OECD thematic review of tertiary education · 2016-03-29 · 4 Toiminta- ja taloussuunnitelma...

Opetusministeriö

Ministry of Education

OECD thematic reviewof tertiary educationCountry Background report for Finland

Publications of the Ministry of Education, Finland 2005:38

Published in the publication series of the Ministry of Education in 2005

Online publications: www.minedu.fi/minedu/publications

1 Kohti tutkimuslähtöisen yrityksen määritelmää2 Opetusministeriön tulossuunnitelma 20053 ESR-hankkeet alueellisen osaamisen

kehittämisessä – vaikutukset Satakunnan,Päijät-Hämeen ja Keski-Suomen maakunnissa.Väliraportti II

4 Toiminta- ja taloussuunnitelma 2006–20095 Suomalais-venäläisen kulttuurifoorumin arviointi6 Esteetön opiskelu yliopistoissa7 Perustietoja ammattikorkeakoulusta8 Audiovisuaalisen politiikan linjat9 Staying Power to Finnish Cultural Exports

– The Cultural Exportation Project of the Ministryof Education, the Ministry for Foreign Affairs andthe Ministry of Trade and Industry

10 Opetusministeriön toimintakertomus 200411 Audiovisuaalisen alan verkko- ja

virtuaalipalveluiden kartoitus 2004–200512 Yliopistot 200413 Universities 200414 Universiteten 200415 Koulutus ja kulttuuri 2004,

Opetusministeriön vuosikatsaus16 Tutkimus väestön liikuntakyvyn, liikuntahalun ja

liikuntataitojen edistäjänä. Liikuntatutkimuksensuunta vuoteen 2010

17 Utbildning och kultur 2004,Undervisningsministeriets årsöversikt

18 Education and Culture 2004, Ministry ofEducation Annual Report

19 Osallistuva oppilas – yhteisöllinen koulu;Oppilaskunnan ohjaavan opettajan opas

20 Aikuiskoulutuksen vuosikirja;Tilastotietoja aikuisten opiskelusta 2003

21 Tohtorit, tiedepolitiikka ja työmarkkinat;Tutkijankoulutus Suomessa 1950-luvultatutkijakoulujen aikaan

22 Koe-eläintoiminnan yhteistyöryhmä (KYTÖ);Toimintakertomus 2001–2004

23 Ammattikorkeakoulut 2004;Taulukoita AMKOTA-tietokannastaYrkeshögskolorna 2004;Tabeller ur AMKOTA-databasen

24 Liikuntatoimi tilastojen valossa.Perustilastot vuodelta 2003

25 Noste-ohjelma vuonna 2004;Vuosiraportti 2004

26 Yliopistotilastot; Taulukoita KOTA-tietokannasta27 Universitetsstatistik 2004;

Tabeller ur KOTA-databasen 200428 Aikuiskoulutuksen alueelliset toimenpideohjelmat29 Taiteen ja kulttuurin Venäjä-ohjelma30 Selvitys tietoteollisuuden lisätoimenpide-

ohjelman toteutumisesta ja tuloksista yliopistoissa

31 Digitaalisen aineiston kysyntä ja tarjonta; Yleiset kirjastot 200432 Opetusministeriön tuottavuusohjelma

2006–201033 Syrjäytymisvaarassa olevat nuoret ja Omaura;

Seurantatutkimus Omaura-toimintaan osallistu-neiden nuorten elämänvaiheista 1995–2001

34 Innovaatiotoiminta Keski-Suomen,Päijät-Hämeen ja Satakunnan ESR-hankkeissa.Alueosaaja-hankkeen III väliraportti

35 Kolme puheenvuoroa luovuuden edistämisestä; Luovuusstrategian osatyöryhmien raportit36 Engagerade elever – en samverkande skola

OECD thematic reviewof tertiary educationCountry Background report for Finland


Opetusministeriö • Koulutus- ja tiedepolitiikan osasto • 2005

Ministry of Education • Department for Education and Science Policy • 2005


Department for Education and Science Policy

P.O. Box 29, FIN-00023 Government

Finland

http://www.minedu.fi

www.minedu.fi/minedu/publications/index.html

Layout: Teija Metsänperä, Ministry of Education

Printed by Helsinki University Press, 2005

ISBN 952-485-052-4 (pbk.)

ISBN 952-485-053-2 (PDF)

ISSN 1458-8110


Foreword

This report was prepared for the Ministry of Education as an input to the OECDThematic Review of Tertiary Education. The document was prepared in response toguidelines the OECD provided to all participating countries. The guidelines encouraged theauthor(s) to canvass a breadth of views and priorities on tertiary education issues. Theopinions expressed are not necessarily those of the national authority, the OECD or itsMember countries.

The preparation work was steered by a national preparatory group lead by Mr. MarkkuMattila, director of division for universities. Other members from the Ministry ofEducation were Hannu Sirén, Juhani Hakkarainen, Kirsti Kylä-Tuomola, Anita Lehikoinenand Ari Saarinen. National coordinator and editor of the report is Osmo Lampinen.

Contents

Foreword 3

Executive summary 6

CHAPTER 1. The national context of tertiary education 12

1.1 Economic structure 121.2 Population growth and demographic patterns 14

CHAPTER 2. Overall description of the tertiary education system 16

2.1 The Finnish tertiary education system 162.2 Emergence of the tertiary education network 172.3 A dual model of tertiary education 182.4 The overall size of the tertiary education 21

2.4.1 Studies 212.4.2 Graduate placement 212.4.3 Personnel 212.4.4 International mobility 222.4.5 Research and development 22

2.5 Administration of tertiary education 24

CHAPTER 3. Tertiary education system and the labour market 26

3.1 Historical background 263.2 Foresight and quantitative planning of educational supply up to 2008 273.3 Foresight and quantitative planning of education up to 2008 273.4 Targets for tertiary education 293.5 The relationship between education supply and employment and income 31

CHAPTER 4. The regional role of tertiary education 34

4.1 Finnish regional policy 344.2 Decentralised tertiary education system 354.3 Tertiary education and the national and regional innovation systems 364.4 The new regional role of universities 374.5 Strategies underpinning regional development 384.6 Structural development of the higher education system 40

CHAPTER 5. The role of tertiary educationin research and innovation 41

5.1 Introduction 415.2 Financing sources for HEIs 415.3 Human resources in research 455.4 Quality assessment and impact analysis in research 465.5 Cooperation with business and industry 47

CHAPTER 6. Achieving equity in and through tertiary education 48

6.1 Introduction 486.2 Social equity 496.3 Regional equity 506.4 Gender equity 536.5 Access and the problem of late entry 55

CHAPTER 7. Resources in the tertiary education system 58

7.1 Staff and financing 587.2 Finnish student's income 617.3 Institutional resources 617.4 Performance management in universities 617.5 Performance management in polytechnics 677.6 Monitoring and evaluation database 69

CHAPTER 8. Planning, governing and regulating the system 71

8.1 Introduction 718.2 Priorities in expansion 738.3 Institutional governing bodies 738.4 Improving institutional management 748.5 Linkages among tertiary institutions and transfer of students 758.6 Linkages between tertiary institutions and other forms of education 758.7 Diversity between the tertiary education system 758.8 Credit transfer 76

CHAPTER 9. Assuring the quality of tertiary education 77

9.1 Finnish approach 779.2 National quality assurance agencies 789.3 Methods used to assess research quality and teaching quality 789.4 The role of students and graduates in quality assessment 799.5 Mechanisms to ensure international comparability 799.6 Key audiences for quality assurance information 799.7 The relationship between inputs and outputs 809.8 Expansion and quality 80

CHAPTER 10. Internationalisation of tertiary education 82

10.1 Two generations of internationalisation strategies 8210.2 Instruments for realising the policy goals 8410.3 Major policy issues arising from the impact of internationalisation 84

11 Conclusions 86

References 90

6

Executive summary

Finland's national objective is sustainable andbalanced societal and economic development. Highemployment, productivity and competitiveness arekey factors. A high quality tertiary education systemand measures to increase research and technologicaldevelopment (and to utilize the results arising fromthis) play a significant part.

The system structure

The main characteristics of Finland's tertiaryeducation system are as follows:

- A comprehensive, dual-sector higher educationsystem, comprising 20 universities and 29polytechnics. This network of institutions isspread geographically over the whole country

- A high participation rate in higher education ingeneral, including high proportions of female andmature age students.

