Tag: economy

  • Last Week in Parliament: Three Takeaways

    Last Week in Parliament: Three Takeaways

    It was a busy week in Parliament last week.  The King came to Ottawa to deliver a Speech From the Throne.  His speech – almost exclusively a re-hash of Liberal promises from the April election – was deeply depressing for anyone who thinks the words “knowledge economy” have any meaning.   

    The main feature of the Speech from the Throne was that it spelled out, in excruciating detail, how the Liberals intend to double down on re-creating the Canadian economy of the 1960s.  Oh sure, the King uttered a line in there early on about how his government is committed to “building a new economy.”  But read the document: that sentiment was in no way followed up by anything resembling a commitment to any kind of new economy.  Instead, here are the major economic elements to which the government is committed:

    • Speeding up permits for major construction projects like roads and pipelines and whatnot: because natural resources have to get to the coasts somehow!
    • Building a lot of houses
    • Spending more on defense
    • Breaking down internal trade barriers
    • Er…
    • That’s it.

    Whatever you think of the merits of the various proposals here, this is not a new economy.  It is barely even a warmed-over version of the old economy.  At best, it is about finding new markets for old products, not developing any new products.  I am unsure if it is more that the Liberals have no sweet clue about how to create a new economy, or that they are uninterested in doing so.  But it’s one of those two.

    Now some might argue otherwise because look!  Evan Solomon!  Minister of Artificial Intelligence and Digital Innovation!  How New Economy is that?  All I can say is: please try not to be that person.  Solomon is a Minster without a department with a mandate which is completely undefined.  Is it an internally-facing ministry meant to diffuse digital innovation and AI throughout government?  Or an externally-facing ministry meant to diffuse these things across the economy?  Two weeks after Solomon was named Minister, we still have no clue.   And the Liberal Manifesto and the cabinet’s One Big Mandate Letter give conflicting impressions about the extent to which the Government sees its AI/digital strategy is about skill expansion/diffusion vs. handing money to techbros (the mandate letter reads like the former, the manifesto the latter). One would be forgiven for suspecting the Carney government is making things up as it goes along.

    Anyways, the point here is still: despite Carney’s globe-trotting central banker/Goldman Sachs reputation, this government seems to be staying as far away from a Davos/future industry agenda as humanly possible.  The Liberal “new economy” is all pretty much all construction and primary industries.  This is not a world which requires a lot of higher education.

    Scared yet?  We’re just getting started.  Back on Thursday our new Prime Minister was seen to tweet:

    In other words, this government seems determined to continue in the tradition of both the former government – and the opposition parties for that matter – in framing the country’s ills as problems of costs to be solved by tax cuts and giveaways rather than problems of growth and the institutional investments required to generate it.  This way lies Peronism and perpetual stagnation. 

    And this is from our allegedly “serious” party.

    So, takeaway number one.  Universities need to throw away EVERYTHING in their playbooks for Government Relations.  Selling yourself as “the future” to a government that is desperately trying to reverse our economy into the 1960s is pointless.  This government and this Prime Minster Do. Not. Care.   Until they do, arguing for universities as “crucial” investments is a waste of time.  The real fight is over the shape of the Canadian economy.

    On to a more abstract point about budgeting.  One of the reasons we aren’t getting a budget before fall, despite the government just having been elected with a pretty detailed budget-ready manifesto and the Department of Finance being perfectly capable of putting together a set of Main Estimates for the House of Commons (as it showed on Thursday), is that Carney is trying to introduce a new set of rules with respect to public budgeting.  He spent part of this week insisting that he would balance the “operating budget” within three years, which sparked a lot of incredulity given that i) the economy is about to be in the tank and ii) the Liberals have ring-fenced most of the federal budget by saying they won’t touch transfers to provinces or transfers to institutions.  In theory, that means very significant cuts to program spending.  Like, say, research budgets.

    Except: there is currently no such thing as an “operating budget”.  What Carney wants to do is to exempt from the budget balance requirement anything that can be seen as “capital investment”, which means basically that the main game in Ottawa over the next few years is going to be how to get your favourite piece of spending classed as “capital” instead of “operating”.  And that’s a live issue because the definition the Liberals touted in the election campaign, to wit…

    …anything that builds an asset, held directly on the government’s own balance sheet, a company’s or another order of government’s.  This will include direct investments the government makes in machinery, equipment, land and buildings, as well as new incentives that support the formation of private capital (e.g. patents, plan and technology) or which meaningful raise private sector productivity.

    …is so loose you could drive a truck through it.  Will CFI spending count as capital?  Probably, but not necessarily since universities (in most provinces anyway) are neither a government nor a company.  Will tri-council spending?  Probably not, but that’s not going to stop folks claiming it supports capital formation/raises productivity, so who knows?  So, takeaway number two: get used to arguing distinctions between capital and operating because this might be the only place the sector gets traction in the next little while.

