Chapter 9. Benchmarking Higher Education System Performance: Estonia
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9.1. Higher education performance in Estonia
9.1.1. Introduction
This country note for Estonia draws on the evidence base of the OECD Benchmarking Higher Education System Performance project to review the performance of the higher education system in Estonia. Its purpose is to assist Estonia in taking stock of where it stands in relation to other OECD member countries on different aspects of higher education and to provide input into future national policy-planning processes.
This stocktaking exercise is supported in this note in two ways. First, a scorecard of 45 indicators is presented, which highlights Estonia’s position within the OECD. This scorecard draws on the evidence compiled during the benchmarking exercise and is organised into three domains: financial and human resources; education; and research and engagement. The first sections of this note contain a brief discussion of Estonia’s position within these three domains.
The final section of the note contains a scenario exercise to support future policymaking. Topics chosen for scenarios in the benchmarking country notes are issues that appear to present important policy challenges for jurisdictions and are likely to persist for the foreseeable future. Assumption choices used for the scenarios take into account recent trends in Estonia and across the OECD. Following the presentation of the scenarios, a set of policy options are examined that could be feasible responses to the challenges under discussion and consideration is given to how successful action might orient the system towards the achievement of more positive scenarios.
9.1.2. Context and structure of higher education in Estonia
Estonia is one of the smallest and newest countries in the OECD. Since regaining independence in 1991, the Estonian economy has been developing rapidly, particularly in recent years, with growth in gross domestic product (GDP) per capita surpassing the OECD average in the last decade (OECD, 2017[1]). The education system has also been transformed in the decades since independence and, as a result, Estonia ranks highly in the OECD on the skill levels of its young population.
The higher education system in Estonia has also undergone a number of reforms in recent years. Investment has been on an upward trajectory and expenditure per student is close to the OECD average levels, although this is also a result of a decreasing population and falling enrolments in recent years. In addition, Estonia has come out of the financial and economic crisis with one of the lowest levels of public debt in the OECD, creating more favourable conditions for future growth in public investment. At the same time, the decreasing population is also contributing to tightening labour market conditions (OECD, 2017[1]), putting pressure on the higher education system to produce graduates with the necessary skills to boost the economy.
Estonia’s higher education system serves more than 50 000 students across 21 higher education institutions. This makes Estonia the third smallest higher education system in the OECD in terms of students, after Iceland and Luxembourg. As in many OECD countries, there is a binary divide in the orientation of institutions, with universities (ülikool) mainly offering academically oriented programmes and professional higher education institutions (rakenduskõrgkool) mainly offering professionally oriented programmes.
There is a strong policy focus on equality and lifelong learning in higher education in Estonia. The Estonian Strategy for Lifelong Learning is oriented towards increasing opportunities for all students to participate in higher education, and aligning opportunities for lifelong learning to the needs of the labour market (Estonian Ministry of Education and Research, 2014[2]). Estonia has also reformed the funding policy for higher education with the goal of improving both equity and quality. Performance-related criteria are included in the funding model for higher education institutions, and since 2013, full-time students studying programmes in Estonian do not have to pay tuition fees (see Chapter 4 of (OECD, 2019[3])).
9.1.3. Estonia’s higher education scorecard
Table 9.1 shows a summary of the relative position of Estonia within OECD countries according to a set of 45 indicators spanning the resourcing and the education, research and engagement functions of higher education, in a scorecard format (where each box relates to one of the quartiles of the OECD distribution). These indicators are drawn from the compilation of evidence in the synthesis report of the OECD Benchmarking Higher Education Systems Performance project, in which Estonia participated during 2017-2018.
As can be seen in the scorecard, Estonia is in the top quartile of the OECD countries in a number of areas related to higher education performance. For example, Estonia invests one of the highest proportions of GDP in the OECD on education. Gender equity is also more well-established than in most OECD countries, with proportions of women researchers and women among academic staff in the top quartile of OECD countries. There are also some indications that Estonia is performing strongly on engagement between research and the business sector, with the level of reported collaboration between higher education and small and medium enterprises in the top quartile of OECD countries.
On the other hand, the scorecard also points to a number of areas where higher education performance in Estonia could be improved. For example, completion rates for bachelor’s programmes are lower than in most other OECD countries with comparable data. Furthermore, while Estonia appears to be relatively successful in providing opportunities for older people to enter higher education, the proportions studying part-time and the proportions of international students are lower than the median level in the OECD. Improving performance and sustaining the system in a context of demographic decline is an important policy challenge for Estonia and may require action on a number of fronts, as outlined in the scenario exercise presented in Section 9.5.
A wider discussion of the topics covered in this note, as well as many other topics spanning the resourcing, missions and performance of higher education can be found in the synthesis report for the benchmarking project in (OECD, 2019[3]).
9.2. Financial and human resources
Highlights
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Public higher education expenditure has grown rapidly in Estonia in recent years, reflecting recent changes in the higher education system, including the removal of tuition fees for most students. Higher education expenditure represents a relatively large share of GDP and of public expenditure.
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The amount spent per student is close to the OECD median. With continued economic growth and stable rates of public investment in higher education, Estonia’s per student spending may continue to rise.
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About one-third of higher education expenditure is allocated to R&D, in line with the OECD median. As in other jurisdictions, R&D expenditure in higher education is concentrated in universities.
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Higher education funding in Estonia comes from a variety of sources, including household sources (from the minority of students who pay tuition fees) and international sources (mostly, the European Union). However, funding from the European Union will be reduced after 2020, posing questions about whether and how it will be replaced.
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Government spending per student for grants and scholarships is just below the OECD median and larger than the average amount of household expenditure per student. Public student loans have low take-up: only 5% of Estonian graduates had one in 2016.
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Estonia has a relatively large proportion of academic staff aged 60 or older, even though the share of those who are younger than 45 is in line with the OECD median. Women represent around half of academic staff in all age categories, in the top quartile of OECD countries.
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The average annual earnings of full-time academic staff in Estonia are lower than in most other OECD countries, and academics are less likely to be employed with a permanent contract than their peers in the Flemish Community, the Netherlands and Norway.
9.2.1. Financial resources
Figure 9.1 shows a more detailed view of the portion of the benchmarking scorecard related to resourcing higher education, and the position of Estonia within the OECD distribution.
Note: The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Estonia prioritises investment in higher education, and public expenditure on higher education has increased rapidly
Estonia spent the equivalent of 1.8% of its GDP on higher education institutions in 2015 (the year of reference for international indicators on education expenditure used in the benchmarking exercise). This proportion is in the top quartile of OECD member countries, at a level of investment similar to that of Finland, and above that of its Baltic neighbours Latvia and Lithuania. Higher education R&D expenditure as a share of GDP was also above the OECD median in 2015 (Figure 9.1).
This relatively high level of higher education expenditure relative to GDP is consistent with Estonia’s commitment to the development of a knowledge-intensive, service-based economy (OECD, 2017[1]). Higher education appears to be highly prioritised within the public budget. In 2015, the Estonian government spent 3.5% of total public expenditure on higher education.1 This places Estonia above the median of OECD countries in terms of the share of public funding devoted to higher education, and at a level higher than Finland, Latvia and Lithuania.
Across OECD countries, expenditure per student on higher education institutions is closely associated with GDP per capita. Wealthier countries find it easier to reach relatively high levels of expenditure per student, even if they allocate a relatively low share of public expenditure or GDP to higher education. In 2015, Estonian GDP per capita was about 25% lower than the OECD median. Notwithstanding this relatively low GDP per capita, expenditure per student on higher education institutions (around USD 12 900) in 2015 was nearly at the OECD median (USD 13 000).
As a result of a strong national commitment to higher education and financial support from the European Commission, expenditure per student on higher education institutions almost doubled in Estonia between 2008 and 2015, a much larger increase than in all but two other OECD countries (Poland and the Slovak Republic). A contemporaneous decline in the number of students contributed to this change. However, while the full-time equivalent number of students declined by 22% between 2008 and 2009, total expenditure on higher education institutions increased by 45% over the same period (calculations from OECD (2018[4])).
Higher education expenditure is also outpacing economic growth; its value as a share of GDP increased from 1.3% to 1.8% from 2008 to 2015. By comparison, the OECD median of higher education expenditure relative to GDP grew by just 0.1 percentage point during the same time period, and only the Slovak Republic grew at faster pace among OECD countries (calculations from OECD (2018[4])). If current economic trends persist, the capacity of Estonia to invest in higher education may also continue to improve.