- The stability of the higher education system. Thestructure is transparent and the functions of thetwo sectors are clearly defined

- The public nature of the system, with the studentpopulation attending tuition fee-free publicinstitutions

OECD thematic review of tertiary education

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- A relatively high proportion of funding for highereducation institutions (HEIs) is drawn from thepublic purse

- A high proportion of research is conducted inpublic research institutes

- Private investment in research has increasedmore rapidly than public investment

- The relative share of funding of universityresearch from external sources has increased

- A marked quantitative expansion in researchtraining, combined with the introduction of agraduate school system

- A well integrated higher education system withfew barriers related to the recognition of credittransfer between institutions

- Graduates from both first degrees and PhDprograms are relatively 'old' at time ofgraduation. Those with higher educationqualifications have relatively low rates ofunemployment

- Relatively few foreign students

- A decentralized admission system foruniversities

Recent policy decisions

Main policy decisions made in recent years may besummarized as follows:

- The enactment of new university legislationemphasizing universities' autonomy as well asinducing them to diversify their funding base

- The introduction of a third mission in universitylegislation, relating to their regional role andresponsibility

- The introduction of bachelor's degrees inuniversities, making the degree structurecompatible with the Bologna process.

- The enactment of new polytechnic legislationemphasizing the autonomy of these fairly newinstitutions and confirming their functions as the second pillar of the Finnish tertiaryeducation system alongside universities

- The introduction of post-experience polytechnicgraduate degrees for those having work and lifeexperience

- A government resolution on the structuraldevelopment of the public research system withthe aim of intensifying research anddevelopment, increasing co-operation betweendifferent interests in the research system, aswell as creating and reinforcing internationallycompetitive science and technology clustersand centres of excellence.

Key objectives andpolicy priorities

Education and research are pivotal to Finland'sstrategy for the future, which is directed at thewell-being of its citizens, cultural diversity,sustainable development and prosperity. As acivilisation, Finland is built on knowledge andcreativity and values such as equity, tolerance, inter-nationalisation, gender equality and responsibilityfor the environment. Education is used to promotecultural rights as well as to develop knowledge andskills for active citizenship.

The aim is a civilisation in which everyindividual can grow personally according to theirown abilities and aptitudes, contribute to thedevelopment of their community and livingconditions, and upgrade their vocational andprofessional competence in response to changes allthrough their careers.

The catchwords in education policy for thecoming years will be high quality, equal opportunity

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and lifelong learning. Finland is to continue todevelop into a humane knowledge-based society bymeans of education and research. The Governmentis committed to maintaining a high level of publiceducation and research funding. Special attentionwill be paid to developing teaching and learning atall levels of education through teacher educationand guidance services.

In order to meet regional needs, tertiaryeducation institutions must meet their regionalresponsibilities by increased cooperation with localbusiness and industry, and by facilitating thetransfer of expertise to working life. The tertiaryeducation system will be developed as a whole,comprising the two mutually complementarysectors.

The system of tertiary education degrees will bedeveloped to correspond to the needs of workinglife and also in response to internationaldevelopments in degree structures.

The public research system will be developed asan operational entity in its own right, with a viewto continuous improvement in the quality andrelevance of research and development (R&D).Development measures will be targeted towardsprioritising activities, enhancing the internationaland national profile of research organisations andselective decision-making. A crucial challenge is todevelop world-class R&D in those fields mostrelevant to the national economy, to societaldevelopment and to citizens' well-being.

Development oftertiary education

The key targets for future education policy were setin the Development Plan for Education and Research2003–2008, adopted by the government onDecember 4, 2003. In summary, the developmentof tertiary education will focus on following areas.

The tertiary education system forms the basis fora regionally comprehensive innovation system. Thetertiary education system is being developed as anentity which is both internationally competitiveand responsive to regional needs. Besides education

and research, tertiary education has a statutory dutyto serve society, e.g. by contributing to regionaldevelopment and developing education for matureage students in response to social changes. Thetertiary education system needs to be viewedholistically, in particular as regards the appropriatenessof its structures, the quality of its performance, itsfinancing, and its international competitiveness.

The performance of the tertiary education systemwill be improved by means of transparent proceduresfor cooperation and a clearer division of the roles ofpolytechnics and universities. The aim is to providea system which is understandable to both studentsand employers and in which the two sectors areallowed to develop equally, commensurate withtheir strengths.

One major aim is to strengthen the internationalactivities of tertiary education institutions. It isimportant for Finnish tertiary education institutionsto improve their international capacities so they canconsolidate their position in the internationaleducation market. Internationalisation is also aresponse to new knowledge requirements in researchand in the labour market. It is important thatsufficient resources are allocated to internationalactivities and that the statutes governing tertiaryeducation institutions are up-to-date. Finland mustbe an active player in European higher educationand research, and the opportunities available in theEuropean Union for developing the quality ofhigher education must be used to the full.

UniversitiesAn important aim is to develop internationalisationand the prerequisites of innovation. The universitieswill have a growing role to play as part of the nationaland regional innovation systems. In the case of theuniversities, this requires that the quality and effi-ciency of undergraduate education is improved, na-tional and international networking is promoted,research training is expanded and the general sup-porting infrastructure for research are improved.

With a view to improving flexibility and inter-national comparability, the new two-cycle Bachelor-Master degree structure will be adopted in all fields

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of study from the 2005–06 academic year. In thesame context, the coverage of studies/subjects willbe re-determined to correspond to Europeanpractices via the European Credit Transfer System(ECTS). In this connection, degree requirementswill be reviewed and quantified to correspond tothe actual student workload.

Personal study plans on which both the studentand the university focus, will be adopted in all fieldsof study. The universities will make their teachingarrangements more flexible so that students are ableto study throughout the academic year. Theuniversities' prerequisites for assuring a high qualityof operations will be strengthened, and theuniversities will develop methods of systematicquality assurance. The management of educationaldevelopment will be enhanced.

Finnish universities work closely with businessand employers, especially in research. A keychallenge for all universities will be to providestudents with skills in scientific methods and theability to produce and use knowledge independently.Some fields need to improve links between studyand work life.

Knowledge is becoming more and moreimportant in regional development and this shouldalso be reflected in university operations. TheUniversities Act will has been amended to includeregional cooperation in the universities' mission.The universities will boost their regional impactwithin existing operations through increasedcooperation and improved division of labour withpolytechnics and other local players.

Development measures will be targeted topromote the impact, quality, content and efficiencyof the units by means of larger, focused resourceentities, stronger networking, more efficientmanagement and performance evaluation.Universities will improve their internationalcompetitiveness by raising their profiles andinvesting in quality research, interdisciplinarity andresearch personnel of an international highstandard.

PolytechnicsThe new Polytechnics Act (2003) provides a basisfor developing polytechnics as tertiary educationinstitutions with specific profiles. Their mission isto provide and develop professional tertiaryeducation closely connected with the world of workand its development, and to conduct R&D whichserves working life and regional development, aswell as teaching.

Polytechnics have successfully established theirplace in the tertiary education system. Their furtherdevelopment as an innovative network requires thatattention is paid to their level of knowledge andtheir capacity to develop further.

In the near future, particular attention needs tobe paid to the development of study processes, topolytechnic graduates' opportunities for furthereducation, to regional development and, related tothis, the enhancement of contacts with working life,and to the development of polytechnic funding andthe polytechnic network.

According to an OECD review (2003)1, theFinnish polytechnic degree programmes areinnovative and relevant to working life. Polytechnicdegrees cater for knowledge and development needsof the labour market. Special attention will be paidto curricula, credit transfer practices, guidance andadvisory services, and measures for reducing studentdrop-out rates, with a view to improving educationstandards.

The Act on the [Pilot Programme for theIntroduction] of Postgraduate Polytechnic Degreescame into force on 31 July 2005. The pilotprogramme is being carried out in three fields ofeducation and within seven degree programmes. Allin all, over 500 students (forming 44 study groups)have been admitted to study within the pilotprogramme. There were 1,094 applications to enterthe Master's-level pilot programmes. Theprogrammes are closely linked to the world of workand it is possible to study alongside work. Oneadmission requirement was that the applicant hadhad work experience of at least three years after

1 OECD 2003: Polytechnic Education in Finland. Reviews of National Policies for Education.

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graduation.With a view to further improving polytechnics'

regional impact, measures will be taken to developthe most appropriate structure of educationprovision, to combine polytechnics' regionaldevelopment projects into larger entities whichcross sectoral boundaries and to boost networkingbetween different tertiary education institutions,schools and other stakeholders. Networked regionaltertiary education institutions composed ofpolytechnics and universities will be developed inresponse to regional needs.