    A final point of importance is something that is not exactly new but has been given fresh salience by being in the Throne Speech, and that is the government’s commitment to limit temporary immigration – that is Temporary Foreign Workers (TFWs) plus international students – to below five percent of the population by 2027.  Or, to put it another way: every extra TFW is one international student less.  What the government has done here is set up a zero-sum game between institutions of higher education and people like the manager of the Kincardine Tim Horton’s whose business model simply cannot work if they are not allowed to employ foreign nationals at below-market rates. 

    This, my friends, is the fight post-secondary education needs to pick and needs to win.  It won’t be easy, because the captains of Canadian industry are largely clueless about competing on anything other than price, meaning low-wage labour is pretty dear to their hearts and they will fight hard for TFWs.  But it is the dilemma this country faces in a nutshell: should we use our scarce temporary immigration spots to make things cheaper in the short-term?  Or should we use them to develop a skilled workforce and build our scientific and technological talent base for the long term? 

    So, I know this won’t come easy to institutions but: screw Bay Street.  Light the torches.  Find the pitchforks.  Pick up anything you have handy and smash the windows of your local Tim Horton’s.  Fight for international students and against TFWs.  This is an existential contest: it decides whether Canada is going to be a country that gets wealthier based on investments in skills, education and science, or a country that bathes in mediocrity because we go mental if the price of a cruller goes up twenty-five cents. 

    And if the sector ducks this fight because direct confrontation with business is icky and makes some Board members uncomfortable?  Well, then the sector deserves everything it gets.  That’s the third, and most important takeaway of the last week.

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  • College grads say they are confident about jobs but cautious about economy

    College grads say they are confident about jobs but cautious about economy

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    As the current job market continues to shift, 2025 college graduates express both optimism and concern about their job prospects, according to Monster’s annual State of the Graduate Report.

    Most graduates (83%) said they were confident about landing a role soon after graduation, although 37% said the job hunt could take 4-6 months.

    “The job market is rapidly shifting, and today’s graduates are entering it with both confidence and conviction,” Scott Blumsack, CMO of CareerBuilder + Monster, said in the report.

    “The message is clear: today’s graduates are ambitious, intentional, and values-driven,” Blumsack said. “Employers who adapt to these priorities by offering flexibility, purpose, and pathways to growth will be best positioned to attract and retain the next generation of top talent.”

    In a poll of 1,000 new and upcoming college graduates, 75% said they’re worried their job prospects will be affected by the economy, up from 69% in 2024.

    In addition, 48% of graduates said they assume they won’t be able to find a job at the workplace they prefer, as compared with 52% in 2024.

    Due to current market conditions, 42% of graduates who don’t already have a full-time job said they’re now looking at more companies and industries, an increase from 34% in 2024.

    Graduates pointed to several red flags that would prevent them from applying for a job at a company, including a salary freeze, recent layoffs, lower than average earnings during the past year, a mandate for daily in-office work and fully remote work.

    At the same time, graduates reported mixed thoughts about the economy and how it may impact their starting salary. About 37% expect their starting salary to be higher as a result of the economy, while 27% expect their starting salary to be lower.

    Job security also appears to be a major priority, with 80% reporting concerns about job security in the current market, as compared with 77% in 2024. About 64% said it’ll be more difficult to find a job due to artificial intelligence filling roles previously held by humans, up from 62% in 2024.

    In December 2024, hiring, job openings and turnover decreased, with hiring reaching its lowest point in five years, according to a BambooHR report. Hiring declined across all industries, both in the U.S. and worldwide, the report found.

    For now, the labor market has cooled off, which could be good news for hiring managers, leading economists told HR Dive. Although top talent may be somewhat easier to find and retain, an aging workforce and changes to immigration will likely challenge recruiters throughout 2025, they said.

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  • China Research Spending Outstrips U.S. Despite Faltering Economy

    China Research Spending Outstrips U.S. Despite Faltering Economy

    China continues to prioritize research and development despite the country’s slowing economy, with the drive for scientific self-sufficiency superseding economic development alone, according to analysts.

    Recent figures from the Organisation for Economic Cooperation and Development show China’s R&D spending grew at a faster rate in 2023 than it did in both the U.S. and E.U., as well as all OECD member states.

    Growth in China reached 8.7 percent, compared with 1.7 percent in the U.S. and 1.6 percent in the E.U.

    According to China’s National Bureau of Statistics, spending continued to increase in 2024, exceeding 3.6 trillion yuan ($489.9 billion) and up 8.3 percent year on year. This accounted for 2.68 percent of China’s gross domestic product in 2024, up 0.1 percentage point from the previous year.