Educational spending per student is lower in professional higher education institutions (HEIs) than in universities
Spending per student in professionally-oriented HEIs generally is less than in universities, due to the fact that professional HEIs typically tend to carry out fewer R&D activities (Lepori and Kyvik, 2010[5]). In Estonia, the Flemish Community and the Netherlands, expenditure per student is about two times higher in universities than in professional HEIs.
However, when R&D is excluded, expenditure per student is around 10% higher in professional HEIs in the Flemish Community and the Netherlands. In contrast, in Estonia, expenditure per student is substantially (30%) lower in professional HEIs than in universities, and far below the per student spending levels in the Flemish Community and the Netherlands. In 2015, Estonian professional HEIs spent about USD 6 600 per student (parity adjusted), excluding R&D, just over one-half of the amount spent by Dutch and Flemish professional HEIs. Estonian professional HEIs tend to be small in size and scope, focusing on specialised fields of study such as health care, theology, art, aviation and defence.
Higher education funding sources are moderately diversified in Estonia
Higher education institutions in Estonia can obtain funding from a variety of sources outside of governments including, for example, households, international sources, and income from the commercialisation of knowledge and research outputs. These resources can help to ensure financial sustainability, for example in periods where the government faces budgetary austerity. Developing and maintaining private financing from private sources outside of households also helps to create ties between higher education institutions and funders that support productive collaboration in research, development, and innovation.
In 2015, private funding other than from households accounted for 17% of funding to higher education institutions in Estonia. However, this was due to particular property transactions in Estonian universities during that year; in other years, the proportion of income from non-household private sources is lower and tends to fluctuate (for example, in 2014, the percentage of higher education funding from non-private sources was 7%, while in 2013 it was 1%). This suggests that the higher education system in Estonia has yet to develop a steady and sustainable source of income from the non-household private sector.
The contribution of households to spending on higher education depends on the category of student. Students studying full-time in Estonian do not pay tuition fees since 2013, shifting the majority of the funding of student tuition from households to the government. At the same time, around 6.5% of the funding for the higher education system came from households in 2015, consisting of fees paid by other categories of students, such as part-time students and students taking programmes in other languages. Estonian higher education institutions have autonomy to set the level of tuition fees for these groups of students. Estonia also aims to incentivise institutions to attract further private investment by including related performance indicators in the institutional funding formula, such as the ratio of public to private funding from educational activities (see Chapter 4 of (OECD, 2019[3])).
Source: OECD (2018[4]), OECD Education Statistics, https://doi.org/10.1787/edu-data-en.
Estonia provides support to students through loans, grants and scholarships, though relatively few students take up the loan offer
The Estonian government spent over USD 1 100 per student on grants and scholarships in 2015. This amount is below the OECD median, though it is above the amount spent by neighbouring Finland, and around double the amounts spent per student in the other Baltic states (Latvia and Lithuania).
In 2015, Estonian households spent, on average, about USD 800 on higher education institutions, principally through tuition and other fees (e.g. administrative fees). This is in the bottom quartile of payments made by households in OECD member countries, implying a relatively low burden on households.
However, the total cost of attending higher education for students who do not live with their families is much higher than tuition and fees. Student loans can assist learners in meeting living costs and ensuring financial constraints do not limit them from completing their studies. Estonia has a public student loan system in place. However, only 5% of Estonian graduates had availed of a student loan in 2016. This may be because of the student loan interest rate, currently set at 5%, higher than in other countries. For example, in Japan, the Netherlands and Sweden, the interest rate on public student loans in equal to or lower than the cost of government borrowing, so that it does not exceed 2%. It could also be related to the fact that Estonian students tend to work longer weekly hours in their part-time jobs, and therefore have more income from employment to help defray living costs (see Section 9.5).
The availability of international financial resources is declining
In recent years, the Estonian higher education system has relied for a relatively large part on international funding, particularly from the European Commission. The proportion of the total funding accounted for by international sources has varied over time, but on average it constituted 14% of total funding between 2012 and 2015 (Table 9.3).
International funding has helped broaden the funding base of higher education, and to raise the level of spending. The initiatives co-funded by the European Union in Estonia cover a wide range of activities, from recognising prior learning (Primus Programme), to raising awareness of diverse teaching and research practices (Dora Programme), to improving graduate labour market outcomes (see Section 9.3.2).
As Estonia grows wealthier, it is likely to qualify for less international funding. Funding levels from international sources have already begun to decline and are likely to decrease further in the coming decade, due to the rapid economic growth, which reduces the ability to qualify for international financial assistance. The current allocation of European Structural and Investment Funds to Estonia ends in 2020, and the contribution of international funding, which has already reduced since 2014, will be much lower thereafter. Estonian policymakers face the challenge of ensuring that activities supported by international funding and aligned with national policy priorities find comparable funding after 2020, if they wish for them to continue.
9.2.2. Human resources
Figure 9.3 shows the position of Estonia within the OECD distribution on the scorecard of indicators related to human resource inputs into higher education.
Estonia has a relatively large proportion of older staff, and working conditions could be more attractive for young staff
An ageing body of academic staff can have significant budgetary implications, as older staff are more likely to be in senior positions and therefore have higher salaries. Estonia had a relatively large cohort of older academics in 2016 (the proportion of academic staff older than 60), making up 22% of total academic staff, in the top quartile of OECD countries.
In addition, a larger older cohort implies that it will be necessary to attract a large number of younger academic staff in the near future, as the older employees retire. In Estonia, the share of academic staff younger than 35 in 2016 was 16%, in line with the OECD median; while the share of staff aged 35-44 was above the OECD median. Full-time equivalent staff numbers have declined slightly in the most recent years (by about 7% between 2014 and 2016) (OECD, 2018[4]). As student numbers have also declined, this in itself does not represent a challenge for Estonia. However, adequate and competitive working conditions are necessary to maintain a stready stream of high-quality academic staff into the future.
Note: The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
In 2014, the average annual gross salary of academic staff in public and government-dependent higher education institutions was about USD 55 000 (parity adjusted) in the median OECD country. The Estonian data is not directly comparable to other countries, because it includes only university staff, while most other OECD countries include data for staff in all higher education institutions. Therefore, the data for Estonia are likely to overestimate the overall level of salary of academic staff in all institutions, as on average, university academic staff are likely to earn more than academic staff in professional HEIs, at least if salary is aligned with qualifications. In Estonia, the share of academic staff with a doctoral degree is 56% at universities, and 14% at professional higher education institutions; academic staff with a bachelor’s degree or less account for just 1% academic staff in universities, and for one-quarter in professional HEIs.
However, Estonian salary data is directly comparable to the data for Finland, which also reported data only on university academic staff. Academic staff in Estonian universities earned an annual gross salary of USD 37 5002 in 2015. By comparison, the average staff salary in 2015 was USD 47 200 in neighbouring Finland. Lower salary levels can make it difficult for higher education institutions to recruit internationally, and to attract foreign talent and Estonian academics who work abroad.
While salary is an important aspect of the working conditions of teaching staff, security and continuity of employment are also important, both for teachers and students. According to existing regulations, university councils or professional HEIs should prepare an open competition process to select candidates to be hired on a permanent basis. Non-permanent contracts may be used if a position cannot be filled through the open competition process.
Notwithstanding these regulations, a relatively low share of teaching staff are employed based on permanent contracts. In 2016, 45% of academic staff with teaching duties in Estonia had a permanent contract. This is lower than in the Flemish Community, the Netherlands and Norway (Figure 9.4).
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Notably, in contrast to other jurisdictions, in Estonia, the share of teaching staff with permanent contracts does not vary substantially with age; older Estonian academic staff are as likely to be on non-permanent contracts as younger staff. Estonia plans to establish a system of tenure for academic staff in new higher education legislation, which may result in an improved academic staff profile in terms of age and permanence of employment.
Women represent around 50% of academic staff in Estonia
The share of women among academic staff is nearly 50%, placing Estonia in the top quartile of the OECD distribution, along with Finland and its Baltic neighbours Latvia and Lithuania. This gender balance holds for all age groups; the share of women is 51% among both staff younger than 35 and staff in the age bracket of 35-44 years-old, and it is 52% among 45-59 year-olds. Estonia and New Zealand are the only countries with such a balanced gender composition of academic staff across all age cohorts (excluding the cohort older than 60, where the share of women is around 40% for both countries).
Balanced gender participation in the academic workforce does not guarantee gender equality in the profession. Women often remain underrepresented at senior levels of academia and management in higher education (see Chapter 4 (OECD, 2019[3])).