One aim in the development of the polytechnicnetwork is to achieve a balanced provision ofeducation to meet both regional ends and the needsof Finland's two official linguistic groups (Finnishand Swedish). Provision must also meet the needs ofworking life, in the most efficient manner possible.The aim is for the establishment of a network inwhich each degree-teaching unit is large enough tobe able to provide education of a sufficiently highstandard and to conduct R&D which serves theregion.

Ongoing policy directions

The main ongoing policy directions may besummarized as follows:

- Strengthening co-operation between tertiaryeducation institutions and forming new consortiabetween universities and polytechnics

- Intensifying research and development inpolytechnics as well as their co-operation withregional organisations

- Rationalizing tertiary education provision byreducing the number of providers or by mergingof institutions

- The unifying of the system of external decisionmaking for polytechnics

- The standardisation of the system for external

oversight and funding of the polytechnic sector.Polytechnics receive much of their funding fromthe Ministry of Education, but major oversight isthe responsibility of bodies such as regional orcity councils.

- Changing existing polytechnic fundingmechanisms by introducing a more stable,measurable and incentive-based system

- Strengthening the development of internationallycompetitive universities

- Intensifying quality assurance systems

- Continuing to develop a university fundingformula based more on the attainment of resultsand on institutional outputs

- We do not yet know how the universityMaster's programmes will be accredited.The best Master's programmes may turn out tobe an asset for Finland in the internationaleducation market. They may attract many moreforeign students to Finland than is now the case.In recent discussions it has been suggested thatthe universities should be able to charge tuitionfees for Master's programmes, which wouldinfluence not only university financing but alsosocial access to tertiary education.

- Shortening the time elapsed between thecompletion of secondary education and thecommencement of tertiary education.

- Introduction of new forms of student guidance,evaluation and assessment intending to improvethe follow up of students, reduce numbers ofdrop-outs and study interruptions, and toinduce students to complete their studies ata younger age

- Intensifying internationalisation in HEIs byincreasing the number of outgoing and incomingexchange students and number of foreignstudents. Measures will also be taken to improve

11

the possibilities, capabilities and mechanisms toenable foreign researchers to work in Finland.

- The university sector will be developed into aworld-class system in Finland's areas of strengthand which will continuously generate newresearch openings and initiatives. Thepolytechnics will be developed as regionalforces. The higher education system will notbe further expanded.

- The higher education institutions will have tocombine their resources into larger entities andto boost networking, management and impactanalysis. Universities will improve theirinternational competitiveness by raising theirprofiles and by investing in high quality researchacross disciplinary borders and researchpersonnel of an internationally-recognised highstandard. The organisations with oversight overpolytechnics, together with the Ministry ofEducation, will have to ensure that polytechnicsare of a sufficient size, are multi-disciplinary inrange, and invest in high-standard educationwhich is responsive to regional work and lifeneeds.

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CHAPTER 1.The national contextof tertiary education

1.1 Economic structure

The Finnish economy has historically relied on theutilisation of the large forests. After the SecondWorld War, Finland created a metal and engineeringindustry sector alongside the traditional forestindustry. In recent decades, Finland's success inbuilding a globally oriented electronics industry hasdiversified the production structure.

For the moment, there are three almost equallyimportant export sectors in the Finnish economy:electronics and electrotechnical goods account for27.5% of the exports; metal and engineeringproducts 27.1%; and forest industry products27.1%. The chemical industry is the fourth largestexport sector.

Finnish industry is exceptionally dependent onthe importation of raw materials, machinery andcomponents needed to manufacture products forboth the domestic and export markets. Consumergoods, such as textiles, clothing and cars, make upalmost 25% of total imports. From 1997 to 2001,the electronics industry enjoyed rapid growth,which meant a significant increase in production.

The forest industry has always relied onprocessing domestic timber resources for the exportmarket. The emphasis has been shifting from


13

mechanical wood processing to paper and pulp.Growing competition and globalisation have had animpact on the forest industry: Finnish companieshave expanded their operations abroad and mergedto form larger units. The metal and engineeringindustry has been growing in terms of bothproduction and its employment effect. The foodindustry used to be predominantly domestic untilrecently, and Finnish agricultural products wereprimarily used by Finnish consumers. However,with Finland's accession to the EU the situation haschanged, and now the entire food sector has totackle international competition. The foodindustry's answer to the ever keener competitionhas been to invest in product development.

productivity has increased since the mid nineties.There is a positive relation between informationtechnology investments and corporate productivity.The new information and communicationstechnologies have required organisational re-arrangements within companies. The deregulationof markets has proceeded rapidly. The basic aim ofindustrial policy is to support entrepreneurship andpromote the transparency and functionality of themarket. In practice, Finland abolished allrestrictions on foreign ownership in the 1990s, andFinnish competition policy has been in line withEU statutes ever since. As a member of the Europe-an Union, Finland is part of the single market. TheEU membership has meant closer industrialcontacts with Europe and with Member States inparticular.

Business expanded rapidly in the informationsector in the 1990s, but the number of companiesin this sector is still small. In 2001 the information-related sector comprised fewer than 15,000companies, which is 6.4% of the total number ofcompanies. On the other hand, one in tenemployees works in an information sector company,and, counted in net sales and payroll, the relativeshare of the sector is even larger. Large companiesare common in the information-related sector. Themost important goods produced are radio andtelevision sets and other equipment (such as mobilephones), their net sales having increased fivefold

since 1993.Operations in the information sector are

concentrated geographically. The Uusimaa regionin the south accounts for more than half of theworkforce and net sales in the sector. Other regionalconcentration centres are Southwestern Finland, theTampere region, and the Oulu region in NorthernOstrobothnia.

The process by which information and know-how became Finland's key resource is also reflectedin the rapid increase in research and developmentspending. In 2004 R&D represented 3.5% of GNP.The communications sector has made substantialinput into innovation. The relative input into R&Din the ICT sector is by far the highest in theOECD countries. ICT also influences innovation inother sectors and has facilitated inter-companyR&D collaboration, as well as cooperation betweencompanies and the scientific community.Information and innovations also spread morerapidly than before.

Exports from Finland have grown at anextremely rapid rate since the early 1990s andexport growth has been a key element in theeconomic restructuring. Whereas in 1990 exportsaccounted for 23% of GDP, by 2001 the figure hadsoared to 42%. Growth has been made possible bycompetitive prices and expertise in high-techproduction and product development. The exportvolume rose by 17.7% in 2000. Exports ofelectronics and electrotechnical industry grew by asmuch as 50%, as markets expanded rapidly andFinnish exporters won new market shares. Exportsof the traditional metal and engineering industryproducts also grew substantially.

Industrial production has grown rapidly and

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Table 1. Value of exports and imports in 2002

Countries Exports Imports

% by % by

region region

EU-countries 54.0 55.7

Central and eastern European 7.2 6.0

EFTA 3.8 4.6

Rest of Europe 8.0 10.8

NAFTA countries 10.0 7.1

Asia 9.4 12.5

Middle East 3.1 0.3

Central and South America 2.0 1.6

Africa 1.6 0.6

Oceania 0.9 0.8

1.2 Population growthand demographic patterns

Ethnically speaking, Finland is a very homogeneousnation. The country has two official languages:Finnish and Swedish. In 2001, 91.3% of thepopulation were Finnish speakers and 5.4%(281,000) Swedish speakers. There are about 1,700indigenous people whose first language is Saami,and 21,000 residents whose mother tongue isRussian.

The number of foreigners residing in Finland hastraditionally been very low, but constantly growing.In 1980, there were 12,800 foreigners, with thelargest numbers coming from Sweden, Germany,the United States and the Soviet Union. In 1990,the figure had grown to 26,000, with Swedes stillthe largest group and Russians on the increase.According to 2001 statistics, the number offoreigners in Finland is 99,000, with Russians asthe largest group (about 20% of the total), followedby Estonians, Swedes and Somalis.

In Finland families most commonly have onechild, which makes 44% of all families withchildren; 38% of families have two and 4% four ormore children. In 1970, almost 10% of all familieshad four or more children.

The net immigration was 0.5 per 1,000 in 1970and has been steadily growing. In 2000, 14,000Finns emigrated and 17,000 people immigrated toFinland, the principal countries of origin beingRussia, Estonia and Sweden (most of the latter areoriginally Finnish citizens returning from Sweden).

