Corporatization of Higher

Education in Lebanon

Jad Chaaban

Associate Professor of Economics

President, AUB Faculty United

12/02/2015

Outline: The Signs of Corporatization & Capitalism Taking

Over University Education in Lebanon A non exhaustive list

1. Decline in the relative size of public education

2. Rise of crony private universities

3. Higher cost of attending tertiary education

4. Limited public support to higher education

5. Misleading indicators to measure outcomes of education

6. Higher education mirroring the dependent economy

7. Education as a privilege: Decline in the role of education in

social mobility

8. Universities managed like corporations: CEOs, CFOs and others

Decline in the relative size of public education

More than 190,000 students registered in universities (2011-2012), 86% Lebanese, 54% women

Lebanese University (public): only 40% of students

30,000 graduates per year, 10,000 Lebanese University

Share of LU for Lebanese students dropped by 25% in the last decade

0%

10%

20%

30%

40%

50%

60%

1970 1992 2003 2011

Share of Lebanese Share of all students

Decline in the relative size of public education

Slow down of enrolment for women in the public university as main driving factor

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

1970 1992 2003 2011

Private- Men

Private - Women

Public - Men

Public- Women

Rise of crony private universities

19th century: Confessional, foreign affiliated universities

AUB (Protestant), USJ (Catholic), BUC (then LAU, Protestant)

1952: Lebanese University

1960: Beirut Arab University (Sunni, Egyptian affiliated)

Dramatic rise in private universities:

1975: 5 Universities, 7 Higher Edu. Inst.

1992: 6 Universities, 14 Higher Edu. Inst.

Today: 24 Universities, 19 Higher Edu. Inst.

Wave of new universities between 1995-2001

Almost all for-profit private entities, close to ruling politicians

LIU: Founded in 2001 by a Minister of Education close to Syrian regime, now largest private university in the country (17,000 students)

Islamic University: part of the Shia Jaafari Council (Amal movement)

Antonine: Maronite church

And many others!

Rise of crony private universities

20 Universities (out of 38 active) had 95% of the students in 2011

LIU and the new universities: 26% of the market, mainly taken from the BAU and the LU

Lebanese University,

45%

Beirut Arab University,

31%

AUB , 6%

USJ, 6%

Other , 12%

1992 Lebanese

University, 38%

Beirut Arab University,

6% AUB , 4%

USJ, 5% Lebanese International University,

9%

Other new, 17%

Other , 21%

2011

Higher cost of attending tertiary education

Minimum entry cost/year: 330$ in public university, average 7,000$ in private, almost 50% of GDP per capita!

AUB and LAU: more than 15,000$/year

Many private universities clustered around 5,000$/year

Minimum tuition/year 2014 Nb. Of students in

2012 AUB $ 15,900 7826 LAU $ 15,300 6320

Balamand $ 9,750 4723 NDU $ 9,000 6827 USJ $ 5,000 9362

Other new (av.) $ 4,500 Lebanese International University $ 4,170 16721

Beirut Arab University $ 2,200 11392 Islamic University $ 1,300 4811

Lebanese University $ 330 73689 Other (av.) $ 5,100

100

110

120

130

140

150

160

170

2008 2009 2010 2011 2012 2013

Tuition (minimum cost of30 underg. credits)

Inflation (CPI % change -CRI)

Higher cost of attending tertiary education

In 5 years tuition at AUB increased by 60% (2008-2013)

Twice more than inflation

Limited public support to higher education

Annual public expenditures on higher education: 160 m$

0.6% of GDP, very low, mostly spent on salaries and administration in LU, share is unchanged for 10 years

Households spend more than 4% of GDP (tertiary private cost)

Reducing public debt cost by 10% would double public spending on higher education

9%

4%

0.60%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Interest paymenton debt

Transfers toElectricity

Higher education

Public current expenditure as % of GDP

Misleading indicators to measure outcomes

What we are told:

Higher enrolment reflects greater demand for education

Private universities have better, modern programs

Women enrolment has increased dramatically since 1970 = gender parity and progress

Lebanese labor force has become more educated

0

10

20

30

40

50

1970 1996 2012

8.1

30.9

47.84

26.4 28.8

44.52

17.4

29.8

46.26

Women

Men

Total

Net enrolment rates in tertiary education %

Misleading indicators to measure outcomes

What the reality is:

Higher enrolment reflects lower employment opportunities, youth (15-29) unemployment rate at 28%

Private university programs not innovative: Business, Management, Law and related: 40,000 students (40% of

enrolment)

Increase in women enrolment: But female labor force participation is still low (25%), education inclusion good but not

enough

Unemployment rate for university degree holders: 14%, while national average 10% (data for 2010)

More than 40% of employees report to have skills that do not match those required by their job (WB 2010)

More than 50% of graduates migrate, 15,000-20,000/year

Higher education mirroring the dependent

economy

Small dependent economy, relies on exporting skilled labor and foreign transfers to finance local consumption

Most jobs are informal and in low productivity services sectors Only 1/3 of job holders are wage employees

Higher education sector reinforces this tendency

Losing the countrys human capital, and paying locally for an education that has its returns abroad:

Spending on education in Lebanon is one of the highest in the world: 13.1% - 4.1% public and 9.1% private expenditure (%

GDP), USA 7%, France 6%.