    It comes despite China’s wider economic slowdown, triggered in part by the collapse of the real estate sector in 2021, which is still struggling to recover.

    Given these financial concerns, the growth in research spending is “quite a feat” and “an important indicator of where China is putting its priorities,” said Jeroen Groenewegen-Lau, head of the science, technology and innovation program at the Mercator Institute for China Studies.

    The Asian superpower also now has to contend with the export tariffs imposed by President Donald Trump. However, analysts expect that R&D spending will continue to grow in spite of these economic barriers.

    “When you look at some of the Asian economies, they tend to be countercyclical in their investment in research,” said Caroline Wagner, a professor specializing in public policy and science at Ohio State University. “When economies slow, they actually increase their spending on research.”

    She said this is true of Japan and South Korea, which both exceeded the OECD average with growth of 2.7 percent and 3.7 percent in 2023 respectively.

    “When they’re experiencing a little bit of a downturn, they actually spend more on research in the hopes that it will stoke the economy,” Wagner added.

    Groenewegen-Lau agreed that China’s growth trajectory looks set to continue, with investment in basic research core to the country’s national development strategy.

    “Even if the economy is not going very well, they can keep up this expenditure,” he said. “They’re kind of borrowing from the future” to “conquer all these technological bottlenecks.”

    He continued, “It’s clear that science technology is maybe even more important than economic development in its own right. It’s like the economic development seems sometimes to be supporting the innovation machine.”

    While these figures are made up of both government and corporate expenditure, there are concerns among China’s leaders that businesses aren’t investing as much as they should, particularly in basic research, according to Groenewegen-Lau.

    “The current economic situation is such that we know that they’re investing less,” Groenewegen-Lau said. “So the central government is trying to make up for that.”

    Universities and research institutes are likely to benefit from this, with investment in the sector rising.

    In 2024, expenditure by China’s higher education institutes on R&D reached 275.33 billion yuan ($37.68 billion), an increase of 14.1 percent from the previous year. However, this still accounted for a minority of total expenditure, with HEIs making up 8.2 percent of the total, compared with enterprises, which made up 77.7 percent.

    And, as China moves away from international engagement and toward self-sufficiency, a key challenge, said Wagner, will be ensuring it has the talent capabilities to go it alone.

    “They have really been working on an imitative model, where they’re connecting with and imitating leaders, and now they’re trying to pull back and say, ‘We’re going to build our own national capacity,’ but you have to have enough [human] capacity in order to do that,” Wagner said.

    “I think that’s one of the questions that is maybe still out there unanswered. Can you do that on your own?”

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  • From Soviet Influence to Market Economy: Mongolia’s Higher Education Journey

    From Soviet Influence to Market Economy: Mongolia’s Higher Education Journey

    It’s been a while since we did an episode looking at the higher education system of a far-flung corner of the world. Recently I was perusing the pages of International Higher Education, a wonderful quarterly publication out of Boston College, and I saw a great little article about the challenges facing Mongolian higher education, and I knew this was something we had to cover on the podcast.

    Unless you spend a lot of time reading about the Chinggis Khan Empire, or in my case, watching the upper echelons of professional Sumo, my guess is you probably don’t think about Mongolia that often.

    As a state it’s only a little over a century old, a child of the disintegration of the Chinese empire, which found protection under the Soviet banner. Its fortunes, both as a country and as a higher education system, therefore, look a lot like those from the further flung stands of Central Asia — that is seriously under-resourced and heavily influenced by a Russian model, which splits teaching and research into two very different buckets.

    Today my guest is Dendev Badarch, a professor at the Mongolian University of Science and Technology in Ulan Bator, and one of the co-authors of that IHE article. He has an interesting take on the current situation in Mongolia and the likely keys to the system’s future success as the country moves towards upper-middle-income status and deals with the challenge of becoming a service economy.

    But enough for me. Let’s turn it over to Dendev. 

    The World of Higher Education Podcast
    Episode 3.24 | From Soviet Influence to Market Economy: Mongolia’s Higher Education Journey 

    Transcript

    Alex Usher (AU): Let’s start with a brief history of Mongolian higher education. You’re from the oldest university in the country, and the National University of Mongolia is only about 80 years old, founded in 1942, if I’m not mistaken. My guess is that, at the start, the system would have been heavily dependent on the Soviet model.

    How did higher education develop during the socialist period up to the late 1980s? Beyond training government cadres, what industries was it designed to support, and how quickly did Mongolian become the primary language of instruction?

    Badarch Dendev (BD): First of all, thank you very much for inviting me to this podcast. Yes, you are correct—the Mongolian higher education system was heavily influenced by the Soviet system. The first university, the National University of Mongolia, was established in 1942, and its curriculum, structure, and administration closely followed the Soviet model.