Compared with other countries in WesternEurope, Finland has few refugees and asylum-seekers (c. 3,000 annually). In 2000, under 2,000refugees and asylum-seekers entered the country asnew residents. The total number of refugees inFinland was about 19,000. People of Finnishextraction in Russia (e.g. Ingrians) resettling inFinland are regarded as ethnically Finnish re-migrants.

Demographic data indicates that the Finnishpopulation is aging. The proportion of childrenunder 15 of the population has dropped to 18%from 30% in the 1950s and the proportion ofelderly people (over 64) has grown from 7% in the1950s to 15%. The average life-expectancy is 81years for Finnish women and 74.1 years for men.

By its economic structure, Finland is a typicalurbanised country. The percentage of people activein the workforce has decreased and is now about66% of the population. The unemployment ratehas remained high in Finland during the past tenyears (14.8% in 2000). Primary productioncurrently provides employment for only 6% of thepopulation, while 27% work in industry andconstruction, and 66% in trade and services.

In the 1980s and 1990s, relocation withinFinland did not reach the proportions it had in the1960s and 1970s. People mainly move within theirmunicipality of residence. Some 530,000 Finns(10.2% of the population) move within theirmunicipalities each year and 260,000 (5%) moveto a different municipality. This migration is nolonger as strongly directed from rural municipalitiesto the towns and cities, particularly in the HelsinkiMetropolitan Area , as it was three decades ago, butthe trend is still the same.

In 2000, the Finnish labour force was2,589,000 people. The proportion of working-agepopulation belonging to the labour force has alwaysbeen high in Finland. Although the work partici-

15

pation rate has declined as a result of the recessionin the 1990s, it is still above the OECD average. Asin other Nordic countries, the relative share of wo-men in the workforce is extremely high, partlyowing to extensive public welfare (e.g. day-care) ser-vices.

The rapid rise in the educational level of thelabour force is reflected in the great differences inthe level of education between different age groups.Among the employed, the age group with thehighest educational level is the 25-to-34-year-olds,about 40% of whom had a tertiary degree in 1997.The corresponding figure for the 55–64 age groupwas a good 18%. The educational level of thoseleaving the labour force is low, while those enteringthe labour force are highly educated.

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CHAPTER 2.Overall descriptionof the tertiaryeducation system

2.1 The Finnish tertiaryeducation system

The Finnish tertiary education system comprisestwo parallel sectors: universities and polytechnics

Finland: ten multi-faculty institutions, threeuniversities of technology, three schools ofeconomics and business administration, and four artacademies. University-level education is alsoprovided in a military academy under the Ministryof Defence. Universities focus on scientific researchand education and have the right to awarddoctorates.

The first university degree, Bachelor's, cangenerally be attained in three years of full-timestudy (180–210 ECTS credits) and the higher,Master's degree (120–150 ECTS credits), in 2years. There is an optional intermediate post-graduate degree of licentiate, which can becompleted in two years of full-time study after theMaster's degree. Full-time studies for a doctoratetake approximately four years following theMaster's degree.

The Universities Act (1997) assigns four missionsto the universities: to promote free research; to


(see Figure 1). There are 20 universities in

17

promote scientific and artistic education; to providehigher education based on research; and to educatestudents to serve their country and humanity. Theamendment of law in 2004 added to the duties ofuniversities the third task, obligation to serve theirsurrounding,

The Finnish polytechnic system was set up overa period of ten years, which comprised a pilot phaseand a subsequent stage in which the operations weregiven their final form. In the reform, the vocationalcolleges joined forces and formed larger entities,upgrading their education to the tertiary level. Thefirst polytechnics gained a permanent status inAugust 1996 and the last five as recently as August2000.

Polytechnics are professionally oriented highereducation institutions (HEIs). In addition to theireducational role, polytechnics conduct appliedR&D which serves teaching and the work life.Today there are 29 polytechnics operating underthe Ministry of Education. Moreover, there isÅland Polytechnic (Högskolan på Åland) under thejurisdiction of the self-governing Åland Islands andthe Police College of Finland, which operates underthe Ministry of the Interior. The polytechnicnetwork covers the entire country from the north tothe south and from the east to the west, catering forthe speakers of both national languages.

Polytechnic degrees are Bachelor-level tertiarydegrees with a professional emphasis and take 3.5to 4.5 years to complete. The main aim of thepolytechnic degree programmes is to provideprofessional competence. The largest fields areengineering, business and health care. The degreesvary from 180 to 240 ECTS credits, whichcorrespond to three or four years of study,depending on the field. All the trainingprogrammes include obligatory work practice. Thenewest part of the system are post-experiencegraduate degrees with the duration of 3–5 years.

The polytechnics gained a permanent status inlegislation passed in 2003. According to thePolytechnics Act, these institutes provide professionaleducation, support professional development,conduct applied R&D which supports regionaldevelopment, and offer adult education.

2.2 Emergence of the tertiaryeducation network

Finland's first university, the Academy of Turku,was founded in 1640. Its main task was to educateclergymen and civil servants to administer theterritorially and politically expending kingdom ofSweden. The educational ideals of the period werea mixture of Classical heritage and Lutherandoctrine. Approximately half of the studentsentered the service of the Church after completingtheir studies.

After two hundred years later, by which timeFinland was an autonomous Grand Duchy ofRussia, the Academy was transferred to Helsinki,where it reopened in 1828 as the ImperialAlexander University of Finland.

The University of Helsinki remained Finland'sonly institution of higher education until 1908,when the Helsinki Institute of Technology, foundedhalf a century before, was given university status.Soon after, the Helsinki monopoly crumbled, astwo universities were founded in Turku (the othera Swedish-language university), in 1917 and theFinnish-language University of Turku in 1920.

The University of Technology was later joined byother professionally oriented institutions: TwoSchools of Economics and Business Administrationwere established in Helsinki in 1920s, one givinginstruction in Finnish and the other in Swedish,and a Swedish-language School of Economics andBusiness Administration was founded in Turku,although this later merged with the Åbo AkademiUniversity. The College of Veterinary Medicine wasestablished in Helsinki in the 1940`s; the Finnish-language Turku School of Economics and Businessadministration in the 1950s. The emphasis oncommercial and technological training reflected thenew needs of the business world. The network ofspecialized institutions of higher education wascompleted with the founding of the TampereUniversity of Technology and the Vaasa School ofEconomics and Business Administration (renamedthe university of Vaasa in 1991) in the late 1960s.

A need for small specialist institutions was alsofelt in the social sciences and pedagogics. The

18

teacher training college established in Jyväskyläback in the 19th century was renamed Theinstitute of pedagogics in 1934 and enlarged toform the university of Jyväskylä in the 1960s. Atabout the same time, the College of Social Sciences,founded in the 1930s. became the university ofTampere. The universities specialized in educationand social sciences met part of the need to expandthe higher education system.

The second phase of expansion with a strongemphasis on regional policy, began in the 1950s.Expansion was fuelled by change in the country'seconomic structure, high demand for an academicallytrained labour force, an increases in the number ofmatriculated students, and general rise in thestandard of living. demands were voiced for greaterregional and equality in university admissions.

Several major decisions on expansion andplacement were made in the 1960s and 1970s. Notone but three institutions of higher education wereset up in eastern Finland: The university of Joensuuand Kuopio and the Lappeenranta University oftechnology. The university of Lapland inRovaniemi was founded in 1979, being the lastdecision in this series. In the 1970´s all privateuniversities were subordinated to the Ministry ontheir own initiative.

A momentous political decision was to raise theschools for higher education in the fields of music,industrial art and theatre and dance to universitystatus in the 1960s and 70s. in 1993 , the Academyof Fine Arts joined the Sibelius Academy, theUniversity of industrial Arts and the TheatreAcademy as a part of higher education system.

All teacher training came under the highereducation system when the teacher traininginstitutes acquired university status in the 1970`s.They were followed by kindergarten teachers in theearly 1990`s after a strong competition with thenewly founded Polytechnics. The languageinstitutes, which previously trained translators,merged with universities in 1981.

The founding of new polytechnics in the early1990`s practically ended the expansion of tertiaryinstitutes. Since then discussion about the optimalnumber of tertiary units has strongly intensified.