Estonia spends a large proportion of higher education current expenditure on teaching staff relative to the OECD median, but very little on non-teaching staff
The distribution of current expenditure among cost items varies across higher education systems, shaped by how higher education activity is organised. In some systems, higher education institutions offer more administrative and logistical support to their academic staff than in others, and therefore employ more non-academic staff.
Overall, in 2015, staff expenditures accounted for 63% of the current expenditure of Estonian higher education institutions, in the bottom quartile of the OECD distribution.
Source: OECD (2018[4]), OECD Education Statistics, https://doi.org/10.1787/edu-data-en.
The distribution of staff expenditures between teaching and other staff is atypical among OECD countries. Teaching staff expenditures account for 56% of current expenditure, the highest share in the OECD area after Austria and Greece, while expenditure on non-teaching staff represents just 7% of current expenditure, the lowest proportion among OECD countries except Austria.
There are fewer academic staff per student than in most other OECD countries
Contact time spent by academic staff with students can be valuable to enhance student learning. Academic staff can teach or support students through lectures, tutorials and practical sessions, as well as by providing individual advice and feedback. In the absence of other data on the quality of teaching and learning in higher education, staff-to-student ratios are often used as an imperfect proxy for learning quality, based on the assumption that fewer students per staff member allows for a greater level of student-teacher interaction.
In Estonia, there were 0.072 academic staff members per student in 2016, or approximately one academic staff member for every 14 students. This is a larger ratio than the OECD median (1:15) and also larger than the ratio in neighbouring Finland, Latvia and Lithuania. However, it should be noted that staff-student contact time also depends on the breakdown of academic staff time between teaching, research or other tasks (see Chapter 3 of (OECD, 2019[3])).
9.3. Education
Highlights
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Estonia has an overall high level of access and attainment in higher education. This is noteworthy, since it does not offer short-cycle higher education programmes, which contribute to the high levels of attainment in many OECD countries. Access to higher education is unequal across demographic groups, though less so than in many other countries.
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Estonia has a large proportion of entrants3 to higher education who are 25 or older, and a relatively small proportion of part-time students. This is atypical among OECD countries, in which older students typically study on a part-time basis. Estonian students work and have dependent children at rates above the OECD average.
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Estonia has had an especially low rate of completion (51%) within three years from the expected time, the lowest among OECD countries reporting this indicator.
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Estonia has a policy of attracting international students that includes direct financial incentives to institutions. The proportion of international students in Estonia in 2016 is near the OECD median, and rapidly rising.
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Young higher education graduates aged 16-34 in Estonia performed relatively well on literacy and numeracy proficiency in the OECD Survey of Adult Skills compared to those with lower levels of educational attainment. They were also more likely to report that they are in good health and they tend to trust others.
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In 2016, higher education graduates earned about 20% more on average than those without higher education. According to data from the Survey of Adult Skills, higher education graduates younger than 35 are also less likely than upper secondary graduates to work in jobs with routine tasks where little learning is involved.
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However, employment premia for graduates appear to be smaller than those observed in other OECD countries. For example, in Estonia, the employment rate of higher education graduates in 2016 was just 1% above that of individuals with only upper secondary or post-secondary non-tertiary education. This could be attributed to the current labour market in Estonia, where employment rates are high in general and there are shortages of qualified staff in some industries.
9.3.1. Access, student profile, completion
Figure 9.6 shows a detailed overview of the benchmarking scorecard indicators related to higher education access, profile of students and their success in completing their studies.
Note: In Estonia, all entrants are included in the indicator on “first time entry rates to bachelor’s or equivalent programmes”. The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Over 40% of Estonian 25-34 year-olds have a higher education degree
Higher education attainment among Estonia’s 25-34 year-old age cohort was just below the OECD median in 2017. This could be partly related to the country’s focus on higher-level programmes (bachelor’s, master’s and doctoral), and the absence of short-cycle programmes, which were reclassified as vocational education in Estonia in 2009. For example, higher education attainment in Estonia is just above that of Finland, another country where short-cycle higher education programmes are not available.
For expected entry rates to bachelor’s programmes, Estonia lies above the median of the OECD distribution, with 60% of young people expected to enter a bachelor’s programme at least once in their lifetime based on current age-specific entry patterns. Students in Estonia are also more likely to be studying for higher qualifications; over one-third of higher education students in Estonia are enrolled at the master’s or doctoral level, a proportion close to the top quartile of the OECD distribution.
Access to higher education varies by social background, though less than in other OECD countries
In Estonia, as in other OECD countries, higher education enrolment rates vary according to family background. Young adults (aged 18-24) whose parents did not complete higher education are about half as likely as those whose parents did attain a higher education qualification to enter a bachelor’s or long first degree (integrated bachelor's/master's long-cycle study) programme. The gap in access by parental education is narrower in Estonia than in many other OECD countries. Estonia ranks 6th among the 16 countries with available data on this indicator (i.e. Estonia has the 6th narrowest gap in entry rates).
Women completed their bachelor’s studies in larger proportions than men in all countries with available data, but the gender gap in completion observed in Estonia is the largest among the 16 OECD countries apart from Finland. Some 42% of women who started their studies in 2008 completed on time (in 2011), compared to 22% of males.
Fewer higher education students complete their study programmes than in many other OECD countries
Only about half of entrants to higher education who started their bachelor’s studies in Estonia in 2008 had graduated by 2014, three years after their expected graduation time. This is the lowest rate among the 16 OECD higher education systems with available data.
Women completed their bachelor’s studies in larger proportions than men in all countries with available data, but the gender gap in completion observed in Estonia is the largest among the 16 OECD countries apart from Finland. Some 42% of women who started their studies in 2008 completed on time (in 2011), compared to 22% of males.
Few students study part-time, even though many start their studies when they are 25 or older
Estonia is atypical among OECD countries for having a high rate of adults who are 25 or older among entrants, and a relatively low proportion of part-time students. Denmark is in the same situation, with over one-quarter of new entrants to bachelor’s programmes aged 25 or older, and only around 10% of bachelor’s students enrolled part-time.4 Among OECD countries in general, an older student population tends to be associated with a larger share of students studying part-time, possibly because older students have less time to devote to study, due to work and family obligations.
Over half of Estonian students work during the lecture period (Hauschildt, Vögtle and Gwosć, 2018[6]). On average, they spend 50 hours a week working or studying, 20 hours of which are spent working paid jobs unrelated to studies, the highest amount among countries participating in the EUROSTUDENT survey (Hauschildt, Vögtle and Gwosć, 2018[6]).
The relatively small proportions of part-time students, together with the low completion rate, could be a function of the fee structure for higher education. Higher education is free only for full-time programmes taught in Estonian. This provides incentives for adults entering higher education to choose the full-time enrolment option, even when studying part-time might better suit their personal situation. And, because higher education institutions can ask for reimbursement of tuition fees of full-time students failing to progress at the right pace, they have weak incentives to propose part-time study. Limited support for flexible and part-time study appears to therefore limit higher education participation and, especially, study completion.
Note: See Chapter 5 of (OECD, 2019[3]) for methodological information on the indicators represented in this chart.
Source: Adapted from OECD (2018[4]), OECD Education Statistics, https://doi.org/10.1787/edu-data-en.
Estonia has a relatively high proportion of entrants to higher education with children, especially among women (Table 9.4). For students with children under 7 years-old, there are no tuition fees, regardless of study progress, making it easier for them to balance family and study commitments. In addition, students with children younger than 3 years-old have the option to undertake study activity and assessments even while on academic leave (a period during which a student can suspend studies while remaining enrolled).
The proportion of international students in Estonia is close to the OECD median
International students in Estonia – those who have entered the country for the purpose of study – are not numerous, though their numbers have been increasing in recent years. One master’s student in ten is an international student (below the OECD median), while at the bachelor’s level, 5% of students are international, a similar level to the OECD median. However, Estonia has experienced an increase in the proportion of international students, which has almost doubled between 2014 and 2016. This is one of the highest rates of increase in the OECD member countries. Estonia is now close to a 1:1 ratio between the number of incoming foreign students and the number of national students who pursue their studies abroad, as compared to an OECD median of around 2:1. Much of the international mobility to Estonia is of a regional nature, with half of international students coming from neighbouring countries, in particular Finland (where 40% of all international students originate).
Estonia will benefit most from international students if they can be retained after graduation to meet labour market needs. However, international students have a comparatively low rate of entry to the Estonian labour market. Only 20% of bachelor’s and master’s international students stay in Estonia after graduation compared to, for example, around 60% of bachelor’s and 40% of master’s international students in Norway.