    To meet the needs of Mongolia’s planned economy, several small, specialized schools were established from the 1950s to the 1960s, including institutions for medical training, agriculture, teacher education, and polytechnic studies. These schools played a significant role in supplying specialists with the skills necessary to support the Mongolian economy.

    In its early years, instruction at the university was conducted in Russian. However, as more Mongolian specialists graduated with higher education degrees, Mongolian gradually became the primary language of instruction. By the 1960s, many courses—particularly in the social sciences and humanities—were being taught in Mongolian.

    AU: By the 1970s, Mongolia had a system that was producing professionals, and instruction was primarily in the Mongolian language. Then, at the end of the 1980s, there was a shift to a market economy, which must have had a profound impact on higher education. What were the biggest changes that occurred in that first decade of a market economy?

    BD:  The Democratic Revolution of 1989–1990 marked a historic transition in our country. We moved from a socialist one-party system to a multi-party democracy and a free-market economy. This shift led to significant changes in higher education.

    In response to the pressure from the new democratic system, the government, in my opinion, took three key steps.

    The first was significant changes to public institutions, reclassifying old public institutes as universities and giving them more authority. Mongolia faced economic difficulties at the time. Under socialism, higher education was fully funded by the government—covering tuition, student stipends, faculty salaries, and more. But after the transition to democracy, we faced a very difficult situation.

    Second, under socialism, all higher education institutions were public. With the reforms, the government allowed the establishment of private universities and colleges, which significantly increased access to higher education.

    The third major step was the adoption of Mongolia’s first higher education law. These three key steps taken by the government shaped Mongolia’s higher education system as it exists today.

    AU: What’s the division now between public and private higher education? In countries like China and Russia, maybe three-quarters of students are still in public universities, but there’s still a significant private or non-state sector that educates about a quarter of the students. Is that the case in Mongolia as well? How big is the private sector?

    BD: You see, when the government made the decision to establish private institutions, there was a boom—a surge of small private colleges that had no infrastructure, no proper teaching facilities, and not enough qualified faculty. At one point, there were almost 200 private colleges.

    But as of last year, the 2022–2023 academic year, we have 69 higher education institutions—19 public and 50 private.

    However, in terms of student numbers, 60 percent of students are in public universities—because of reputation, infrastructure, and other factors. In total, Mongolia has about 145,000 students.

    AU: My understanding is that both public and private institutions rely heavily on tuition fees, and that tuition fees are quite high. Is that good for financial sustainability, or does it create risks for institutions?

    BD: Tuition fees are not high, but universities and higher education institutions depend almost entirely on tuition. About 90 percent of their income comes from tuition. There is no public funding—except for some government subsidies for students.

    AU: So, in that situation, it’s not really a question of whether a high dependence on tuition is bad. If there’s no public subsidy, it’s simply the only way to operate, right?

    BD: Yes. Exactly.

    AU: Badarch, another critical function of universities is research. How does Mongolia compare internationally in terms of scientific research? What are the successes, and what are the biggest barriers to developing a stronger research culture?

    BD: You know, from the beginning, Mongolian universities were primarily training institutions, not research institutions. But in the last 10 years, there has been significant investment in higher education, especially in public universities. For the first time, university professors have started publishing internationally. In fact, the five largest public universities now produce 65% of all internationally published research papers. However, in Mongolia, higher education and research have been separate from the start, following the Russian model.

    AU: You would have an Academy of Sciences?

    BD: Yes, research was traditionally conducted by the Academy of Sciences. But universities have received significant investment in research infrastructure. For example, the National University of Mongolia now has more than 40 research laboratories in fields like biology, environmental sciences, and even nuclear physics. The Mongolian University of Science and Technology has supercomputer laboratories and modern mechanical engineering facilities. In addition, we now have many graduates returning from foreign universities to work in Mongolian universities, and they are contributing to research.

    But there are still major challenges. Universities do not receive sufficient research funding because most of the research budget goes to the Academy of Sciences. There is very little collaboration with industry and almost no funding from the private sector. There are also no endowment funds or other financial support systems for university research.

    Another critical issue is the weak graduate programs. Almost 99% of graduate students are part-time—there are no full-time graduate students. This severely limits research output. Without strong graduate programs, research activity remains low. This is one of the biggest challenges for Mongolian universities.

    AU: A couple of years ago, a set of laws were passed aimed at increasing university autonomy—governance, leadership selection, those kinds of things. Do universities now have real independence, or does political influence remain a challenge? And what did the laws do to promote political independence?

    BD: Over the last three years, there were extensive discussions about the concept and details of these new laws. In July 2023, Parliament adopted a set of education laws. For the first time, these laws covered all levels of education as a single system, creating better interconnection between different stages of education. That is a very good sign.

    Second, for the first time, the law explicitly recognized academic freedom as a key principle of higher education, which is another positive step.