2.3 A dual model oftertiary education

The dual model of the Finnish tertiary educationgoes back to 1989. It was seen at the time that thepolytechnics would be the best solution to thefunctional shortcomings in the post-secondaryeducation system of the time. The vocationalcolleges were too "low" in the education system,and their potential was not used to the full. It wasalso believed that the polytechnics would help cleara "backlog" of matriculated students.

During the first years of planning, the status ofthe new polytechnics remained unclear. Universitysociety and conservative parties were stronglyopposing the founding of any competing tertiaryinstitutions. Some planners saw the polytechnics aslower-level universities or institutes preparing foruniversity studies. As the solution matured, thetertiary system was approaching a dual model, inwhich the polytechnics are equal to universities, yethaving their own specific character. However, agreat deal of development was needed to upgradethe old post-secondary vocational colleges to thetertiary level and make them fit to operate side byside with the traditional universities. The aim ofhigher education policy was to strike a new balancein the tertiary structure. Another goal was to offer awide range of choices to students through a widerange of institutions with different profiles.

At the time the polytechnics were beingdeveloped, there was another route Finland couldhave taken. It would have been possible to give theexisting universities larger latitude in expandingtheir supply towards more professional training inthe fields now offered by the polytechnics. In thiscase, there would not have been two clearly separatecategories of tertiary institutions, and the vocationalcolleges would have had to find their place in post-secondary education. It is difficult to say whetherthis solution would have resulted in a great degreeof differentiation. It is doubtful whether theuniversities would have been able to cope with thegrowing responsibilities and whether the vocationalcolleges would have had a very promising future.

We know from experience that, set against each

19

other in competition, institutions tend to imitateeach other. The best solutions travel from oneinstitution to another, and little by little theinstitutes start to resemble each other. This couldhave been the fate of higher professional education,had it been incorporated into universities.

The dual policy can be seen as one form ofregulation by the authorities. Through this policy,the authorities try to induce diversification withinthe tertiary education system, while at the sametime promoting stability. However, the tenet inFinland was that, rather than letting the sectors oftertiary education drift too far apart, they should beencouraged to engage in close collaboration.Individuals, ideas and projects should be able tocross the boundaries between these two sectors.

Had there not been a clear aspiration to have twodifferent sectors, tertiary education could easilyhave become uniform. It is not very likely that theinstitutional hierarchies would have disappeared, infact, they could have grown more acute. The factthat tertiary education is divided into two sectors –practical and theoretical – may also encourage theinstitutions to develop their own individualprofiles.

The dual policy has several special characteristics:

a. The present dual system is specific to Finland inthat the two tertiary sectors are fundamentallydifferent. The polytechnics are seen asinstitutions which prepare their students forpractical work, while the mission of universities ismore academic and has a theoretical andresearch orientation.

b. The degrees and degree programmes aredifferent in polytechnics and universities.The universities have a two-cycle degreestructure (Bachelor-Master) while thepolytechnics have so far had only one levelof degrees (Bachelor). A three-year pilot ofpostgraduate polytechnic degrees waslaunched in 2002.

c. The model of administration is different inthe universities and the polytechnics.The universities are maintained by the state,

while the polytechnics are run by municipalities,joint municipal bodies or foundations.These maintaining organisations – andexternal partners – have a stronger role in theiradministration, sometimes also a more directimpact on their operations.

d. The administrative structure and staffcategories of universities are largely geared tosupport research, while polytechnics are mainlyinstitutes of teaching, with fewer research-related tenures. The polytechnic organisationfollows a conventional organisational model,while the operative focus in the universities isoften on the level of departments or individualprofessorships. The universities in Finlandfollow Humboldtian model.

e. The funding systems are geared to supportthe special mission of each sector.In universities, external funding is largelytargeted to research. At first, polytechnicsobtained funds for the development of theirbasic operations and later for teaching andthe regional service functions.

Several follow-up studies have shown that the dualideology has been well received both by the labourmarket and by students seeking admission totertiary education. The more professionally orientedcandidates apply to a polytechnic and the moretheoretically disposed choose the university. Thisclear division is also reflected in the opinionsexpressed by employers. With their distinct profile,polytechnic graduates compete for the same jobswith university graduates. There is consensus inFinland concerning the respective missions of thepolytechnics and universities.

20

Figure 1. The education system in Finland

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Vocationalqualifications

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21

2.4 The overall size ofthe tertiary education2

The provision of tertiary education in Finland isextensive. The annual student intake in tertiaryeducation as a whole is equivalent to about 65% ofan average 19–21 age group. In 2003 there werearound 174,000 degree students in universities,83,000 in open university and over 129,000 inpolytechnics (see detailed tables in the appendix3).

Polytechnic education has been provided since1991. The polytechnic system grew to its plannedextent between 1997 and 2003. The annual intakeincreased by over 4.700 students from 1997 to2003. The overall student number grew from28.500 to 129.000 in the same time. At the end of2003 the total number of graduates was 102,000.

2.4.1 Studies

The average duration of university studies in 2003was 7 years. Architecture (Master's 10 years) andmusic (7.5 years) had the longest study times (seetable).

In 2001–2002 the discontinuation rate inuniversities was 6.7% (c. 5,600 persons), 5.3%dropping out permanently (exited from theeducation system), while 1.4% transferred toanother field of study. Altogether 5.9% of theuniversity dropouts (330 persons) transferred topolytechnics. The dropout rate was the lowest inMedicine (1.6%) and clearly the highest in SportSciences (16.8%).

In 2003 the average duration of polytechnicdegree studies in youth education was 4.1 yearsand 3.2 years in adult education. The averagestudy time was the longest in Technology,Communication and Transport, in Culture, and inNatural Resources and Environment (4.4 years).

In 2001 and 2002, nearly 11,000 polytechnicstudents (7.6%) discontinued their studies. In

youth education the percentage ranged from 4.7%to 12.7% depending on the institution, and from4.2% to 10.6% depending on the field. Of thedropouts, 1.4% started in another polytechnic and0.7% (1,700 students) in a university.

In 2002, the average age of polytechnicgraduates was 25, university Master's graduates 27and new PhDs 36.

2.4.2 Graduate placement

The employment situation among universitygraduates has not changed much. According toStatistics Finland, the unemployment rate foruniversity graduates aged between 20 and 64 was3.7% and for those with postgraduate orcorresponding researcher training 2.4%.

In 2001 the unemployment rate for those with aMaster's degree was 3.7% and 2.2% for licentiatesand doctors. 83.5% of Master's degree holders weresalary earners, 1.1% were self-employed and 5.2%were studying.

The placement of polytechnic graduates of1998–2002 was the following at the end of 2002:82% were employed, of whom 80% were salaryearners and 2% self-employed; nearly 8% wereunemployed; 5% were studying; and 2% hadmoved abroad.

Universities and polytechnics have takenmeasures to promote graduate placement, forinstance by stepping up advisory and guidanceservices and developing internships.

2.4.3 Personnel

In total, universities employed in 2004 some36,800 persons, of whom 25% were teachers. Thenumber of professors was 2259. Other teachercategories are assistants, senior assistants andlecturers. In addition to those enjoying tenure, another half of the staff has been funded by external

2 The data is from the KOTA (university) and AMKOTA (polytechnic) databases, which contain key data describing higher educationactivities and serve HEIs, the Ministry of Education and other stakeholders. The data are also used in the development, monitoring,evaluation and steering of HEIs. Some data come from Statistics Finland.3 Statistical changes are shown in the Appendices (the text mostly uses 2003 statistics).

22

contracts. Nearly 60% of lecturers, 22% ofprofessors and 50% of assistants are women.

The major dynamic element in universitypersonnel in recent years has been the increase ofpart-time and externally funded personnel.Structure of posts and salaries within permanentpersonnel have stayed quite stable since the SecondWorld War. For the moment there are pressures toreform university staff salaries into a more flexibleand encouraging form.

The student-teacher ration in universities is22:1, and 2.7 new students are admitted perteacher. There are 1.6 Master's degrees awarded perteacher and 0.6 doctorates per professor.

In 2003 the overall polytechnic workforce was10,500, of whom 56% were teaching personnel.The largest teacher groups were senior lecturers andlecturers, the rest were principal lecturers, of whom26.4% were PhDs and 38% licentiates. Mostlecturers had Master's degrees; 2% were PhDs and6% licentiates.

The non-teaching staff in polytechnics amountedto 44% (4,620 persons). They mostly work ingeneral, personnel and educational administrationand in library and information services.