International students enrolled in occupationally specific programmes offered at professional HEIs are more likely to find employment in Estonia after graduation than those enrolled in universities (Estonian National Audit Office, 2015[8]; Estonian Ministry for Education and Research and Archimedes, 2015[9]). However, the proportion of international students is much lower in professional higher education institutions (1%) than in universities (8%), and as professional HEIs do not offer programmes in English, students studying there must already speak Estonian, which also makes subsequent labour market integration an easier process.
9.3.2. Graduate outcomes
Figure 9.8 shows the position of Estonia within the OECD distribution on the set of scorecard indicators associated with the outcomes of graduates.
Note: The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Higher education graduates in Estonia have high levels of literacy and numeracy proficiency
Internationally comparable measures of higher education learning outcomes are not currently available. However, the OECD Survey of Adult Skills can provide some insight into the cognitive and workplace skills of young graduates. These data allow for the performance assessment of higher education graduates in basic skills such as literacy and numeracy.
In Estonia, around three-quarters of 16-34 year-old higher education graduates reached level 3 of the proficiency scale of the Survey of Adult Skills (PIAAC), in both literacy and numeracy, slightly above the OECD median level. A proficiency level of 3 implies an ability to understand and respond appropriately to dense or lengthy texts, and complete tasks that require an understanding of mathematical information that may be embedded in unfamiliar contexts.
When compared to upper secondary graduates, and controlling for basic demographic and social characteristics, young Estonian higher education graduates were substantially more likely to reach level 3 on both the literacy and numeracy scales than individuals with only upper secondary education. The odds ratio5 of reaching proficiency level 3 for 16-34 year-old higher education graduates, compared to individuals with only upper secondary education, is over 2 for both numeracy and literacy proficiency, slightly below the OECD median.
Higher education also yields social and personal benefits
Higher education graduates younger than 35 were more likely than individuals with only upper secondary education to report more positive social outcomes in Estonia, according to their reports in the background questionnaire of the OECD Survey on Adult Skills. These indicators show that substantial non-monetary benefits are associated with higher education, even though these benefits might be less pronounced in Estonia than in other countries in some cases.
For example, the odds ratio of reporting trust in other people was about twice as large for higher education graduates, as compared to upper secondary graduates (close to the OECD median level). Higher education graduates were also more likely than upper secondary graduates to report being in good health (1.6 higher odds, compared to upper secondary graduates), though the difference between these groups is smaller than in most other OECD countries.
The economic benefits of higher education for graduates are mixed when compared to other countries
About 90% of Estonian higher education graduates under 30 are employed or in education. Among 25-34 year-old graduates of higher education, the employment rate was nearly the same as that for graduates of upper secondary education (or post-secondary, non-tertiary education) in 2017. Higher education graduates with a bachelor level qualification do, however, achieve a 20% earnings premium on average.
The limited labour market advantages of Estonian higher education graduates can be attributed, in part, to two disparate factors. First, Estonia has experienced a large emogration of young higher education graduates relative to other OECD countries, whose earnings are not captured in national labour market indicators. Jaggo, Reinhold and Valk (2016[10]) estimate that information on labour market outcomes cannot be obtained for over 10% of Estonian graduates, who are most likely living abroad.
Second, Estonia has a relatively high level of labour market inactivity, due to a variety of reasons. The share of young people with dependent children is relatively high in Estonia, with 40% of women and over 20% of men in the 18-29 year-old cohort having at least one child (Table 9.4). Family care is a common reason for labour market inactivity. Furthermore, young men usually spend a year serving the national conscript obligation, and a common period to undertake this duty is immediately after graduation. Therefore, it is not surprising that that many Estonian graduates are inactive, even though few are involuntarily unemployed. The share of Estonian graduates younger than 30 who are inactive and not in education (10%) is the fifth-highest in the OECD area, whereas the share of unemployed, not-in-education graduates (2%) is the sixth-lowest.
Apart from these factors, other indicators point to a more positive picture of graduate labour market outcomes in Estonia, also in comparison to other OECD countries. Less than 5% of Estonian higher education graduates reported working in jobs with routine tasks in the Survey of Adult Skills, one of the lowest shares in the OECD area.
The Estonian government is seeking to improve the labour market outcomes of graduates
The government set a target of 88% for the employment rate of higher education graduates by 2020, and also has put in place a number of policy initiatives to enhance the labour market relevance of higher education (Table 9.6). For example, the information needed to monitor and improve the employment situation and working conditions of graduates is being gathered through a national graduate survey. In addition, evidence to support planning for future provision is generated through OSKA, a forecasting tool used to anticipate labour market and skills needs based on quantitative and qualitative evidence (European Commission, 2017[11]).
The government has introduced a number of measures to ensure employment for higher education graduates. The share of graduates employed or in education is included in the formula funding, providing a financial incentive to higher education institutions to ensure that higher education programmes confer the necessary skills for further study or work.
The graduate employment rate is also one of the criteria involved in the quality assessment of study programme groups in Estonia (EKKA, 2011[12]). In addition, higher education institutions are required to take the needs of the labour market into account when designing new study programmes under a government regulation on the Standard of Higher Education (Estonia, 2009[13]).
Estonia aims to have some form of work-based learning included in all higher education programmes (European Commission/EACEA/Eurydice, 2016[14]). In particular, the more professionally-oriented programmes are required to include a traineeship, a period of work-based learning which typically takes place following the completion of academic work on a programme and makes up a minimum of 15% of the study load. Since 2016, PRÕM, a programme co-funded by the European Union, aims to favour co-operation between institutions and enterprises for the development of work-based learning in higher and vocational education, through creating programmes where most study is completed in the workplace rather than in lectures.
9.4. Research and engagement
Highlights
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The higher education research and development sector plays a leading role in the research and innovation system in Estonia, with 56% of all researchers in the country working in higher education in 2016.
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Gender parity among researchers has been reached in all but the oldest age groups. Overall, in 2016, women researchers made up almost 45% of the total cohort of researchers in the population.
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Survey data suggests that Estonia achieves relatively high levels of collaboration between business and the higher education sector compared to many other OECD countries. This higher level of collaboration also extends to small and medium enterprises in Estonia, which report one of the highest levels in the OECD of collaboration on innovation with the higher education sector.
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In 2016, in Estonia international scientific collaboration, as measured by joint authorship of scientific publications, was close to the OECD median. In the same year, net flows of scientific authors were positive for Estonia, suggesting a net brain gain of researchers.
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Estonia produces a lower volume of publications overall per 1 000 people aged 25-64, with 2.5 publications in 2017, below the OECD median. In 2017, over one-tenth of all Estonian publications were among the 10% most cited publications, the same level as the OECD median.
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Estonia is in the bottom quartile of OECD countries in the amount of scientific knowledge that is made publicly available. In total, 23% of publications from Estonian research activities were available in some form of open access in 2016, a proportion which is among the lowest in OECD countries.
9.4.1. Inputs and activities
Figure 9.9 provides a detailed overview of the benchmarking scorecard indicators associated with research inputs and activities.
Note: The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Estonia has strengthened R&D capacity in recent years
Estonia has prioritised the development of national capabilities in research and development in recent years. While previous national research strategies have focused on increasing investment and building capacity, the most recent strategy covering the period of 2014-2020 is geared towards harnessing the value created by the R&D sector in Estonia for the good of the economy and society (Estonian Ministry of Education and Research, 2014[15]).
The higher education sector plays a larger role in national R&D activity in Estonia than in many other OECD countries. The proportion of researchers working in the higher education sector was in the top quartile of OECD countries in 2016, comprising 56% of all researchers in Estonia, close to the maximum proportion of 63%.
There is marginally greater emphasis on basic research (research aimed at creating new general knowledge without a specific purpose in mind) in Estonia than in many other OECD countries, with 59% of higher education research classified as basic research in 2015, slightly above the median OECD level of 54%. However, as much of the funding in higher education research and development in Estonia is project-based, the apportionment of investment between different types of research is volatile over time (Figure 9.10).
Source: Adapted from OECD (2018[16]), OECD Science, Technology and R&D Statistics, https://doi.org/10.1787/strd-data-en.
Basic research is crucial to expanding and improving the body of knowledge available for the benefit of society, and the higher education sector is where the majority of basic research is carried out across the OECD. At the same time, many public research investment strategies in OECD countries are targeting increases in spending on applied research and experimental development, to orient research more towards tackling specific challenges. This is also the case in Estonia, where specific policy instruments support the development of applied research in areas of smart specialisation, business R&D and co-operation between higher education institutions and business (see Chapters 6 and 7 of (OECD, 2019[3])).