    The third important issue relates to governance. According to the law, if implemented correctly, universities should have independent governing boards. Another key aspect is the diversification of funding for universities, as well as strengthening university research. The law also states that public universities should receive government subsidies to help cover maintenance costs.

    I think these are the positive aspects of the new law. However, in reality, the implementation of these important measures has not yet happened. Political interference still exists, particularly in the selection of university directors and key leadership appointments.

    AU: We’ve talked a lot about the challenges in Mongolian higher education. What do you see as the opportunities? Where do you think the greatest improvements could happen in the next few years?

    BD: Yes, there are definitely opportunities. First, universities are expanding their cooperation with international communities, and they are learning a lot from these collaborations. Also, as I mentioned earlier, we have a new wave of young specialists and graduates from world-leading universities. We need to hire them. If we bring in these young professionals, give them opportunities to conduct research, teach, and help reform higher education institutions, we will see positive changes soon.

    Second, there is a major opportunity in digital technologies. If we use them smartly and correctly—things like AI, online learning, and MOOCs—then Mongolian universities can take a big step forward.

    But in order to take advantage of these opportunities, we need to ensure that the new laws are properly implemented.

    AU: If we think even further ahead, maybe to 2050, what do you think the system will look like? Will Mongolia have caught up with countries like China, Korea, or Japan? Do you think the system will have developed to the point where it can be considered alongside those peers?

    BD: You may know that the government has adopted the “Vision 2050” long-term strategic development plan. According to this plan, by 2050, Mongolia should have one of the leading universities in the region.

    I see two possible scenarios for the development of higher education in Mongolia by 2050—one optimistic and one pessimistic.

    Starting with the optimistic scenario: If we can reduce government and political interference in university governance and give universities full autonomy, that would be a big step forward. The government should also increase its support for universities, establish strong links with industry, and adopt models like the triple helix approach. Additionally, partnerships with leading international universities would help improve graduate programs.

    If these changes happen, Mongolia could develop strong higher education institutions. But right now, many of the most talented secondary school students are not choosing local universities—they are looking abroad for their education.

    The pessimistic scenario is that if things continue as they are today, universities will still exist, but they will lack freedom and independence. The issues we are currently facing—political interference, funding limitations, and weak institutional autonomy—will persist. That would be very unfortunate. However, I hope that we will see changes in government policy and that Mongolia will implement best practices from other higher education systems around the world.

    AU: Thank you so much for joining us today.

    BD: Thank you.

    AU: And before we go, I’d like to thank our excellent producers, Tiffany MacLennan and Sam Pufek, as well as our listeners, viewers, and readers for tuning in. If you have any questions or comments about today’s podcast, please don’t hesitate to contact us at podcast@higheredstrategy.com. If you’re worried about missing an episode of The World of Higher Education, why not subscribe to our YouTube channel? Go there today—don’t delay—never miss an episode!

    Join us next week when our guest will be Steven Mintz, a professor of history at the University of Texas at Austin. We’ll be discussing his new book, The Learning-Centered University. Bye for now.

    *This podcast transcript was generated using an AI transcription service with limited editing. Please forgive any errors made through this service. Please note, the views and opinions expressed in each episode are those of the individual contributors, and do not necessarily reflect those of the podcast host and team, or our sponsors.

    This episode is sponsored by Studiosity. Student success, at scale – with an evidence-based ROI of 4.4x return for universities and colleges. Because Studiosity is AI for Learning — not corrections – to develop critical thinking, agency, and retention — empowering educators with learning insight. For future-ready graduates — and for future-ready institutions. Learn more at studiosity.com.

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  • How R&D creates new skills and can jump start the economy

    How R&D creates new skills and can jump start the economy

    Skills England, the government’s new-ish arms length body exists to coordinate the work of employers, educators, and civic leaders to meet the skills needs of the country over the next decade. As the Secretary of State for Education states in the opening of Skill’s England’s inaugural report

    The first mission of this government is economic growth. Central to this mission is a skills system fit for the future. We need to harness the talents of all our people to unlock growth and break down the barriers to opportunity. Each and every young person and adult in the country must be able to learn the skills they need to seize opportunity. Businesses need a highly skilled workforce to draw on if they are to drive economic growth and expand opportunity in our communities.

    On the face of it the argument is compelling. The mission is to have a bigger economy. The method is to increase economic output in key industries. The means is to have people to deliver those outputs. And the result is a more productive economy and a rise in living standards.

    One of the challenges the government faces is that it has a limited set of tools. It can set incentives and regulation but in mass swathes of the economy it cannot set wages, tell businesses what to do, and for more than a decade no government has made the country significantly more productive.