2.4.4 International mobility

In recent years, universities and polytechnics havebeen stepping up their international activities inboth education and research. In 2003 the totalnumber of Finnish students going abroad was7554. Compared with the 2002 figure (7434) theincrease was 122 or nearly 2%. Like in previousyears, about one in five university students (19%)and one in seven polytechnic students (14%)studied part of their degree course abroad. Thenational aim is that by 2010 the number ofstudents going abroad will reach 14,000.

The number of foreign exchange students hasbeen growing steadily for several years. In 2003Finland received overall 6,616 foreign students andtrainees, which means an increase of 590 students,or 10%, from 2002.

International exchanges have grown inuniversities mainly through multilateral exchange

programmes. In 2003 the number of Finnishuniversity exchange students was 3,863. Thenumber of foreign students who came to Finlandgrew by 5.4% from 2002. In 2003 a total of 3,987university students came to Finland to study.

In 2003, 15% of Finnish university researchersworked for two weeks or longer in foreignuniversities and 1,088 foreign researchers came towork in Finnish universities for one month orlonger. The average duration of research visits was4.9 months.

In 2003, 3,691 polytechnic students studied ordid work practice abroad for three months orlonger. The average duration of students' stayabroad was 4.8 months. In teacher exchanges, 44%of polytechnic teachers studied or worked abroadfor one month or longer. Polytechnics received 73exchange teachers or experts from abroad for onemonth or longer and 1,462 teachers for less than amonth.

Both higher education sectors have continuedcarrying out development measures according tothe internationalisation strategy adopted in 2001.The aim is to strengthen Finland's competitivenessin the international education market. The year2003 did not see any major changes in the foreigncooperation partners. As regards both incoming andoutgoing exchanges, Finland's mobility is veryEurope-centred: 79% of mobility to Finland and89% of mobility from Finland was with Europeancountries. Most of other exchanges are with NorthAmerica and Australia.

2.4.5 Research and development

In 2003 the R&D expenditure in Finland was EUR5.0 billion in all, which makes 3.5% of the grossdomestic product (GDP). The higher educationsector expenditure (universities, polytechnics anduniversity central hospitals) was EUR 976 billion,or about 19 % of the overall expenditure. Thebusiness sector accounted for 70% and the publicsector (mainly state research institutes) 10%. At1% of the GDP, public R&D funding in Finland isamong the highest in the world; the EU average is0.77% (OECD).

23

Table 1. R&D expenditure by performer sector and source of funding in 2003

Source of funding

Performer Business Public University Foreign Total

enterprises sector* sector** countries***

€ million % € million % € million % € million % € million %Businessenterprises 3,306.1 93.7 192.4 5.5 - - 29.4 0.8 3,527.9 100.0

Public sector* 67.2 13.0 399.7 77.6 - - 48.5 9.4 515.4 100.0Universitysector** 56.0 5.7 386.2 39.6 454.6 46.6 79.6 8.1 976.3 100.0

Total 3,429.3 68.3 978.3 19.5 454.6 9.1 157.5 3.1 5,019.7 100.0

* Incl. private non-profit institutions

** Incl. university central hospitals and polytechnics*** In major corporations, funding received from the

corporation's foreign enterprises is understood to be own funding, which diminishes the proportion of foreign

funding

research funding in polytechnics and 49% inuniversities. The foremost sources of researchincome for polytechnics were EU funds, domesticbusinesses and Ministry of Education projectfunding. The primary external sources of financingfor universities were the Academy of Finland(research funding) and the National TechnologyAgency TEKES (technology funding).

In 2005 the Ministry of Education allocated EUR640 million to research, which represents 40% ofall state R&D funding. Most of this sum was allo-cated to universities and the Academy of Finland,Research expenditure accounted for almost 11% ofthe total expenditure in the Ministry of Educationadministrative sector.

In 2003 external funding represented 77% of

Source: Statistics Finland

Figure 2. R&D funding in the state budget in 2005 (%)

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2.5 Administration oftertiary education

All Finnish universities are state-run institutionsand primarily financed from the state budget butthe universities have extensive autonomy. Thepolytechnics are either municipally or privately runand co-financed by the government and localauthorities.

Parliament passes educational legislation anddecides on the overall lines of education andresearch policy. The universities are governed by theUniversities Act and polytechnics by thePolytechnics Act. Legislation concerning the universitydegree structure is being revised to enable the newtwo-cycle degree structure to be adopted on 1August 2005. The main policy guidelines anddevelopment targets are determined at a generallevel in the Development Plan for Education andResearch, which is adopted by the Government fora six-year period and revised every four years.Performance management and target outcomesconstitute the most important tool for the Ministryof Education in steering the operations of theuniversities and the polytechnics. This is strategicsteering which implements the national tertiary

The polytechnics and universities are responsiblefor evaluating and developing their own operationsand outcomes. The Higher Education EvaluationCouncil, established in 1995, is an advisory bodywhich assists the universities and polytechnics andthe Ministry of Education in evaluation andpromotes evaluation as an integral part ofinstitutional operations.

The national science, technology and innovationpolicies are formulated by the Science andTechnology Policy Council, which is chaired byPrime Minister. The Council is responsible for thestrategic development and coordination of Finnishscience and technology policy. The Council advisesthe government and its ministries in questionsrelating to science and technology, the generaldevelopment of scientific research and researchertraining, and Finnish participation in internationalscientific and technological cooperation.

The national authorities primarily responsible forscience and technology policy are the Ministry ofEducation and the Ministry of Trade and Industry.The Ministry of Education is in charge of mattersrelating to researcher training and science policyand the Academy of Finland. The Ministry of Tradeand Industry deals with matters relating toindustrial and technology policies, the NationalTechnology Agency TEKES and the TechnicalResearch Centre of Finland VTT. Nearly 80% ofgovernment R&D funding is channelled throughthese two ministries.

The Academy of Finland, the Finnish ResearchCouncil organization, takes care of the centralresearch administration and finances a major part ofthe university research. The Academy has fourresearch councils, appointed for three-year terms,each financing research in its disciplines. Anotherimportant task for the Academy is to evaluateresearch. Public funding for technology anddevelopment is channelled through TEKES, whichalso plays a major part in the external funding ofthe universities.

education policy (Figure 3).

25

Figure 3. Central administration of tertiary education and research

President of the Republic

Council of state

Science and Technology

Policy Council


Universities

Academy of Finland

Research Institutes

Polytechnics

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26

CHAPTER 3.Tertiary educationsystem and thelabour market

3.1 Historical background

Finland has a fairly long tradition in theanticipation of labour and educational needs. In the1970s, educational foresight was organised into aPlanning Secretariat of the Ministry of Educationand a Consultative Council for EducationalPlanning attached to the Ministry. These bodiesincluded representatives of the Ministry's differentunits and other educational agencies, provincialadministration, other ministries concerned witheducation and training, and the social partners.From the outset, this organisation was charged withdrawing up proposals for the supply of educationand training by levels and fields of education in thelonger term. One of the reasons for this activity wasthat up to the late 1980s the extent of both thenational and regional supply of secondary anduniversity education was determined by the centralgovernment.

The set-up changed in the early 1990s whenneo-liberal political ideologies led to a wide-scaledelegation of education policy decisions to the locallevel. In that connection, quantitative planning wasdevolved to the extreme. The rationale was thatsince the education providers and HEIs have


27

sufficient information to decide their own supply,state control was no longer needed to the formerextent. The Planning Secretariat and theConsultative Council were abolished.

The experiences from the decentralisation werenot altogether positive as regards the quantity ofsupply. However, this is not the main reason whyeducational foresight and more planned supply ofeducation are gaining more ground again. Thereason is primarily the foreseeable demographicdevelopment. The population is ageing: the largepost-war age groups will start retiring en massetowards the end of this decade. The young agegroups entering the labour market are considerablysmaller than the baby-boom generation, andconstantly getting smaller. From 2004 onwards theentrant labour force will be smaller than the exit.From 2010 onwards the annual labour need isestimated to be 10,000 larger than the entrantlabour force. The labour force, and later the wholepopulation, will gradually start to diminish.

As the foreseeable labour shortage seems to rockthe very foundation of both society and the nationaleconomy, it is imperative that the education supplyis quantified rightly: firstly in secondary vocationaltraining, polytechnics and universities, andsecondly by fields of education within these levels.This was the rationale for a large-scale foresightundertaken in connection with the preparation ofthe Development Plan for Education and Research2003–2008. The aim was to set targets foreducation and training for 2008.