Local returns on higher education are 6% in Lebanese University, negative in private universities, thus the need for migration to

make educational investments profitable.

Education as a privilege: Decline in the role of

education in social mobility

Public university mostly for the poor and middle class: 92% of poor households register in public university (2005)

92% 77%

48%

8% 23%

53%

0%

20%

40%

60%

80%

100%

120%

Poorhouseholds

Middle Class Richhouseholds

Private Universities

Public University

Distribution of university enrolment by family status, 2005

Education as a privilege: Decline in the role of

education in social mobility

Students originating from public schools less than 10% in elite private universities

Lebanese university graduates face a salary disadvantage compared to elite private universities

Lebanese University 61%

Beirut Arab University 57%

American University of Beirut 10%

Universite Saint Joseph 5%

Lebanese American University 5%

Other universities 26%

Lebanese University -14%

Beirut Arab University -15%

American University of Beirut 38%

Universite Saint Joseph 11%

Lebanese American University 5%

Other universities 5%

Proportion students originating from public schools, 1993/1994

Difference in monthly earnings from global average, 1994

Education as a privilege: Decline in the role of

education in social mobility

75% of AUB students come from only 40 schools (out of 160 origin schools)

95% of these schools are located in the Greater Beirut area

The number of students enrolling in AUB from the Lebanese public schooling system has dramatically declined in the past two decades

0

100

200

300

400

500

600

700

0%

2%

4%

6%

8%

10%

12%

1993 2003 2013

Share originating from public schools

Minimum credit cost US$ (right axis)

Universities managed like corporations: CEOs,

CFOs and others: AUB as a case study

Several budget items have seen a significant increase over 2007-2012:

Information Technology, Travel and meetings, Compensation of key officers and administrators, Taxes, Interest Fees

Together the above items totaled an addition of more than13m$ over their level in 2007

Salaries of key administrators have increased by as much as 89% over 5 years

Selected expense items, US$ (IRS declaration)

2008 2012

Management salaries 8,773,000 22,700,000

Legal 2,300,000 2,100,000

Travel 3,400,000 5,700,000

Interest 266,000 1,400,000

Information Technology 1,400,000 4,000,000

Advertising and Promotion - 1,000,000

Category AUB

AAUP-

CUPA Diff

Ratio to

lowest -

AUB

Ratio to

lowest -

USA

VP Medicine 59,000 37,000 37% 118 31

President 39,500 31,000 22% 79 26

VP Facilities 33,000 9,000 73% 66 8

VP IT 30,500 10,500 66% 61 9

VP Development 29,500 13,000 56% 59 11

VP Finance 27,500 14,000 49% 55 12

Provost 26,000 14,500 44% 52 12

VP Legal 23,000 15,000 35% 46 13

VP Human Res. 22,000 8,750 60% 44 7

VP REP 21,500 13,000 40% 43 11

Professor 7,600 8,700 -14% 15 7

Associate Prof. 5,700 6,500 -14% 11 5

Assistant Prof. 4,700 5,500 -17% 9 5

Lecturer 4,000 4,800 -20% 8 4

Instructor 2,800 4,400 -57% 6 4

Janitor 500 1,200 -140% 1 1

Average monthly salaries comparison, AUB vs. USA December 2013, US$/month

Data sources: AUB Fact Book 2014, AUB IRS Form 990 2013, AAUP 2013, CUPA 2013. US comparator: AAUP private independent average, masters level, CUPA all combined average.

Comparison of faculty and administrators salaries

Salaries of administrators at AUB are all 20-70% higher than those in the US, while those of professors are all 15-60% lower.

The highest paid administrator at AUB makes 118 times the minimum wage, compared to a ratio of 31 in the US.

An administrator at AUB earns on average more per month than what an instructor makes in one year.

Salaries of administrators at AUB are on average 5 times higher than those of professors

Many instructors still earn as low as 1500$/month, 20 times less than an administrators average salary

8 additional English professors can be hired using the salary of AUBs Chief Operating Officer

Comparison of faculty and administrators salaries

Conclusions

Corporatization of higher education is embedded within the Lebanese rentier -dependent economic system

Divided society that perpetuates conditions of submissions:

Poor and peripheries in the public system, precarious jobs, no social mobility, easily controlled through rentier and sectarian system

Rich in the private educational system, trained to migrate, no threat on the ruling class

Same struggle of school teachers, university professors and activists in socio-economic progress

Rights and values vs. commercial interest

Democratization vs. rule by cartel and crony capital

Secularism and respect for diversity vs. sectarianism

Global struggle against various forms of capitalistic control within class warfare

Thank you