the descendants of a person in the bottom 10% of earners to secure an average income, compared with two generations in Denmark, which means a person would see their grandchildren achieve that goal.

The OECD said income mobility was a reality for many people born between 1955 and 1975 from low-educated parents but it has stagnated for those born after 1975.

150 years for poor Irish child/ descendants to earn national average income: 60 years in Denmark

In January 2020 the World Economic Forum (WEF) launched its Global Social Mobility Index which tracks 82 global economies according to their performance on five key dimensions of social mobility distributed over 10 pillars: 1. Health; 2. Education (access, quality and equity, lifelong learning); 3. Technology; 4. Work (opportunities, wages, conditions); 5. Protection and Institutions (social protection and inclusive institutions).

The WEF said Nordic countries and parts of Europe outperform the rest of the world.

"The countries that provide their populations with most equally shared opportunities are mostly Nordic economies: Finland, Norway, Sweden, Denmark and Iceland. Among the 82 economies ranked by our index, Germany ranks 11th, France ranks 12th, Canada ranks 14th, Australia ranks 16th, Japan ranks 15th, Ireland ranks 18th, the United Kingdom ranks 21st, South Korea ranks 25th, the United States ranks 27th, the Russian Federatio ranks 39th, China ranks 45th, Saudi Arabia ranks 52nd, Turkey ranks 64th, Mexico ranks 58th, India ranks 76th and South Africa ranks 77th."

On income mobility across generations, Ireland has a 14th ranking of 22 countries and it is behind Italy; US; Korea; Portugal and UK.

Public social protection expenditure in 2018 comprising welfare and health was lowest in South Korea at 11.1% of gross domestic product (GDP) among 30 mainly rich country members of the Organisation for Economic Cooperation and Development (OECD). China's social protection rate is at 13%.

Eurostat has a broader measure of gross social expenditures and in 2017 France was in the lead at 34.1% of GDP; Denmark 32.2%; Finland 31%; Germany 30.0%; Austria, Netherlands and Sweden at 29.0% and Ireland at 15% of GDP in 2017 but in 2020, 19.5% of national output stripped of tax avoidance distortions.

On a euro per inhabitant basis (at 2010 constant prices), Ireland is a laggard among rich countries.

In 2017 Denmark was at €15,330; Sweden €12,430; Netherlands €11,740; Finland €11,250; France €11,150; Austria; €10,730 Germany €10,710; and Ireland €8,660.

Ipsos Mori conducted a poll on social mobility on behalf of the World Economic Forum in 33 countries and markets in November and December 2019 among more than 22,000 adults aged 16-74.

Ipos said, "Across most emerging countries, optimism reigns on nearly all issues (although safety from crime is a frequent exception). The reverse is true in most advanced economies. Pessimism about young people’s physical safety, financial wellbeing and job security is the norm in Western Europe, North America, Australia, Japan, South Korea and Israel."

Schooling and social mobility

In the Nordic region, Denmark has the highest number of private schools while Finland has the lowest. Approximately 25% of basic education schools in Denmark and some 2% in Finland were private in 2017 [in Finland, after a 9-years of basic education in a comprehensive school, students at about 16 have an option to choose to continue secondary education in an academic track (lukio) or a vocational track (ammattikoulu), for 3 more years, with some then choosing tertiary education]. Private schools in Finland and Sweden cannot charge tuition fees. In Denmark, Estonia and Norway it is possible to charge reasonable fees.

In Ireland, 7% of secondary school students are in fee-paying schools. Thirty-six of 53 fee-paying schools are located in the Dublin area and in 2019 almost 68% of the 25,900 private school students were located in Dublin.

Fee-paying schools accounted for 12% of secondary school students in County Dublin.

In Britain, 14% of secondary school students are enrolled in what are called independent schools.

Margaret Kennedy and Martin J. Power of the University of Limerick, in their 2010 paper [“The Smokescreen of meritocracy”:Elite Education in Ireland and the reproduction of class privilege], concluded that "research has long identified that in Ireland, children from the upper socio-economic groups get a disproportionate number of the more valuable educational qualifications. Yet Irish policy in this area has not significantly concerned itself with eliminating the inequalities of wealth, power, and status that reproduce educational inequalities from one generation to the next."

In Britain last year a report by the Sutton Trust, a charity, and the Social Mobility Commission, a public sector body, found that while just 7% of UK children are privately educated, they comprise 39% of those holding the top 5,000 jobs in government, business and the media in 2019.

The report said that among senior judges, the proportion was 65%, while 59% of civil service permanent secretaries and 52% of diplomats went to fee-paying schools.

Even though less than 1% of the British population attend Oxford and Cambridge, their graduates inhabit the top ranks of the senior judiciary (71%), cabinet ministers (57%) and permanent secretaries (56%).

Multinationals prefer white males from elite universities

British researchers last year reported on research on 3,260 graduates recruited by 31 elite multinational companies including those working for firms such as Goldman Sachs, Barclays Bank, HSBC and Pricewaterhousecoopers.

It found that "inequalities emerge right at the point of graduate entry, at the very outset of people’s careers."

While there is diversity among staff, the researchers found that "compared to white graduates, most other ethnic groups are less likely to be earning the most upon entry to a top firm especially Asian/Asian British - Bangladeshi (over 10% less likely), Black/Back-British Caribbean (nearly 14% less likely) and Chinese (over 7% less likely)."

"Unlike recruitment more generally, those graduating from a core groups of elite universities are more likely to have a higher starting salary, in particular Oxford, Cambridge, London School of Economics (LSE), Imperial and especially London Business School. A small group, including the universities of Bath, Warwick, and City provided a small challenge to this dominant group in terms of earnings upon entry."

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Education does not always equal social mobility — "Collectively, this research suggests that a range of social mobility exists across different countries in relation to how much education a person gets. Equal education does not always mean equal opportunity."

Korea has the highest share of young adults with tertiary qualification among OECD countries, with an above average employment rate for those with a tertiary education. According to the OECD, Korea spends more on education than the OECD average at primary to tertiary levels of education. Private expenditure is significantly higher than public expenditure at tertiary level.

Almost half of 25-64 year-olds held a tertiary qualification in 2018. The share of 25-34 year-olds with a tertiary qualification rose from 58% in 2008 to 70% in 2018, as a result of high tertiary enrolment rates at an early age, combined with very high completion rates (94% for bachelor’s programmes), the highest among OECD and partner countries in 2018.

In September 2019 The Irish Times had a story with a foolish headline, 'Young people in Ireland among world’s most educated.'

The OECD's 'Education at a Glance' report had Korea on top for tertiary qualifacations among 25-34 year olds. Russia (not a member country of the OECD) was second at 63% and Ireland was fourth at 56%.

Germany was behind Turkey at 32%. Austria was at 40% and Finland at 41%.

It is of course ridiculous to suggest that countries with a tradition of vocational eductaion are less educated than counterparts in Ireland or Russia.

Sweden, the Netherlands, Switzerland, Denmark and Finland, are among the top innovation economies in the world while Ireland is mainly an entrepĂ´t for foreign-owned firms.

Despite grade inflation, a bachelor’s degree in Ireland results in an average 81% earnings premium compared with students who completed secondary school only. The average salary premium in the OECD Area of 36 countries, is about 44%.