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Cablegate: Russian Universities Failing to Meet Labor Market Demand

VZCZCXYZ0002
RR RUEHWEB

DE RUEHMO #2546/01 2390516
ZNR UUUUU ZZH
R 260516Z AUG 08
FM AMEMBASSY MOSCOW
TO SECSTATE WASHDC 9684

UNCLAS MOSCOW 002546

SENSITIVE
SIPDIS

STATE FOR EUR/RUS

E.O. 12958: N/A
TAGS: ECON SCUL RS
SUBJECT: RUSSIAN UNIVERSITIES FAILING TO MEET LABOR MARKET DEMAND

1. (U) This message is sensitive but unclassified and not for
internet distribution. It is the first in a series examining
Russia's university reform process.

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Summary
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2. (U) Russia's universities are failing to keep pace with today's
labor market demands. Instead, they are maintaining a Soviet-era
focus on theoretical knowledge and academic learning. While the
number of students and both public and private institutions has
grown markedly, a lack of investment in faculty and administration
training, curriculum development, and facilities has left half of
graduates unable to find or woefully unprepared for jobs in their
fields. Recognizing the deficiencies, the GOR has undertaken
reforms, including planned accession to Europe's Bologna Process (a
standardized modernization process for European universities) by
2010 and introduction of a nationwide exam for high school graduates
in 2009. Further, with education as a National Priority Project
since 2006, the GOR has injected cash and created new types of
universities to modernize the system.

--------------------------------------
University Education: State of Affairs
--------------------------------------

3. (U) Russia's university education system has failed to keep pace
with the country's economic growth and with globalization in
general. After the collapse of the USSR, the GOR focused more on
safeguarding the education system's previous achievements and
strengths rather than on modernizing the system. As such, Russia
has maintained most of the features of the Soviet university
education system, including its sectoral structure and high
centralization - particularly in the areas of funding mechanisms,
quality assurance, and faculty training.

4. (U) Some changes have occurred though. For example, since the
early 1990s, the largest change has been the expansion of
universities' administrative and academic autonomy, especially in
the areas of research, admissions, non-budgetary financing, student
fees, and international cooperation. Over the past 17 years, the
country has moved from universal free higher education to
establishing private universities and accepting some paid students
at public institutions. In early 2000, the GOR joined the Bologna
Process (the creation of a common European education space) with the
aim of bringing its university system in line with European and
global standards.

5. (U) In 2006, the GOR also started to implement the National
Priority Project in Education, with the goals of support for
innovation, improving cooperation between universities and
businesses, increasing financial stability, and introducing a more
transparent system of quality assessment. Under the NPP, some
universities, departments, and professors have made efforts to
upgrade curricular and administrative processes through extended use
of information technologies, access to leading research, and
collaboration with colleagues in Russia and abroad.

----------------------------
Growth without Modernization
----------------------------

6. (U) The number of universities in Russia continues to increase
as new regional universities have opened, affiliates have been
institutionalized, and large universities have expanded their
networks of local branches. Since 1990, the number of universities
has doubled. There has also been a concomitant increase in the
number of students, which has almost tripled. Furthermore, since
1995 the number of private universities has more than doubled and
the number of students attending them has increased eight-fold.

7. (U) The rapid growth in the number of universities and students
over the past 15 years has brought with it a difficult challenge -
how to maintain and ultimately improve the quality of education.
The difficulty of this challenge has been exacerbated by the fact
that the expansion in universities and students has not been
accompanied by adequate investments in staff training, remuneration,
teaching materials, equipment, and infrastructure.

8. (U) The inability of the university education system to evolve
as quickly as the labor market has resulted in a severe mismatch
between the skills taught in school and the skills demanded by
Russia's employers. One of the underlying reasons for this mismatch
lies in the fact that the university system is more oriented toward
the demands of consumers (i.e., students and their families), rather
than the demands of the labor market. In addition, the structure of
Russia's labor market has changed significantly. Employment has
shifted from manufacturing and agriculture to trade and services.

9. (U) A few of the more elite and/or progressive universities have
been able to adapt and become responsive to the needs of the
modernizing economy, but most remain grossly deficient. According
to Minister of Education and Science Andrei Fursenko, only 15
percent of all Russian universities are considered "high standard,"
that is providing training that fully meets the demands of the labor
market. A quarter of Russia's adult population (25.6 percent) has a
university degree (higher than the OECD average and similar to the
rates of Australia, Japan, Canada, and the Netherlands), but half of
all graduates fail - or don't try - to find work within their field
of specialization and require special training after entering the
workforce. This mismatch between education and the labor market
has, in turn, led to lower economic returns on, and a devaluation of
university education.