Gender balance in academia has largely been achieved
The relative proportion of female researchers overall in Estonia is in the top quartile of OECD countries. Gender parity has been reached in all age groups except the over-60 category; in total, 44% of researchers in the higher education sector were women in 2016. This also reflects Estonia’s strong relative position in terms of gender equity among academic staff as a whole (see Section 9.2.2).
Estonia has put in place a range of supportive policies which promote gender equity, including gender balance monitoring in the hiring process, and alignment with the principles to support gender equity in the research profession included in EU policy initiatives such as the European Charter and Code of Conduct for the recruitment of researchers, and the European Research Area Innovation Committee (see Chapter 4 of (OECD, 2019[3])).
There is a relatively low supply of doctorate holders and researchers in the population
The proportion of doctorate holders in the population is below the OECD median in Estonia, at 0.6% of the population, compared to the OECD median proportion of 1%. At the same time, the numbers of doctoral graduates from Estonian higher education institutions appear to be growing slowly; there were 190 new doctoral graduates in 2012, while by 2016 the number had increased to 239 (OECD, 2018[4]).
A similar picture can be seen with regard to the proportion of researchers in the population in Estonia. Overall concentrations of researchers in the labour force are also at the lower end of OECD countries, below median levels, and they have been static over the period 2011-2016. As Figure 9.11 shows, other countries with lower proportions of researchers in the population have been able to surpass Estonia in terms of growth in recent years.
According to the OECD Careers of Doctorate Holders survey, around 10% of the population with a doctoral qualification living in Estonia were foreign citizens in 2016, the same proportion as the OECD median level. Estonia has potential to increase both the numbers of native and foreign doctorate holders further in the future. The numbers of foreign doctoral candidates choosing Estonia for their studies has grown by more than 50% between 2013 and 2016 (from 218 in 2013 to 339 in 2016). At the same time, the numbers of Estonian doctoral candidates choosing to study in other OECD countries has increased at a much slower rate, from 264 candidates in 2013 to 289 in 2016 (OECD, 2018[17]).
Source: Adapted from OECD (2018[16]), OECD Science, Technology and R&D Statistics, https://doi.org/10.1787/strd-data-en.
Estonia appears to have built solid links between higher education R&D and the business sector
Estonian higher education appears to have created stronger links with the business sector compared to some other OECD countries. The proportion of higher education expenditure on research and development (HERD) funded by business in 2016 was slightly above the median level of OECD countries. It should be noted, however, that funding for HERD from business is generally low across the OECD, with the median OECD country receiving just 5% of higher education research and development funding from business in 2016.
Enterprises also are more likely to co-operate with the higher education sector on research and development (R&D) in Estonia. This may reflect the fact that the higher education sector performs a comparatively greater portion of R&D compared to other OECD countries, making it a more prominent potential partner for collaborative efforts with businesses. In the 2014 Community Innovation Survey, Estonia ranked in the top quartile of OECD countries in the level of reported collaboration between higher education and small and medium enterprises on innovation.
Co-operation between business and higher education is particularly visible in the information and communications technology (ICT) sector. For example, the IT Academy is a joint initiative of the government, businesses and higher education institutions to support students, learning and research in the ICT sector and related areas of study.
Estonia is building on this record by introducing new initiatives to further strengthen collaboration with business. For example, the recently-formed ADAPTER network of universities and research institutes creates a framework for co-ordinating education and other contract services to business enterprise, while the NUTIKAS initiative provides targeted funding for public research institutes to support applied research and develop commercial products in conjunction with business enterprises.
9.4.2. Internationalisation and knowledge production
Figure 9.12 shows the position of Estonia within the OECD distribution on the scorecard of indicators related to internationalisation of research and development activities and knowledge production.
Note: The indicators represented in this chart are a subset of the indicators presented in Table 9.1. The coloured circle represents Estonia’s position in the OECD distribution. The circle is not coloured when data are available for less than half of the OECD countries (the minimum number of countries with available data is 14). For more information on methodological issues and metadata, see OECD (2019[3]). Follow the Statlink to download the data underlying the calculation of the scorecard.
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
International collaboration could be further improved
As a small economy, Estonia recognises that international collaboration is essential for achieving their R&D goals. Numerous policy initiatives have been put in place to promote greater internationalisation of higher education research and development, including the Mobilitas programme, which funds doctoral and post-doctoral positions for international researchers.
Bibliometric indicators can be used to provide some indications of the level of mobility of researchers and collaboration on research across national borders. These measures suggest that while flows of researchers in and out of Estonia in any one year are small as a proportion of overall researchers, net flows of scientific authors as a proportion of the overall research community over the period 2002-2016 were positive, and were in the top quartile of OECD countries. In that period, Estonia experienced a net gain of 4 researchers for every 100 full-time researchers in the population (Figure 9.12).
Estonia’s contribution to research documents based on international scientific collaboration is close to the OECD median, with 29% of research documents published as the result of international joint work.
Volume of outputs are lower, but the impact of research appears higher according to bibliometric indicators
Estonia produces fewer publications overall per 1 000 people aged 25-64, with 2.5 publications in 2016, below the OECD median level and less than one-half that of the most productive countries (Figure 9.12). But Estonia performs better on the impact of the publications, as measured by citations of scientific documents produced by researchers. In 2017, over one-tenth of all Estonian publications were among the 10% most cited publications, placing Estonia at the OECD median level on this indicator.
The impact of research is often measured by considering how successfully knowledge is transformed into useful products or services. Patent application statistics are one way of measuring this. The Estonian higher education R&D sector is responsible for a relatively high proportion of overall patents. This is unsurprising, as higher education accounts for a larger than average share of the overall R&D sector, and Estonia appears to have forged some strong links with the enterprise sector. However, the overall volume of patents from the higher education sector per 100 researchers remains relatively low, below the median of OECD countries for which data is available.
While the the number of researchers and publications per 1 000 of the population are lower than median levels (Figure 9.13), the estimated annual number of publications per researcher is slightly above the OECD median level. Estonian researchers produce an estimated 0.5 scientific publications annually, compared to the OECD median of just under 0.4 (see Chapter 8 of (OECD, 2019[3])).
Access to knowledge in Estonia is less open than in many other OECD countries
Making research results widely available through open access mechanisms can support research efficiency and quality by reducing duplication, and by increasing the ability to replicate results and generate knowledge spillovers (OECD, 2019[3]). Estonia is in the bottom quartile of OECD countries in making knowledge publicly available. In total, 23% of publications were available in some form of open access in 2016, a proportion which is among the lowest in OECD countries.
Open access may become more common in the future in Estonia, as a new Open Science strategy has been developed to cover the period 2016-2020, based on the outcomes of the deliberations of a specially established expert group on open science in 2015 (Open Science Expert Group of the Estonian Research Council, 2016[18]). Estonia is also aligning national open science infrastructures to the European Commission’s European Open Science Cloud, which has a goal of ensuring that all scientific publications are FAIR (Free, Accessible, Interoperable and Reusable) (European Commission, 2018[19]). In addition, regulations on institutional and personal research funding require all publications arising from a supported research project or research grant to be registered on the public Estonian research portal, the Current Research Information Systems (CRIS).
Source: Adapted from OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
9.5. Scenarios for policy
This section of the note extends the comparisons drawn in the previous sections by looking forward, and presenting a set of scenarios relevant to the future of Estonia’s higher education system. The purpose of these scenarios is to provide evidence-based conjectures about future trends in areas of national policy importance, which can stimulate debate and support policy-planning exercises (Box 9.1).
Governments plan for the future of higher education in the context of a number of sources of uncertainty. Scenarios can be defined as descriptions of hypothetical futures that could occur and that, although somewhat speculative in nature, are nonetheless internally consistent and causally coherent (OECD, 2006[20]). The development of scenarios can provide support to national discussions on contextual and systemic trends, highlight possible consequences of current circumstances on higher education and the economy, and outline the main available policy directions.
In a context of increasing complexity in societies and economies, more emphasis is being placed on anticipatory exercises in the policy process (OECD, 2015[21]). Contemplating different policy scenarios can feed into the development of broad long-term strategic planning for higher education systems or pre-policy research related to particular policy topics.
Short and medium-term scenarios are likely to be more accurate and useful to the decision-making process of policymakers. The scenario exercise presented in Section 5.1 therefore focuses on the immediate decade ahead (i.e. up to 2030), and is developed using the following steps:
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statement of a subject area or issue of national policy concern and the rationale for the concern
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outline of the assumptions used to develop the set of future scenarios
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explanation of the likely impact of the assumptions on future trends
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discussion of implications for policy.