3.2 Foresight and quantitativeplanning of educational supplyup to 2008

The number of tertiary graduates entering thelabour market in Finland is regulated by means ofa medium-term Development Plan for Educationand Research, which sets quantitative targets basedon long-term forecasts on the need for educatedworkforce.

The forecasts are two-fold. The future need fornew entrants is estimated on the basis of the

outflow from the labour market mainly due to theage structure of the population and the resultingretirement rate. The second part concerns changesin the workforce as a whole and in selectedoccupational groups. This part is based onsuccessive phases of estimations of economic growthand workforce, changes in the industrial branchesand occupational groups. The needs arising fromthe outflow and changes in occupational structuretogether constitute the need for labour marketentrants. The occupational figures are transformedinto educational concepts with the help ofoccupation-education matrices.

The relationship between labour market demandand the supply of education at all levels ofeducation is followed on a fairly regular basis.Monthly data on employment and unemploymentis available by different levels and fields ofeducation, and detailed and comprehensive data oneducation and jobs can be obtained from the censusconducted every five years. Feedback from thelabour market also comes through informationprovided by the polytechnics, the universities,employer and employee organisations and differentcooperative and advisory bodies set up by thegovernment.

The supply of graduates cannot match labourmarket demand exactly, firstly because the forecastscan give only a rough picture of futuredevelopments and secondly because short-termfluctuations are not predictable and thereforeeducation and training, which may take 5–10 years,cannot be adapted to rapid labour market changes.

3.3 Foresight andquantitative planningof education up to 2008

The education foresight up to 2008 was conductedas follows:

a. A Ministry of Labour project called Labour Force2020, which involved many other ministries,including the Ministry of Education, deviseda foresight ("basic scenario" and "target

28

scenario") concerning labour demand, or jobcreation, by industrial branches up to 2020.

b. The foresight service of the National Board ofEducation forecast the development of theoccupational structure of the labour force upto 2015, which is compatible with the labourdemand foresight mentioned above. The forecastperiod was 2006–2015. Students who enrolin 2008 will mainly enter the labour marketbetween 2011 and 2015. An important startingpoint for the forecast was the data on theoccupations of the employed workforce collectedby Statistics Finland in 1995 and 2000.Occupation-specific exit from the labour market(primarily retirement) was calculated on the basisof the age structure of 50 occupational groups,and the projected number of employed personsin these occupational groups was calculated in22 branches of industry. The sum total of thechange in the number of employed persons(plus or minus) and the outflow yielded theestimated number of new jobs becoming vacantduring the period under review and subsequentlythe annual labour demand.

c. Each occupational group was given an"optimal education/training profile", that is,it was estimated which education/training wouldbe the most appropriate track for eachoccupational group in terms of the skill andknowledge demands. This was the basis forcalculating labour demand by levels ofeducation and by fields of education.

d. To determine the target supply for 2008, itwas necessary to take into account someeducation policy objectives, other parametersand the objectives set in the 2003 GovernmentProgramme for improving the efficacy andperformance of the education system. The aimof the Government is mainly to step up transitionto further education; to reduce dropout and toraise the graduation rate; to reduce unnecessary

multiple education/training; to shorten studytimes in higher education; to lower the age oflabour market entrants; and ultimately to raisethe employment rate. Similarly, the Governmentconsiders it important that the whole school-leaving age group continue in vocational trainingor in higher education and that vocationaltraining provides eligibility for higher education,primarily to polytechnics but also universities.This aspect of the 2008 targets was deliberatedwithin the scope of a Ministry of Educationproject Education Supply 2008, in which theMinistry of the Interior, which is responsible foroverall regional development, and the Ministryof Labour were also represented.

It was on this basis that the entrant targets forvocational training, polytechnics and universities werecalculated in youth education by fields of educati-on for the year 2008. These figures were sent on awide comment round together with the draftDevelopment Plan for Education and Research. Thefinal figures were adjusted according to thestatements received, within political realities. TheDevelopment Plan was adopted on 4 December 2003.

In connection with the preparation of theDevelopment Plan, the educational administration,the regional councils, the Ministry of Labour, theMinistry of the Interior and educational establish-ments drew up regional targets for each maakunta4.The Ministry of Education approved the indicativeregional targets for 2008 in May 2004.

The Development Plan constitutes the nationalframework for education supply. The targets foreach HEI are agreed by the Ministry of Educationand the polytechnic/university in a performanceagreement, on the basis of which the HEIdetermines its intake for each field of education.The performance agreement is concluded for athree-year period and certain parts of it are reviewedeach year. The next agreement period will be2007–2009.

4 Maakunta refers to the 20 historical counties in Finland, which are ethnologically unified areas. Although not a unit of official, electi-ve administration, the concept of maakunta is increasingly used in regional development contexts after a reorganisation of regionaladministration, in which Finland was divided into five very large provinces (plus the self-governing Åland Province).

29

The Ministry of Education has already launcheda project relating to the next Development Plan,which will set targets for 2012. The process will besimilar to the one described above, but moreattention will be paid to regional targets. TheMinistry of Labour will also initiate a Labour 2025project.

The present focus on anticipation is alsomanifested by the Government Foresight Network,which was instituted in early 2003 and in whichnearly all the ministries participate.

3.4 Targets for tertiary education

The total number of post-compulsory certificatesand diplomas awarded annually in Finland is110,000–120,000, two thirds of which are uppersecondary qualifications and one third tertiarydegrees. The number of polytechnic degrees is18,000 and university degrees 11,500.

The number of graduates is 900,000, which isone fourth of the total working-age (15–64 years)population.

The labour market situation for the graduateworkforce has been in the 200s quite reasonable.The unemployment rate in 2001 was 6%, ascompared with the overall employment rate of 12%and with 19% among those with no post-compul-sory qualifications. The annual income of thetertiary graduates is EUR 36,000, whereas thegeneral level is EUR 27,000. University graduatesearn EUR 45,000 a year. The income ofpolytechnic graduates is lower than that of thosewith higher vocational qualifications. Oneexplanation is that since the polytechnic system isfairly recent, the graduates are still quite young andhave not yet fully established themselves in thelabour market.

The deep economic recession of the early 1990sis clearly reflected in the graduate employmentsituation. The overall unemployment rate hit therock-bottom in 1993 when it was 23%. Universitygraduates and postgraduate degree holders did fairlywell during the economic crisis. Polytechnicgraduates and those with equivalent qualificationswere not as fortunate – at its worst their unemploy-ment rate was 15%.

Table 2. Number of degrees and qualifications and population aged 15–64 by sector, 1990, 1995, 2001

Level Degrees Population aged 15–64

1,000 persons

1990 1995 2001 1990 1995 2001

All 112,400 118,600 115,200 3,361 3,413 3,476

Degrees 15–64-year-olds

1000 pers.

1990 1995 2001 1990 1995 2001

All 112,400 118,600 115,200 3,361 3,413 3,476

Upper secondary school 27,200 33,800 33,700 234 260 304

Vocational education 48,900 43,200 44,500 993 1,051 1,119

Tertiary education 35,500 41,100 36,500 675 800 921

a. Polytechnics 23,800 26,700 21,000 439 530 604

Vocational college 21,200 22,100 3,000 386 463 480

Higher vocational college 2,600 2,900 100 53 66 65

Polytechnic 0 1,700 17,900 0 1 59

30

Income development has been slightly morepositive among the highly educated populationthan among the population on average after 1993

university graduates.

Table 3. Unemployment rate, annual income, salaries and wages by level in 1990, 1995 and 2001

Level Unemployment Annual income, Annual salaries and

rate,% EUR 1000 wages, EUR 1000

1990 1995 2001 1990 1995 2001 1990 1995 2001

All 6 20 12 18 21 27 15 18 22

Upper secondary school 4 20 8 15 18 21 13 15 17

Vocational education 7 22 15 16 18 23 13 15 19

Tertiary education 2 10 6 25 27 36 22 24 30

a. Polytechnics 3 12 7 22 23 30 19 20 26

Vocational college 3 13 7 20 22 29 18 19 24

Higher vocational college 3 10 5 30 32 47 27 28 39

Polytechnic 9 24 23

b. University 1 6 4 32 34 45 28 30 38

Bachelor 1 7 5 26 28 35 23 25 30

Master 1 6 4 34 35 47 29 31 39

Licentiate 1 4 3 38 39 53 34 35 45

Doctorate 0 2 2 51 51 68 44 44 55

Figure 4. Unemployment rate of tertiary graduates 1990–2001

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31

holds if the change in education supply correspondsto a change in relevant job-openings, i.e. a changein the outflow rate and in the number of jobs.Labour market entrants substitute retiringemployees, as well as being hired for totally newjobs. Problems mainly arise in situations ofeconomic recession or significant slackening ofeconomic growth, when new jobs are not createdand labour market entrants graduating frompolytechnics and universities are mainly recruitedto substitute retired employees. But if the supplyexceeds the estimated number of job openings,unemployment will grow. Unemployment is aproblem for the younger graduate labour force inparticular because older employees generally havepermanent jobs and only exceptionally lose them(e.g. through redundancy). On the other hand,young graduates are in high demand and readilyhired in an economic boom thanks to their freshknowledge and open-minded approach to newkinds of assignment.

