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Some features of higher education in Hungary

It is essential for every nation to have intellectual elite in order to achieve competitiveness. The actual government takes responsibility in defining the main streams of educational policy. Its role is not limited to providing the necessary means but establishing the institutional framework as well. Finally, for those taking part in education, the existence of certain conditions have to be granted so that anybody deserving to obtain a degree could do so. As a result of the of the financial and economic crisis of 2008 a new approach has been conceptualized, according to which the taxes paid have to be turned into valuable assets – namely, the state expects a certain reciprocity in return for education. The goal is to set up a modern education system that provides students with competitive and up-to-date knowledge that is sought after on the labour market. There is a state of crisis in the field of education because in every state the economic crisis has resulted in the reduction of funds in all areas, including that of education. Every state has to deal with the following questions. Should the lower classes be excluded from higher education? Should mass education be replaced by a system fostering the education of the elite and more specific and high value knowledge be conveyed instead of a generic one?  How can the costs of higher education be reduced? What kind of changes are worth implementing in order to render the knowledge behind newly acquired degrees more competitive than before? Is it worth investing as much in education as much the requital of all these changes justifies it? The theory of human capital can explain how much higher education costs in effect and whether it is worth implementing such investments. This means that the amount invested in education transforms into investment in human capital, which boosts a nation’s economic productivity and competitiveness, hence increasing market value resulting in the increase of incoming capital.

The first university in Hungary was founded in 1367 in Pécs and the University of Óbuda was set up in 1395. Hungarian universities used to be equipped with highly trained educators providing quality education to a few belonging to the intellectual elite. Recently however, public opinion on the role of higher education in society has changed. Since the 2000s Hungarian education has been offering the applicants knowledge that has become easily accessible for almost everybody. As a result of the Act of Higher Education passed in 1993, the number of entrants to higher education has drastically increased. Universities and colleges have been opened where anybody wishing to study could obtain a degree and the actual government has not been willing to limit the spread of mass education. Beside state universities and colleges, privately owned and church-run institutions have appeared as well. The increasing number of students applying to higher education has been a recent phenomenon in the OECD countries as well. In the period between 1990 and 2005 the number of college students quadrupled. Lately this number has been continuously decreasing due to unfavourable demographic changes and the effects of the financial crisis. In line with the idea of economical management of higher education, the reduction in the number of students has been encouraged more and more. Even so, compared to the leading 19 European countries and the average number of entrants in the OECD countries, Hungary is still lagging behind. Based on Hungary’s Structural Reform Programme, the Széll Kálmán Plan, created by the Hungarian government, a further diminishment in student numbers is expected in the near future. A tendency has been observed in the neighbouring countries as well, which shows that number of applicants to higher education has started to slowly decrease, though not as drastically and prominently as in Hungary in the past few years.

Achieving a society based on knowledge is one of the greatest challenges of globalization. The Széll Kálmán Plan, which is part of the government’s educational policy, states the following: “As the structure of the higher education system does not fulfill the expectations of the labour market, the Hungarian government has been wasting tens of billions of HUF each year. If technological education continues to decline the processing industry might suffer from the lack of professional manpower. In the private sector there is an increased demand for technological degrees, yet arts departments have been gaining ground in higher education and their curriculum hardly correlates with actual market demands.” According to statistics the distribution of students before 1989 and the period until the early 2000s was the following: 37% pedagogical studies, 20% technological and engineering field, 10% medical studies and 4-5% in the field of law and humanities. Since the beginning of the 2010s the majority of students, adding up to 25% have been studying economics, 15% have chosen technological and engineering courses while the number of students opting for pedagogical studies have dwindled to less than 7%. Therefore the number of students in the fields of economy and law is significantly higher than in any other European country. As the demand for manpower possessing higher education degree has increased, the institutions have gradually started to broaden the variety of courses on offer. More and more students obtained degrees until the repercussions of the crises have reached the circle of those with higher education background, which resulted in a high rate of unemployment among them. The approach towards the development of the educational sector has taken a turn worldwide. The only reasonable goal has become the creation of a competitive higher education. As the market has shifted towards industrialization, the most viable form of education appears to be theoretical instruction supported by practice which could render the obtained knowledge competitive.