9.5.1. Continued demographic changes may pose difficult challenges for Estonia’s higher education system
Estonia is undergoing a period of demographic transition, which is affecting its higher education system and the labour market. The number of young people has been decreasing for more than a decade. This has resulted in falling higher education enrolments and a shrinking workforce. International student numbers are growing, but are insufficient to replace domestic enrolment demand. However, the number of students may start to grow again in the coming years. This poses the question of how Estonia can effectively plan for sustained growth and improvement in the higher education system in a context of uncertainty about future demand.
9.5.2. Key related evidence
Estonia’s population is among the smallest of OECD countries. It has approximately 1.3 million inhabitants (Statistics Estonia, 2019[22]), and the population has been declining and ageing in recent years. The share of young people entering higher education has also reduced; entry rates of young Estonians under 25 have decreased from 53% in 2013 to 48% in 2016 (OECD, 2018[4]). As a result of these two trends, the total number of students in Estonian higher education students institutions decreased by 16% between 2005 and 2016.
However, demographic data suggests that the rate of decline could diminish in the coming years. The 10-14 year-old age cohort has begun to increase modestly, while changes to the size of the 5-9 and 15-19 year-old age cohorts have been smaller in recent years (Figure 9.14). This could allow domestic demand for higher education to stabilise in the near future, if there is no further decline in entry rates to higher education.
Estonia has managed to increase the number of international students substantially in recent years; however, these numbers are currently not large enough to offset the decline in domestic student numbers. Estonia also has a relatively high level of higher education participation among older age groups, with the proportion of students aged older than 25 already among the highest in OECD countries. In addition, enrolment rates among individuals older than 25 as a percentage of the population are above the median of OECD countries. This may limit the extent to which expanding enrolment among older students could replace falling enrolment numbers among traditionally-aged entrants.
Declining higher education enrolments and graduates are limiting the availability of skilled workforce to the labour market. Evidence suggests that the Estonian labour market is tight, i.e. in short supply of labour and skills. Unemployment is generally low, the size of the workforce is shrinking, and employers indicate skills shortages as one of the main barriers to expanding their economic activity (OECD, 2017[1]). Further declines in enrolment and graduates will worsen this problem, sharpening the constraints that skill availability already places on the growing economy.
Source: Statistics Estonia (2019[22]), Statistical database, http://pub.stat.ee/px-web.2001/dialog/statfile1.asp.
While gaps in the labour market can be filled by migration, Estonia has also faced challenges in attracting and retaining skilled workers. There are a relatively small number of international immigrants compared to other OECD countries; 6 000 permanent entries of foreign citizens were registered in 2016, which is 0.5% of the total population. In addition, Estonia has had one of the highest emigration rates of skilled labour in the OECD area in the past decade, although return migration has been increasing in recent years. In 2010/11, around 16% of native-born Estonians with higher education credentials lived abroad (OECD, 2015[23]; OECD, 2017[1]).
9.5.3. Scenarios for Estonia up to 2030
Scenarios can be used to consider where the recent trends observed in Estonia might lead in future years. They can be used as a basis for contemplating how policy initiatives or contextual factors could change future enrolment in higher education; and to plan for future policy actions by considering which of the hypothetical futures presented are most desirable or most likely to be realised in the Estonian context.
Table 9.7 outlines a set of assumptions which are used to create a set of simple scenarios for future demand for higher education in Estonia. Assumptions focus on the three key subgroups of prospective higher education students; the younger cohort, the older cohort and international students. Assumptions are made for the period out to 2030 and are based on:
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the age-specific enrolment rates in higher education in Estonia and in other OECD countries, beginning from age 19
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the share of international students in Estonia, and the growth in international student numbers in other OECD countries.
Using these assumptions, two “negative” scenarios and three “positive” scenarios are generated for higher education enrolment in Estonia in the period out to 2030. Contemplating each of these scenarios in turn can help policymakers to consider ways to consolidate the system to increase efficiency in the case of more negative enrolment scenarios, or develop new initiatives to achieve more positive enrolment scenarios.
The “baseline” set of assumptions presented in Table 9.7 assumes an extrapolation of the situation as it was in 2016 (the most recent year for which data are available) until 2030, given the current enrolment rates across different age groups6. It also assumes that the number of international students will remain constant at their 2016 level. Therefore, the projected changes to enrolment using the baseline set of assumptions are based purely on the changes in the underlying demographics.
The main alternative assumptions on the changes to enrolment rates and international student numbers are based on the most recent (2016) levels of the same indicators in other OECD countries for which data are available. The assumptions made for growth in enrolment rates could be considered reasonable targets for Estonia to attain, given the fast-growing economy and the increasing public investment in the higher education system in recent years. In addition, they are rates that have already been achieved by at least one-quarter of the other OECD countries.
The “younger cohort growth” and “older cohort growth” assumptions increase the age-specific enrolment rates in one age group, while keeping the enrolment rates in the other age group at the same levels as the baseline. The “younger cohort growth” assumption is that the enrolment rates for people aged 19-24 will increase linearly until they reach the level of the 2016 top quartile of OECD countries (which equates to an increase of approximately 40% in enrolment rates for Estonia on 2016 levels). In the case of the “older cohort growth” assumption, enrolment rates increase by 30% on their 2016 levels by 2030, which would bring Estonia into line with the 2016 top quartile of the OECD.
Under “international growth” assumptions, the population of international students would expand and meet the growth rates achieved by the most successfully internationalised (top quartile) OECD countries over the period 2004-2016. This implies that international student numbers would increase by approximately 2.5 times their 2016 levels by 2030, to a level of over 10 000 students (compared to the 2016 level of 3 500 students).
Finally, a more negative “younger cohort reduction” assumption is included, where enrolment rates in the cohort aged 19-24, already relatively low in 2016, would continue to reduce by a further 10%. This would bring enrolment rates into the bottom quartile of the 2016 OECD distribution by 2030.
Figure 9.15 illustrates how the development of student numbers in the Estonian higher education system might unfold under these five different sets of assumptions.
Note: See Table 9.7 to see the assumptions underlying the calculations of the values for each scenario.
Under the baseline assumptions, based on a continuation of the most recent enrolment trends, Estonia can expect that enrolments will continue to fall in the short term. However, the projected trend suggests that Estonia is over the largest part of its higher education enrolment decline. In the baseline scenario, higher education enrolment should therefore contract at a slower pace in the coming years, and eventually may begin to pick up during the mid-2020s. Despite the increase in the latter part of the period, there would still be an estimated 5 000 fewer higher education students in 2030 than in 2016 (with about 46 300 students projected), making this scenario a more negative one in terms of future growth in student numbers.
In the “younger cohort reduction” scenario, which assumes a further 10% decline in enrolment rates of the young population, enrolment would fall to about 42 300 students by 2024 and only increase by about an additional 1 500 students over the following six years to 2030.
Figure 9.15 also indicates how increasing enrolment rates from different groups of students could have an impact on the overall student numbers by 2030. Enrolment rates of the younger age group (19-24) in Estonia are comparatively lower in relation to other OECD countries than those aged 25 and older. This implies that the “younger cohort growth” assumption, where enrolment rates in the 19-24 age cohorts grow towards the top quartile of OECD countries, is likely to provide greater increases in student numbers than the “older cohort growth” assumption. The “younger cohort growth” assumption implies a scenario where higher education enrolments could recover to a level of around 56 700 students by 2030, while in an “older cohort growth” scenario, the gains in enrolment might be more modest, reaching a level of 51 400 by 2030.
Under the assumptions of “international growth”, notable increases could be made to the size of the student population in Estonia. In this scenario, even if enrolment rates of Estonian students do not change from 2016 levels, the numbers of students in Estonia could be at a level of 53 100 students by 2030. However, a strong growth in the numbers of international students, without other positive changes, will also not be sufficient to return the higher education system to previous peak enrolments.
It is clear that neither demographic change alone, nor gradual increases in enrolment rates, nor substantial increases in international students will suffice to bring higher education enrolment numbers in Estonia near to their peak at the beginning of the decade. Only a composite of the three positive scenarios occurring together could restore the size of the student population to its previous peak.
Estonia could therefore consider which of the scenarios are most likely to occur or are most achieveable in the current context, and plan accordingly.
9.5.4. Implications for policy
Managing demographic transition effectively and increasing the size of the highly skilled workforce – in part by expanding or sustaining the number of skilled graduates – is likely to be a policy priority for Estonia in the coming years.