    As the National Centre Institute of Economic and and Social Research argues one of the reasons the UK’s productivity is stuck is because the uneven distribution of skills also leads to the uneven distribution of clusters that can spin up economic activity. Plainly, if the country keeps producing similar graduates with similar skills the economy will end up in a similar place. It might not be just that we are training the wrong skills but that we’re thinking about graduate skills entirely wrongly.

    Supply and demand

    It is quite hard to work out what skills will free the country from its productivity trap.

    For example, the Department for Education provides a bulletin on occupations in demand and it makes for mixed reading for universities.

    82.5 per cent of the occupations which the Department believes are in critical demand do not require a degree level education. Critical demand is a composite measure which assesses outliers against seven indicators which “include the number of visa applications, online job adverts and annual wage growth.” The most critically in demand occupation is care work, followed by sales accounts and business development managers, and then metal working production and maintenance fitters.

    To be clear, this is a different analysis on whether those occupations benefit from someone having a degree in them. If you take a profession like childcare there are zero barriers to entry, zero licensing requirements, and in the informal childcare sector zero need for background checks. All things being equal, having nannies trained somewhere like Norland which produces highly qualified nannies is a net good for children and the economy.

    The professions that are the highest in demand do not require a university degree. Therefore, there is an argument that reducing the number of people with a university degree would not harm the economy overall. A version of this narrative is played out in the too many people go to university debate and the UK needs more apprentices debate. Whether either of these things are true, having more apprentices would seem to be a good thing, they don’t always consider how universities themselves create demand for new skills in the workforce.

    To put it plainly, universities don’t just supply skills, they create demand for them.

    Alignment

    This is because universities carry out research and one of the core purposes of research is to create products and services that can be adopted into the real economy.

    The social and political implications of the contraceptive pill, the media campaigns to reduce smoking, and the innovation in materials arising from the motorway signs developed at the Royal School of Art, demonstrate R&D from UK universities shapes the skills society needs in an unexpected way.

    This is a different kind of shaping of the skills landscape than the government. The government’s approach is top down: putting in place incentives, regulations, and investment, to create a different kind of labour market. Universities work from the bottom up by pursuing things that are interesting, turning ideas into reality, and then creating new kinds of work. This work then has to be serviced by new skills and new combinations of existing skills.

    Kate Black, the co-founder of University of Liverpool spin-out Meta Additive, couches her work in similar terms:

    It is amazing to be able to take my research which started life in a laboratory at the University and then translate it into the real-world, helping to create jobs and providing industry with smart manufacturing solutions.

    There are new skills and new kinds of work needed because of the work of universities. Clearly, it’s harder to predict the industries that are yet to emerge.

    Narratives

    Student fees cross subsidise research but this does not mean there is a good relationship between which students universities recruit and what research they should fund. This has led to the current arrangements where incentives encourage a broad programme mix, in turn encouraging a growth in student numbers, therefore requiring academics to teach students, and in part creating research across a broad portfolio. The incentives for funding research works against specialisation for the majority of institutions.

    This leads to a skills system that is led by student demand for places not the skills an economy needs. In turn, this limits the kind of research that takes place, which in turn limits the creation of new demand for skills.

    For example, Labour’s industrial strategy requires a workforce skilled in core sciences. The university recruitment landscape is working against having more people taking up those roles. The more numbers decline, the less likely universities are to provide those courses, and the more the UK’s R&D base will suffer, which will limit the creation of new jobs and demand for skills to fulfill them.

    This leaves an enormous policy conundrum. One option would be to designate programmes of critical importance which are allowed a permanent funding settlement to support R&D and skills development. This could be an increase in the teaching grant or additional hypothecated funding through the research councils. This would help the stability of the R&D and skills pipeline but it would be massively unpopular for some institutions, hasten the closure of non critical research fields, and it does not solve the problem that skills and research needs are unpredictable.

    The other solution is a more stable research funding settlement for universities that nudges toward de-coupling research funding from student recruitment. This would mean either more research funding to maintain the current system or fewer better funded projects. Again, not easy or cheap.

    Universities will respond to the incentives in front of them but the narrative is theirs to shape. Instead of talking about research, graduate jobs, and a graduate skills gap, the opportunity is to talk about how the economy really works. The current arrangement incentivises universities to continually tack their programmes, research, and offer to the funding in front of them. An alternative narrative is the investment in broad based curricula and research is the best insurance against an economy which is unpredictable, and the only opportunity to jump start an economy which is comatose. This requires long-term and predictable funding.

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  • EY and Microsoft equip the next generation with AI skills

    EY and Microsoft equip the next generation with AI skills

    The EY organization and Microsoft announced this month the launch of the AI Skills Passport (AISP), which assists students aged 16 and older in learning about artificial intelligence (AI) technologies, and how to work with and apply them to various industries and careers. This free online program is part of an ongoing social impact collaboration focused on supporting young people and those furthest from opportunity to build the AI skills necessary to thrive in today’s AI economy.