10. (U) Universities for the most part lack the infrastructure that
would meet modern requirements, with 21 percent requiring complete
overhauls. This includes computer and telecommunications
facilities, laboratory equipment, informational and methodological
resources (including libraries and electronic databases), as well as
classroom and dormitory conditions. Laboratory equipment in most
technical universities has not been modernized for almost two
decades. Today the majority of medical students use the same
textbooks and practical guidelines that were used twenty years ago.
Another key weakness in Russia's university system is the
insufficient qualifications of much of the academic and managerial
staff. This reflects that fact that talented graduates prefer to
work in other sectors of the economy, where compensation is higher
than it is in the education system. Age is therefore also becoming
a problem, as 21 percent of the faculty is now older than 60.
11. (U) Other challenges include weak links among university
research institutions and industry, a lack of long-term sustainable
funding sources, and egalitarian access to quality university
education (with high costs of both formal and informal education
services and low territorial mobility of students). The Russian
system of university education has not so far played a significant
role in applied R&D and innovations. Primary tasks in this sphere
include diversifying funding sources, stimulating the demand for
qualified research staff, streamlining the regulatory environment
for R&D, securing intellectual property rights, and introducing
methods of assessing the effectiveness of R&D.
12. (U) Since the turn of the century, with the general
macroeconomic improvement in the national economy, public
expenditures on university education have been gradually increasing.
The major problem today is not as much in the amount of public
funding (although still low in comparative perspective) as in the
inefficient financial management and allocation mechanisms,
including the inadequate compensation system. In addition, the
development of a system of state support for education via credits
and the introduction of various student scholarships and grants are
only at a very early stage of development. The development of
endowment funds ultimately may provide the necessary basis for
long-term sustainable funding of Russian universities. However,
endowment legislation became effective in Russia only in February
2007, and the endowment culture in the university system is only in
an embryonic condition.
--------------
Reform Efforts
--------------

13. (U) Bologna Process: As part of the government's efforts to
modernize the university education system, Russia adopted a law on
new university education standards in 2007. These standards are
scheduled to come into force by 2010, when Russia's completes its
accession to Europe's Bologna Process. The new standards include
moving away from the five-year university education system inherited
from the Soviet Union (with the degree of "specialist") to the four
year undergraduate (Bachelor's) and two year graduate (Master's)
systems that prevail in European university systems. These changes
shift the balance of university education from a system based on
academics and knowledge to one based on practical components and
competencies. The shift from a specialized five-year program to a
two-level system is expected to improve the link between what
universities teach, especially at the graduate level, and what the
labor market demands.

14. (U) Although Russia signed the Bologna Declaration in 2003, the
practice of introducing individual features of the new system
already had started as early as 1992. After an initial wave of
enthusiasm, however, the process has dramatically slowed down.
Today only 12 percent of graduates have a Bachelor's degree and only
4 percent have a Master's degree. Critics of the Bologna Process
fear that the structural changes that the system demands will
destroy positive aspects of the Russian university system,
especially its emphasis on academics, while failing to improve the
disconnect between university education and the labor markets.

15. (U) Faculty and administrative personnel at many of the
universities oppose the reforms, and feel they are being excluded
from influencing the direction of university education in Russia.
They disagree with the proposed reduction in Master-level programs,
the shift to mostly paid graduate education, and feel two years is

insufficient to redesign curricula. . Some observers estimate that
up to 80 percent of university faculties and administrations oppose
the reforms. Businesses, however, welcome them. According to
research done by the UNITY HR Agency, up to 80 percent of businesses
support further reform of the university system and an equal share
prefer to recruit graduates with a Bachelor's degree.

16. (U) The Unified State Exam and NPP: In 2001, Russia launched
the Unified State Exam (Russian abbreviation - EGE)- a nationwide
test for high school graduates and university applicants. After a
six-year pilot period, in 2009 all high school graduates will take
the exam and results will be mandatory for all Russian university
applications. EGE is primarily aimed at equalizing territorial and
economic differences in test results and university entrance.
Despite some positive results in the diversity of social backgrounds
among first-year students at universities, EGE is still a subject of
debate, primarily due to the quality and range of the test questions
and technical problems. In addition, some teachers have strong
reasons to oppose the reform since it threatens their illegal income
both in direct bribes and payments for entrance exam preparations.

17. (U) The National Priority Project (NPP) on Education, which
began in 2006, is meant to help modernize Russia's university
education system through a variety of measures, including support
for innovation through cash disbursements, limited structural
reforms, and the creation of new types of universities. In
2006-2008, for example, the Russian Government rewarded 57
universities with RUB 30 billion ($1.25 billion) for creating
innovative education programs. Another component of the NPP is the
creation of "federal" and "national" universities. The federal
universities in Krasnoyarsk (Siberia Federal University) and
Rostov-on-Don (Southern Federal University) are expected to serve as
the models for an eventual network of federal universities (one per
each federal district) based on the integration of science,
business, and education (with the involvement of venture funds and
techno-parks). The NPP also envisions the creation of several elite
business schools to increase Russia's competitiveness in the
international economy. So far, two such schools have been
identified: the Skolkovo Moscow School of Management and the
Graduate School of Management at St-Petersburg State University.

-------
Comment
-------

18. (SBU) Infrastructure shortcomings, deficits in qualified
teaching and management staff, weak linkages between the education
system and the labor market, and the lack of buy-in from the
university community itself will continue to pose significant
challenges for university education in Russia. However, the GOR's
stated commitment to reform, backed up by relatively substantial
public expenditures and concrete programs, as well as positive
trends in some universities, does offer some hope for the long-term.
End comment.

BEYRLE

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