Without successful intervention, the baseline scenario of declining enrolments and the more negative “younger cohort reduction” scenario are likely to create a continued shortage of advanced skills. There are a number of options to sustain or increase the number of higher education graduates, many of which Estonia is already pursuing. Potential policy choices include demand-side options, where policy efforts are made to increase demand for existing higher education services and achieve the more positive scenarios for enrolment outlined in the previous section.
However, supply-side policy initiatives, where efforts are made to create greater efficiency and effectiveness in the current system, can also be pursued to reduce potential adverse impacts in the case of the more negative scenarios occurring, or to streamline the system to prepare for future enrolment increases.
Demand-side options to achieve more positive scenarios
Estonia has positive prospects for increasing future demand for higher education. The economy grew by 17% between 2010 and 2017 (OECD, 2018[24]). The average salary level increased by 18% in the same period (OECD, 2018[25]), and unemployment is generally low (OECD, 2017[1]). The growing economy, together with Estonia’s reputation as one of the most advanced digital economies in the world, has created the potential for attracting both skilled and non-skilled workers into the country. Net migration has been positive in recent years and reached a record high in 2017, as more Estonians returned home to live, and increasing numbers of immigrants arrived from the surrounding regions (Statistics Estonia, 2019[22]).
If Estonia is also able to build on the progress and strengths of its higher education system and achieve one or more of the growth scenarios outlined in the previous section, the adverse effects of falling enrolments could be mitigated more quickly and the level of adjustment required by the system could be reduced.
Achieving the “younger cohort growth” scenario
Achieving higher enrolment rates among the 19-24 year-old cohort could have the strongest potential impact on enrolment numbers (Figure 9.15). Systemic features could be addressed, which could increase future enrolment rates in the younger age cohort.
Estonian students generally do not finish upper secondary school until age 19, and increasingly are choosing not to immediately continue to higher education (OECD, 2019[3]). Apart from conscription requirements which delay entry in some cases, the tight labour market ensures that potential students can easily find jobs. Relatively low levels of financial support for living costs of full-time students, combined with higher fees for part-time students, make continued labour market participation for secondary graduates attractive. Strengthening support for living costs while studying could help to raise enrolment rates in younger cohorts, and boost their chances of completing their studies.
Estonian 15-year-olds are high performers in PISA, and impact on socio-economic factors on student performance is lower in Estonia than in most OECD countries (OECD, 2016[26]). Therefore, students from lower socio-economic backgrounds are more likely in Estonia than in many other countries to have the necessary foundational skills to progress to higher education. A strong student support package could also increase opportunities for students from disadvantaged backgrounds to enter and complete higher education.
The degree apprenticeship model in the United Kingdom was launched in 2015, and combines a period of apprenticeship with higher education study, which leads to a qualification at bachelor’s or master’s level. Apprentices typically spend 20% of their time studying in the higher education institution and the remainder of their time in the workplace. Qualifications for entry can be specified by the employer, depending on the field or industry of the apprenticeship.
The apprenticeships are supported financially by the government through a designated degree apprentice fund. Apprentices do not pay tuition fees, and are paid at least the national apprentice wage by the employer. Students therefore are less likely to have debt at graduation, and will have developed labour market relevant skills along with completing a recognised higher education qualification. Analysis by the Office for Students in the United Kingdom has also found that degree apprenticeships benefit both upper secondary graduates from disadvantaged backgrounds and mature learners, potentially increasing social mobility.
An independent evaluation of the degree apprentice fund has also found that participation in the process has been transformative for many higher education providers and is allowing for stronger and wider collaborative partnerships to be built between higher education and enterprise. The degree apprenticeship has also been used as a successful means to address specific skills gaps, for example in public sector areas such as nursing, social work and policing.
Source: Warwick Economics & Development (2019[27]), Evaluation of the Degree Apprenticeship Development Fund - Report to the Office for Students by Warwick Economics & Development,
https://www.officeforstudents.org.uk/media/7cd79cd8-536f-49e5-a55f-ebd83b344b16/dadfevaluation.pdf.
An additional policy option for Estonian higher education is to recognise and formalise students’ relationship with the labour market. Since there is high demand in the labour market in some industries, scope exists to build more innovative formal arrangements between the higher education sector and enterprises to support dual learning or longer paid student work placements than currently exist. This would help in achieving a better balance between study and work obligations. New programmes of this nature could allow students to enter studies with greater financial support, while also helping to meet labour market demand and achieve Estonia’s aim of increasing work-based learning. For example, the United Kingdom recently introduced a “degree apprenticeship” model of study, which leads to a qualification at bachelor’s or master’s level (Box 9.3).
Achieving the “older cohort growth” scenario
Estonia already has a relatively high proportion of older students; however, in contrast to other OECD countries, these students tend not to study part-time and therefore often enrol in full-time education while working and managing other personal obligations. This is as a result of the tuition fee structure in Estonia; students studying full-time in Estonian do not pay tuition fees if they can make enough study progress, while part-time students are charged fees that are at the discretion of institutions (see Chapter 3 of (OECD, 2019[3])).
More flexible study options could help attracting new entrants and support lifelong learning or further study for existing graduates. Other jurisdictions, for example the Flemish Community of Belgium, have created flexible study modalities that are specifically aimed at students who wish to combine work and study (Box 9.4). This could also help to achieve Estonia’s ambitious future vision for lifelong learning of its citizens (Estonian Ministry of Education and Research, 2014[2]).
The Flemish Community is the only jurisdiction in the European Union that requires all higher education institutions to offer part-time studies and that all degree programmes be provided in the form of flexible learning pathways. The Flexible Learning Paths Act (2004) provides the framework to support flexible pathways, based on a definition of study programmes as an aggregate of modules, each of which is a well-defined unit of learning, teaching and assessment activities. Higher education institutions validate the completion of a module by issuing a credit certificate. Tuition fees are based on the number of credits in which students are enrolled, and there is no distinction between part-time and full-time students in terms of financial support. This, together with other policies on flexible study provision, is likely to contribute to the comparatively high share of students studying part-time in the Flemish Community.
Source: OECD (2019[3]), Benchmarking Higher Education System Performance, https://doi.org/10.1787/be5514d7-en.
Finally, Estonia could consider introducing an enhanced system for the recognition of prior learning. Of the four jurisdictions participating in the benchmarking exercise, Estonia was the only one that did not report having a policy in place for the full recognition of prior learning. Prior learning can be recognised in some cases. For example, the TULE programme funded the completion of higher education for students who had previously achieved 50% of the credits towards a qualification, implying the recognition of credits previously earned within the higher education system. However, Estonian higher education institutions cannot admit students solely on the basis of recognition of prior learning. Furthermore, institutions themselves can also set various conditions to RPL processes. One-fifth of Estonian students leave school annually without an upper secondary qualification (Estonian Ministry of Education and Research, 2018[28]), meaning that a significant proportion of the population may not have any alternative pathway to access the higher education system without first obtaining an upper secondary qualification.
Creating a national infrastructure for the recognition of prior learning, combined with flexible study options, could help to increase demand and achieve the “older cohort growth” scenario. National indicators and statistics related to this objective could be defined and collected, which would help to monitor progress.
Achieving the “international growth” scenario
Internationalisation of the student body has progressed at a relatively fast pace in Estonia, but stepped-up efforts to attract students could help to further increase demand from abroad and realise a scenario of higher international growth.
Of particular importance for Estonia concerning internationalisation are the connections to the region, including Scandinavia and the Baltic states. Estonia is well positioned to benefit from its membership of the Council of the Baltic Sea states as well as its membership of the European Union and other regional networks. For example, Nordplus, a regional co-operation, provides opportunities for short-term student mobility at all levels of education within the Baltic/Nordic region, which could help increase future regional demand for study experiences abroad. In addition, continued participation in European Union student mobility initiatives means that Estonia can benefit from the Europe-wide drive to further increase student mobility.
Strategic programme partnerships with higher education systems in neighbouring regions can allow Estonia to tap into wider regional demand. There are some indications that Estonia is already starting to move towards harnessing these regional links. For example, regional joint degree partnerships, such as the University of Tartu joint programme with the University of Stockholm on Sociolinguistics and Multilingualism (University of Tartu, n.d.[29]), can fulfil government objectives of increasing student mobility and promoting the Estonian language and culture.
Joint campus arrangements with peer countries can also promote stability in the system and increase demand for education in Estonia. A recent example in Estonia is the establishment of a campus of the Finnish Hospitality School in Tallinn (Haaga-Helia, n.d.[30]). Developing more of these linkages would lead to a strengthened system with more potential to draw from the regional pool of potential students.