    According to Randstad research, demand for AI skills in job postings has surged by 2,000%. However, a recent EY and TeachAI survey, with support from Microsoft, found that only 15% of Gen Z respondents feel fully satisfied with how their schools or employers are preparing them for the implications of AI and the use of AI tools. The AISP aims to bridge this gap by equipping learners with essential AI skills for the modern workplace, with a goal of upskilling one million individuals.

    The free online learning program is accessible on web and mobile platforms and participants can take the 10-hour course at their own pace to learn about key topics such as the fundamentals of AI, ethical considerations and its applications across business, sustainability and technology careers. By completing the course, participants will receive an EY and Microsoft certificate of completion to strengthen resumes and gain access to additional learning and employment resources.

    The EY organization and Microsoft have now successfully activated the course in the United States, United Kingdom, India, Italy, Greece, Belgium, S. Africa, Ireland, Switzerland, Cyprus, Australia, New Zealand, Fiji, Papua New Guinea, Sweden, China and India. Expansion plans are underway to roll out to additional countries through 2025 — and to translate to five languages.

    Together, the EY organization and Microsoft have collaborated on a multitude of programs to help empower job seekers and impact entrepreneurs with the skills needed for an AI-driven future, furthering the EY Ripples ambition to impact one billion lives by 2030.

    Other high-impact EY and Microsoft social programs include:

    • Microsoft Entrepreneurship for Positive Impact: This Microsoft program provides support to innovative tech-first entrepreneurs who are addressing our world’s most pressing challenges. The EY organization and Microsoft run a series of Skills Labs to support more than 100 entrepreneurs to date on key growth challenges identified, such as investment strategies, financial planning, environmental, social and governance (ESG) strategy and business resilience.
    • EY and Microsoft Green Skills Passport: A program aimed to help learners aged 16 and over develop skills to find green jobs and pursue opportunities in the growing green economy. To date, more than 46,000 learners have completed this free course and are on their way to a green skills career.
    • Future Skills Workshops (FSW): An EY offering to upskill young or underserved groups equipping them with knowledge to help them navigate a changing world. The “All about AI” module is the newest module and will be launched across Latin America through in-person delivery with the EY organization, Microsoft and Trust for Americas.

    Gillian Hinde, EY Global Corporate Responsibility Leader, says:

    “The EY and Microsoft collaboration is a powerful example of how organizations can come together to help drive meaningful social change and help shape the future with confidence. The AI Skills Passport program aims to equip young people and underserved communities with the AI experience needed to thrive in today’s digital age, while also sharing the skills necessary for tomorrow.”  

    Kate Behncken, Global Head of Microsoft Philanthropies, says:

    “Through this new initiative with EY, we’re helping young people build the AI skills they need to succeed in the evolving AI economy. By bridging the gap between education and employability, we’re creating opportunities for the next generation to contribute, innovate, and thrive in the new AI economy.”

    Learn more about the EY-Microsoft AI Skills Passport here.

    Kevin Hogan
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  • Can knowledge exchange fix a broken economy?

    Can knowledge exchange fix a broken economy?

    There’s always a challenge in trying to describe knowledge exchange, how it’s funded, why it’s worth worrying about, and what it actually does to the economy.

    Mechanisms

    The default is to talk about its underpinning mechanisms. The way that money goes to universities, their partners and then circulates into the real economy, and then hopefully something good happens. The problem with this approach is that outside of experts and hardy enthusiasts like me this approach is, well, rather dull.

    And knowledge exchange is a less than glamorous name for some of the most important work universities do. ESRC, one of UKRI’s funding councils, has a rather elegant way of describing it:

    The Economic and Social Research Council (ESRC) is committed to encouraging collaboration between researchers and businesses, policymakers, the public and third sector organisations (for example charities and voluntary groups). This can create mutual benefits and contribute to positive economic and social impacts outside academia, for example through changes to policy and practice or new products and services created by commercialising research. Two-way interactions of this type are often collectively referred to as knowledge exchange. This is an umbrella term that covers a wide range of activities researchers might engage in, including policy engagement, public engagement, commercialisation and business engagement.

    A less elegant way is to say that universities working together with other organisations can make the economy and society stronger. It is not a dry technocratic thing but the very way in which the wonderful things that are produced in universities become useful. Great ideas without an audience are interesting but fruitless. An expectant audience with no great ideas are bound for disappointment.

    This means that there must be both the conditions for useful ideas to be produced and the conditions for organisations to make use of them. Research England, another funding body of UKRI, funds knowledge exchange through the Higher Education Innovation Fund (HEIF) and the Connecting Capability Fund (CCF). While HEIF is a more general knowledge exchange fund the CCF is focussed on the commercialisation of research with business. These funds are small compared to the overall research funding pots. HEIF is a formula based fund of £260m compared to an overall UKRI budget of over £8bn.

