International Journal of Government Auditing – October 2014

The integration of public college and university graduates into the employment market: an audit by the SAI of Slovakia

For any society, education is a crucial need and goal, both on a collective and individual basis. In 2010, European Union (EU) member states and the European Commission agreed to incorporate education as one of the key elements of the Europe 2020 Strategy to become a smart, sustainable, and inclusive economy.

The EU member states spend significant resources on education; however, these resources are not spent in a balanced manner. In 2012, education-related expenditures in 27 EU member states were at 5.3 percent of the EU member states' GDP; the highest expenditures were in Denmark (7.9 percent of its GDP) and Sweden (6.8 percent of its GDP). In European Free Trade Association (EFTA) member states, Iceland recorded the highest expenditure, of 8 percent. Slovakia's expenditure was 3.9 percent.

In 2012, Slovakia's public universities and colleges (SPUC) were assigned 441 million euros from the state budget; this sum was ultimately increased to 453 million euros.

Facts about the audit and auditees

The number of students attending SPUCs, related to the funds assigned to SPUCs in the state budget and the graduates' success rate in entering the employment market, has shown structural imbalances for a while. This imbalance prompted the SAI of Slovakia to dedicate an audit to this issue.

State budget funds to ten selected SPUCs, and student numbers at these SPUCs, is shown below:

Bar Chart:  University funds from state budget vs number of university students

The audit was performed between May and December of 2012. The auditees were the Ministry of Education, Science, Research and Sports (Ministry), and 10 of Slovakia's 20 public universities and colleges. The audited SPUC students represented nearly 65 percent of all SPUC students in 2010-2012.

The audit was a combined performance and compliance audit and was performed by 22 auditors from the SAI of Slovakia's headquarters and its eight regional offices. The audit team worked out a preliminary study, and while preparing for the audit, the team looked for identical or similar audits conducted in Central Europe. Several websites of SAIs in the region were examined, and it was noted that this audit would likely be unique.

Funding for SPUCs is performed according to the 2002 Law on Universities and Colleges. From 2002 until the time this audit was performed, this law was amended 29 times. Altogether there were more than 25 jurisprudence acts of various forces ranging from law to regulation, order, or decree devoted to the topic of public universities and colleges. From 2002 to 2013, the Ministry had seven Ministers. In July 2014 a new Minister was appointed. Although this change in personnel had no relation to these audit results, it did add to the instability and complexity of a system that tends toward opacity and vagueness.

At the time of audit, the employment market was offering no more than one thousand jobs for graduates. For example, in the second quarter of 2013, the number of unemployed graduates was greater than 27,000 and that was 6.3 perecent of the total number of unemployed workers. This reflects a long-standing reality of Slovakia's employment market, and SPUCs funded from the state budget produce new employment seekers without having performed a meaningful analysis of the job market needs.

SPUCs graduates' length of unemployment in 2007 - 2011

Table: SPUCs graduates' length of unemployment in 2007 - 2011
Source: Study prepared by the audit team based on data from the Office of Labour, Social Matters and Family, Social Security Office, Business Register, and Trade Register.

Audit Findings

The following conclusions are based on the findings analysis:

  • In the academic years 2010/2011 and 2011/2012, 6,359 graduates (15.3 percent) did not enter the employment market; that meant that based on an average expense for one SPUC graduate of 8,750 euros (1,750 euros per year for five years), the short-term ineffectiveness of the state budget funds was 55,570, 000 euros.
  • Based on a questionnaire published on the SAI Slovakia's website (1,298 questionnaires were filled out and assessed), 49 percent of graduates found some type of employment in the field they had studied, and 15.4 percent of graduates were using their acquired knowledge; 26.3 percent of graduates received fulltime employment in their studied field.
  • The Ministry assigned funds to SPUCs according to the number of students enrolled—other criteria were marginal. Funding based on student numbers did not take into account the SPUCs' quality of education; scientific and research activities; or the employment rate of SPUC graduates.
  • The methodology of finance allocation had a defined coefficient of graduate employability; however, not enough weight was assigned to it. When setting the graduate employability coefficient, the SPUCs used data on graduate unemployment that was different than the data discovered by the auditing team. The auditing team checked 42,210 graduates in 870 study programs at ten SPUCs for the academic years 2010/2011 and 2011/2012. According to the SPUC's methodology, the fraction of unemployed graduates during these time periods was 2.7 percent; according to the audit team, it was 15.3 percent.
  • After concluding their studies, the graduates' employability was as follows: 20 percent took up to three months to find work, and 70 percent took up to six months. Long-term unemployment (more than 12 months) was registered as 3.2 - 4.3 percent.
  • The correlation between the job market and the number of graduates is unsatisfactory, and this imbalance results in an overproduction of unemployable graduates.
  • Data from the Social Security Office, the Business Register and the Trade Register confirmed that there are graduates who could not find employment in their studied fields.
  • The present mechanism of allocating funds for individual SPUCs does not fully address the successful placement of the graduates in the job market.
  • There is no plan to adjust student numbers based on actual domestic employment needs. While a graduate may be trained for a professional career, this readiness does not guarantee his or her ability to find a position in the chosen field.
  • Relationships among students, lecturers, unemployed graduates, and allocated current expenses did not show any elements of linear dependability; at comparable levels of individual indicator value, the unemployment numbers varied considerably.
  • The statistical summaries on employment did not provide an objective overview of graduates' professional job placement.
  • The Ministry did not ask SPUCs to monitor and evaluate the indicators of the factual and financial fulfilment of the programs' structure, goals, and measurable indicators – and the failure to do so was in opposition to the Law on Budgetary and Financial Regulations.
  • Some goals with measurable indicators were not realistic or capable of being met, such as a goal to achieve a graduate unemployment rate of less than 0.5 percent of all unemployed workers by the end of 2012.

In 2010, the Ministry prepared a document, "Long-term plan for education, research, development, artistic and other creative activities for SPUCs up to 2014," that was approved by the government. The Ministry was to meet goals, prepare an annual report on goals and tasks fulfilment, and provide tables of long-term plan updates. The cited tasks fulfilment was not secured because after the Parliamentary elections in June 2010 the incoming government aborted the tasks. The audit team stated that measures to secure the SPUCs' educational goals were not defined, the complex amendment of the Law on Universities and Colleges from 2002 was not performed, and the funds allocated to the SPUCs by the Ministry were not defined in relation to job market needs.

The Ministry does not involve itself in the creation of new or existing student programs—this area is exclusively self-governed by the SPUCs. The SPUCs perceive the college and university education and new study program as fully reflecting the needs of the job market on regional and national levels, despite the fact that job indicators and the employability of graduates demonstrate a different trend.

SAI recommendations

  1. Review the methodology of funding allocations to the SPUCs and consider giving preferential treatment to those SPUCs whose graduates demonstrably find employment;
  2. Re-evaluate the existing goals of the Ministry sub-program, and set new goals that reflect society's actual needs;
  3. Develop and apply tools to secure up-to-date and reliable data to monitor the graduates' placement in the job market;
  4. The Ministry should assess and adjust the ways it allocates funding in such a manner that the employment rates of the SPUC's graduates are supported;
  5. Re-evaluate the National Reform Program of the Slovak Republic for the upcoming period according to the Manifesto of the Slovak Republic Government for 2012 – 2016; and
  6. Create interconnectedness among the SPUCs and relevant Work, Social Affairs and Family Offices in such a way that SPUCs would have online access to factual data regarding graduates' job market placement. This recommendation anticipates cooperation with the Ministry through an enlarged functionality of the Employment Services Information System.

The Ministry adopted measures based on the SAI of Slovakia recommendations. Their fulfilment will be reported during 2014.

For more information, please contact the SAI of Slovakia at info@nku.gov.sk.