The results of higher education

According to Freidmann it should be in the state’s interest to invest in higher education because intellectually well-trained individuals form a more efficient manpower, even if they do not have the opportunity to work according to their line of studies. Human capital contributes to the productivity of manpower and encourages entrepreneurism. The years spent in education can be turned into higher profits and income in the future, benefiting the state. The concept of manpower becomes more flexible, individuals can be more easily reeducated and their knowledge could be more useful regarding global market requirements. Social mobility, a lower rate of criminality, the better adaption of new technologies and the understanding of social diversity could be the changes that the state can directly benefit from. The resources dedicated to the development of education appear as profitable investments in 15-20 years’ time in any country, hence in Hungary as well. The gross domestic product (GDP) is to measure the efficiency, productivity and market value of various economies. According to studies carried out in the OECD area, countries with higher GDP and higher rate of average wage per capita can afford to spend more on the development of higher education and education in general which in return results in an efficient and profitable economy. This significant correlation indicates that the amount of expenditures and future profits are inexorably linked.

The employment of large numbers of professionals yields more taxes as their wage and income are higher, therefore their contributions paid to the treasury constitute a higher amount. According to statistics one student cost 9.7 million HUF for the Hungarian state in 2008. In contrast, 26.5 million HUF is expected to be paid by professionals in the form of taxes and contributions in the future. These amounts have to be calculated using present value, therefore the results are approximate. It is essential to have the right amount of professionally trained potential employees on the labour market to achieve economic growth. Currently, the situation of fresh graduates on the labour market is unstable as employers are unaware of the knowledge that provides the basis for their degree obtained in the new educational system. The performance of institutions and the demand of the labour market are not properly aligned. Jobseekers with higher education degrees are more likely to find employment; therefore they constitute the smallest part among the unemployed.

The Hungarian government has spent approximately 1% of its GDP on higher education related costs. In an international context this means that the percentage of GDP spent on higher education in Hungary is lagging behind by 0.5% compared to the OECD countries and by 0.3% compared to the 19 leading states of the European Union. In respect to the amount dedicated to education, including primary, secondary and higher education, Hungary ranks last among the OECD countries. This lag can be explained by economic retrogression. The efficient operation of educational systems started to diminish as the economic decline proceeded. The resources have dwindled despite the growing importance of investment in human capital, as economic prosperity can be attained through the acquisition of relevant skills and competences. The educational policy of the current government makes it clear that investment in human capital is given less importance, which will probably further aggravate the position of Hungarian higher education, the funding of which has already been categorized as insufficient based on comparative studies. Funding of higher education in the European countries does not reach half of the funding in the US. Based on the Széll Kálmán Plan the 2012 Hungarian higher education budget was further reduced. Given that the existing infrastructure has to be maintained and requires constant upkeep, this will lead to the reduction in personnel. The reforms induced by the financial crises may backfire in Hungary. Economic growth might be slowed down by the lack of professional manpower and the permanent reductions of funds might decrease Hungary’s competitiveness on the long run.

The quest for a solution

To fill the gaps in the enrollments to higher education, educational policy attempts to attract foreign students. The budget of higher education is being funded by complementary resources brought in by foreign students. The event ₺Pop-up Hungary” was organized by the Hungarian embassy in Beijing in May 2013 to introduce and advertise Hungarian higher education in China. Chinese students with proper economic background are expected to enroll to Hungarian universities which could increase the numbers of Chinese students in Hungarian higher education. This phenomenon is not new, as Hungarian higher education has previously accommodated foreign students mainly in the medical sector. Medical students in Hungary have always been provided with outstanding training and now other fields, such as engineering that have not been well-known are also aiming at attracting students from abroad. This is the field of educational marketing which needs to be further developed and supported by complementary funds. Education could function well as a new branch of business if it could provide the market with high quality and useful theoretical and practical knowledge. Hungary is searching for opportunities and is striving to position itself as an attractive educational centre however; due to economic problems the current solutions are unstable and unsustainable.

István Pomizs PhD candidate, school principal