Estonia could also increase demand from international students outside of the local and European region. This would require a broader strategy and package of measures covering both the education and research functions to compete in the global marketplace, as research performance and reputation weigh heavily in the decision-making process of prospective international students. Estonia has a large and varied suite of scholarship programmes that support international inward and outward mobility of both domestic and foreign students, as well as academic staff (see Chapters 5 and 6 of (OECD, 2019[3])). These could be continued or even expanded. However, without considerably increasing capacity for higher education research and development, it may be more difficult in the longer term to achieve and maintain substantial growth in international student numbers from outside the local region, and outside the EU.
Supply-side options to manage more negative scenarios
Many OECD countries are experiencing a decline in higher education student numbers, and with this, an increase in per-student costs, as fixed costs prove difficult to reduce. In Estonia, where full-time equivalent student numbers have fallen by almost 16% between 2010 and 2014, expenditure per student has risen by 60%.
However, increased per-student funding can only deliver benefits if used effectively. While successful policy initiatives could lead to the achievement of the more positive growth scenarios, these will take time to realise. In the meantime, Estonia can adopt supply-side policy initiatives to achieve near-term efficiencies and to increase supply to the labour market from the existing demographic base.
Estonia can improve efficiency and prepare for the future
In Estonia, changes in enrolment have impacted differently across institutions (Figure 9.16), making effective future planning at both system and institutional level more difficult. For example, some institutions may be maintaining larger buildings than necessary, or could be left with large payrolls relative to their revenues, and be unable to reduce costs effectively.
Possible remediation initiatives include institutional mergers and other forms of consolidation and redeployment of staff. Some countries in the region, such as Denmark and Finland, have used mergers to gain efficiency and quality in their higher education systems. By preserving the existing institutional units, mergers can maintain the role of institutions to cater to people living in remote locations or preferring less popular programmes of study (Williams, 2017[31]). Estonia has also made use of mergers to reduce the number of institutions in recent years, which can help existing institutions dealing with enrolment fluctuations (OECD, 2019[3]).
However, Estonia must also be mindful of possible future growth in demand and ensure that flexibility remains to expand the system to meet future needs. Other forms of consolidation within the higher education system, such as building alliances or networks between institutions in specific regions, programmes or categories of students, could also be a way to manage fluctuating demand. Estonia, with a smaller higher education system and a relatively flat governance structure, could be better placed than many other countries to pilot some innovative means of collaboration between institutions.
Note: The numbers in brackets in the legend show the number of student enrolments in 2015.
Source: European Tertiary Education Register (ETER) (2018[32]), ETER Database, www.eter-project.com/.
Redeployment of academic staff throughout the higher education system is difficult due to the specialised nature of staff. In Estonia, this difficulty could be compounded by the fact that the terms of employment for academic staff are within the remit of higher education institutions, and as a result, moving between institutions can imply a change in working conditions. Estonia has already brought forward legislation that could standardise the tenure qualification conditions of academic staff.8 Standardising a wider range of terms and conditions for higher education staff could have the additional benefit of creating more flexibility in the workforce and also improving career prospects for younger academics, given that more than one-fifth of current academic staff in Estonia are likely to reach retirement age in the coming decade.
Estonia could also use the recent changes in the system as an opportunity to pilot new models of organising teaching and research in higher education institutions, other than the traditional “department-based” model. There is an increasing recognition of the importance of interdisciplinary research and study programmes to promote entrepreneurialism and innovation in higher education (Box 9.5). While interdisciplinary programmes already exist in Estonia, they are mainly at the master’s level. Estonia could therefore explore the possibility of creating incentives in the system for introducing interdisciplinary curricula at other levels of education. This could have the joint benefit of maximising the recognised benefits of interdisciplinary activity and also work towards building a less specialised future academic workforce with interdisciplinary knowledge and competencies.
HEInnovate is a framework developed by the European Commission and the OECD for higher education institutions to self-assess how they manage resources; build organisational capacity; collaborate with external stakeholders; create and nurture synergies between their core functions; embed digital technology; promote entrepreneurship; and support knowledge exchange with the wider world (European Commission and OECD, 2018[33]).
The framework puts a high emphasis on the value of interdisciplinary activity, and recognises that creating interdisciplinary learning and research environments is a core task required to create an entrepreneurial university. Linking interdisciplinary education and research to important local or societal challenges can stimulate promotion and participation in interdisciplinary education environments. According to the framework, interdisciplinary education activities should be publicly recognised and awarded, for example cross-faculty summer schools, interdisciplinary research groups, cross-campus idea competition or campus-wide student associations.
Tackling non-completion could help mitigate adverse effects of the more negative scenarios
An additional avenue for increasing skilled labour market supply from the higher education sector is to tackle the problem of non-completion. Higher completion rates mean that more students achieve the maximum benefit from their higher education experience in terms of skill and knowledge acquisition. Furthermore, in the presence of a shrinking student and working population, high completion rates are important to minimise the constraints that skills shortages pose to the economy.
Among OECD countries with available data, Estonia had the lowest completion rate for the entry cohort of 2008, as just 51% of new entrants managed to complete their bachelor level programme within three years of the theoretical graduation rate. Given falling demand and labour market constraints, low completion represents a serious inefficiency in the Estonian system, and it is estimated by the OECD to cost Estonia around USD 40 million, or just under 10%, of higher expenditure annually (see Chapter 8 of (OECD, 2019[3])).
Increasing completion rates could deliver substantial benefits to the Estonian labour market and wider economy. National evidence suggests that the current level of non-completion is making it difficult to meet labour market demand in certain industries. Key reasons identified for non-completion include a lack of comprehensive information on the curricula, which can cause students to underestimate the requisite and workload associated with a programme; and the need for students to work to financially support themselves and gain experience (Kori et al., 2015[34]).
The Estonian government is already working to reduce non-completion rates through a mixture of initiatives including increasing funding for student support; the inclusion of non-completion rates among the indicators used to allocate formula funding to institutions and set national targets; and adopting measures to attract non-completers back into higher education. However, continued low levels of financial support combined with labour market demand even for non-completing students from certain fields of study, such as ICT (University of Tartu et al., 2015[35]), can work against the success of government efforts.
High non-completion rates are also the result of the tuition fee structure in Estonia, which incentivises full-time study even when part-time study would be the most suitable option for students. According to 2016 EUROSTUDENT data, Estonian students are much more likely to work while studying than students in other European countries (Hauschildt, Vögtle and Gwosć, 2018[6]). Estonia can consider ways to reduce the difference between the cost of studying full-time and part-time and remove the incentive to enrol full-time in order not to pay fees. Higher education insitutions already charge some fees to full-time students who do not make sufficient study progress. However, this can act as an additional impetus not to continue with studies for students who are already not progressing quickly.
As removing part-time fees would also further reduce the non-government income stream available to insitutions, Estonia could instead explore a means for full-time students to contribute financially towards their education, and use the income earned to incentivise their completion and provide additional financial supports. For example, Estonia could use additional income from the contributions of full-time students to increase financial student support.
Finally, increasing evidence suggests that well designed structures for guidance and academic and social support of higher education students can increase completion (Mann Levesque, 2018[36]; Salmi, 2018[37]). New support schemes with dedicated human resources could help to better orient students before entry and offer academic and social support (for example, remedial courses and counselling services) to students at risk of non-completion. In the Netherlands and the Flemish Community of Belgium, there has been increasing policy focus on improving student guidance in recent years (see Chapter 5 of (OECD, 2019[3])).
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Notes
← 1. This figure includes expenditure outside higher education institutions, such as government loans, grants and scholarships.
← 2. The salaries are expressed in US Dollars using purchasing power parities (PPPs) for GDP.
← 3. In Estonia, the data related to entrants are for all entrants, whereas in most other OECD countries the data refer to new entrants only.
← 4. Part-time students are those with an intended study load less than 75% of a full-time load.
← 5. The odds ratio reflects the relative likelihood of an event occurring for a certain group relative to a comparison group. If the odds ratio is greater than 1, then it is more likely that the event (scoring at level 3 or above) occurs for people in the group of interest (individuals with higher education) than in the comparison group (individuals with upper secondary education).
← 6. The extrapolation of the demographic trends is carried out by projecting forward the current size of the age cohorts in the Estonian population. For example, the number of 19 year-olds in 2022 is assumed to be equal to the number of 18 year-olds in 2021.
← 7. The number of people with a certain age in a given year is equal to the number of people who are one year younger in the previous year.
← 8. A Higher Education Act passed the Estonian Parliament on 20 February 2019, and was proclaimed by the President on 7 March 2019.