    The key question isn’t whether knowledge exchange is a good thing. It self evidently is. But whether the intervention by funders is producing bigger impacts than would naturally happen through universities working with businesses, policy makers, and other groups. After all, universities would still benefit from equity in spin-outs and bask in the warm glow of civic participation even if they weren’t supported to do so.

    Reports

    UKRI has brought out three new reports that look at knowledge exchange funding.

    The first report is an evaluation of HEIF carried out by Tomas Coates Ulrichsen. The part which UKRI will be most proud of, and should definitely cause them to consider whether their funding is enough, is that every £1 invested in HEIF produces £14.8 return on investment if you crowd in actual and estimated external impacts. Perhaps even more impressively the report also suggests that “38% of knowledge exchange outputs and incomes would not have happened in the absence of HEIF.” This isn’t activity that is being paid for twice but activity that is actually being created.

    However, while this makes the case persuasively for the value of HEIF it’s the summary which gives us a bigger clue into what is going on in the economy. The report notes

    The past two decades has seen KE income secured by English HEPs grow significantly in real terms, with KE income 81% higher in 2022/23 than in 2003/04 for HEPs in receipt of HEIF during the period 2017/18 – 2022/23 (the vast majority of HEPs in England). However, what is clear is that this twenty-year period is characterised by two very different decades. While KE income grew strongly – and faster than the economy as a whole – during the first decade, the past ten years has seen this growth largely stagnate. The limited growth in KE income may well reflect the multiple crises and shocks the UK has faced since then, not least with the Covid-19 pandemic, cost of living crisis, and departure from the European Union and the effects of this on R&D with research grants and contracts income to HEPs from European sources declining almost 30% in real terms since the EU referendum in 2016. KE income now appears to track trends in the economy more widely (as measured by the UK’s GDP).

    To read the inverse of this is that the wider economy is a constraining factor on the ability of universities to deploy their research for social and economic benefit.

    There is perhaps a tacit assumption that if universities produce great and useful research it will lead to great and useful things in the economy and society. This is only true as long as the economy has the absorptive capacity to keep the cycle of knowledge exchange investment which leads to knowledge exchange outputs which supports knowledge exchange income churning.

    Help/HEIF

    The evaluation of HEIF carried out by PA Consulting is particularly illuminating within this frame. The key findings are that in a changing policy environment HEIF has anchored the sector to make some significant social and economic impacts. It is the flexibility of the fund which has allowed specialisms to develop, the autonomy of the fund has found favourability in the sector, its stability has allowed for long-term partnerships, and a more permissive approach to accountability has allowed providers to demonstrate their value without drowning under administration.

    The report is full of examples of how HEIF funding has catalysed wider social and economic activity but the examples have two things in common. The first is that allowing flexibility in the fund means it can be deployed in multiple partners in multiple ways. This means that even where there are wider economic challenges the funding can be tailored to suit the challenges of local economies. The second is that the long-term nature of the fund allows for greater stability within partnerships to withstand adverse economic headwinds.

    Together, the two reports point toward HEIF as being successful as it demonstrably supports economic growth but does so through flexibility and provider autonomy linked, to a lesser or greater extent, to national priorities. It’s only a small fund but it is impactful.

    Same old SMEs

    The final report on CCF by Wellspring again demonstrates a positive return on investment. The programme has led to 200 new spin-outs and supported over 1,500 SMEs. The programme has led to the launch of at least 338 products and services and it is expected more will be launched over time, particularly in high-tech spin-outs.

    The obvious albeit incorrect conclusion to draw would be that if each of these interventions induce such strong economic benefits then making the intervention larger would make the economy stronger. In fact, if the economic returns are so strong then the projects could presumably be 10, 100, or 1,000 times bigger, and continue to provide economic return.

    Instead, what these reports highlight is that knowledge exchange funding is a product of the wider economy. There is a natural limit to how much activity can take place as there comes a point where the economy is not large enough or dynamic enough to absorb the benefits of universities’ work. In fact, these reports indirectly demonstrate how economies get stuck into a death spiral. Productivity stalls which prevents the absorption of innovative products and services. Without innovative products and services the economy cannot become more productive. And so on.

    The benefits these schemes are realising would suggest they are not close to meeting the capacity of the economy and could therefore be much larger. It is also a matter of purpose. The funds are designed on a premise that there is capacity to make use of university work. It is a much harder question to imagine how funding should be designed where it is necessary to restart a broken economy.

    The impact of these funds is striking, the reports written about them are convincing, however they open a door to a wider question of whether knowledge exchange funding is big enough, well directed enough, or tooled properly, to fix the UK’s entrenched economic issues including its collapsed productivity.

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