Another factor is economic restructuring. In thelate 1990s there were two shifts in the Finnisheconomy. The first one was a policy for restrictingpublic sector growth and cutting public-sector jobs

Figure 5. Annual Income of the tertiary graduates and the employed population 1990–2001, euros

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3.5 The relationshipbetween education supplyand employment and income

There are some cases through which it is possible toinvestigate the impact of an increase or a decrease ineducation supply on the labour market situation.For example, the number of dental degrees hasfallen approximately by 40–50% since 1997.Following the decrease, the unemployment rate fellby half and the annual income grew by one fourth.This could be taken as a sign of a link between achange in education supply and the labour marketsituation. In reality, the relationship between thesefactors is more complicated. As far as dental studiesare concerned, there was also a decrease in dentists'jobs, so that it made sense to decrease the educationsupply. In the field of medicine, we can find asimilar fall in the education supply and a resultingreduction of the unemployment rate. But incontrast to the dental field, the income level grewless than in comparable educational groups overall.

The correlation between changes in educationsupply and the unemployment rate and income

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32

Figure 7. The annual income of all university graduates and engineering gaduates 1990–2001, euros

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Figure 6. Annual income of polytachnic and university graduates according to the main sector of

employment 1990–2001, euros

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arand for encouraging the growth of the privatesector. This meant that there was an over-supply infields traditionally employed in the public sector.This concerned university graduates andpolytechnic graduates in certain fields, such asnursing. This is shown in the following figure.

The second shift took place in the industrialstructure. Since 1993 the ICT sector has increasedits share of production and employment in the

national economy. In tertiary education this has meantgrowing demand for graduate and postgraduate de-gree holders, especially in engineering.

The third factor in income formation is the ageof the graduates. The income level rises over time sothat the older the employee is, the higher his/herannual income. A slight change has taken place inthis respect during the past decade: age has more

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effect on income creation than before (see Figure 8).

33

Figure 8. Annual income of all university graduates by age in 1990, 1995, 2000, euros

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Figure 9. The annual income in Typical Higher Education Occupations by Sector of Education

in 1990, 1995 and 2000, euros

This means that when the population ages, theaverage income level will grow if the income systemremains unchanged.

Looking at the annual income from the point ofthe typical graduate occupations, we find out thata certain number of non-graduates are also emplo-yed in these occupations. The income level ofuniversity-educated employees is much higher thanthe other education groups. But if we compare

employees with only upper secondary school certi-ficates – those who have not completed higher edu-cation studies – and polytechnic graduates, the dif-ference in the income levels is not as substantial.

The income level varies according to thefluctuations of the national economy. The variationhas been largest in post-graduate groups whileuniversity graduates have succeeded in maintainingand even increasing their income.

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34

CHAPTER 4.The regional role oftertiary education

4.1 Finnish regional policy

In Finland, regional policy was discussedextensively in the 1960s and the 1970s. At thattime, the focus was on the industrialisation ofdeveloping areas and the development of publicservices. The government played a central role in thedevelopment efforts. The first laws on regionalpolicies were stipulated in 1966–1969 and1970–1975. Their ideology was bases on theprinciple of solidarity towards most depressedregions. One important target at the time was theregional expansion of the university system in orderto balance regional supply of university places.

For the years of 1975–1981 a special law wasstipulated to improve developing regions. That wasthe starting point of planned period of regionalpolicy, which lasted up to the end of 1980s. Themain target was a balanced national development.The ideology was based on legitimate justice. Itwas considered legitimate to invest on dynamicregional centres, if this investment will not surpassthe interests of any other regions. At the same timeuniversity policy was targeted to structural changesin degree system and administration.

In the late 1980s, systematic efforts were madeto develop the Finnish innovation system with a


35

by the regional development legislation, themaakunta-specific implementation plans list anumber of expectations regarding universities andpolytechnics.

Finland's accession to the European Union in1995 was a milestone in regional development.The Structural Funds made resources available forvarious regional programmes and projects. Between1995 and 1999, the Ministry of Education fundedaltogether 1,170 projects, allocating a total of EUR420 million to them. The HEIs received nearly halfof this sum. The European money has beenespecially welcometo polytechnics, which started totake their first steps in research and development.

The Finnish Government is currently preparingmeasures for devolving central governmentresponsibilities on the regions. The university andpolytechnic networks are already regionallydecentralised and therefore not included in this setof projected measures.

4.2 Decentralised tertiaryeducation system

The Finnish tertiary education system of 20universities and 29 polytechnics covers the wholecountry. Higher education has been developed as adual system, in which each sector has a profile of itsown. The universities are charged with academicresearch and education based on it and thepolytechnics with higher education geared to theworld of work and R&D which serves education,the world of work and regional development.

The Finnish university system grew into thepresent regionally comprehensive network duringthe 1960s and 1970s. The present 20 universitiesare based in 11 cities and towns, providing degreeeducation in over 20 different localities. The aim ofthe regionally decentralised network is to make fulluse of the talent reserve of the country and toproduce highly educated workforce for the needs ofthe growing public sector and the business sector.

5 Maakunta = a traditional county, not part of the official or elective administration; for a longer explanation see footnote in Chapter3.3.

view to better international competitiveness. It wasseen important to invest in activities whichgenerated and enhanced knowledge. Theuniversities had an important place in the efforts.Another aspect which began gradually to gainground was the need to develop the regions basedon their own strengths. The government's role wasto help create basic infrastructure in the regions andconditions conducive to effective operation of theinfrastructure.

In the 1990s, the focus in regional developmentshifted to programme-based regional policy andlegislative measures. The main responsibility forregional development still rests with thegovernment and the local authorities. Foradministrative and operational purposes, thecountry is divided into regions (maakunta5). Theregional councils became regional authorities, withresponsibility for general regional policy planning.The Government has launched several regionalprogrammes, in which the programmes for centresof expertise and regional centres have importantfunctions. The ideology is based on utilitarianism,which is supposed to serve the whole nationalentity.

Another significant reform was a regionaladministration restructuring in 1997, in whichemployment and economic development centreswere put in place to back up development in theregions. The regional authorities in the Ministry ofEducation sector are the provincial state offices,which have administered higher education mattersmainly with regard to EU Structural Fund projects.

In the 21st century, the regional developmentlegislation was amended with the aim of devolvingdecision power on the regions in mattersconcerning them. Each regional council devised afour-year regional programme for its maakunta,outlining regional development and its priorities.The regional councils prepare implementationplans for each year; the aim is that these are agreedwith central government. Although highereducation does not belong to the matters governed

36

In the 1980s, the universities were increasingly seenas engines of regional development. This trendgained impetus from the improved possibilities foruniversities and the private sector to developresearch cooperation. In the nineties, the focus inuniversity development was on quality. At thattime, the polytechnic system was being created.

The university network will not be expandedfurther. The focus is currently on enhancing theregional impact of the universities through closercooperation and networking with business andindustry and other regional players. This is achallenge especially with regard to R&D, whichcan thrive only in higher education units ofsufficient size and versatility. The regional impact ofuniversities is further strengthened by the adulteducation network, which also covers the wholecountry, and the recently established universitycentres. There are voices in national debate ,whichargue that university system is already too large.According to that argument universities cannotsucceed in international completion, unless they arebigger in size. Some ultimists even claim that manyunits should be disclosed.

The official government policy stresses theimportance of co-operation within the universitysystem and with the polytechnics. For this purposethere are new kind of networked tertiary educationinstitutions, which operate in six towns (Lahti,Mikkeli, Kajaani, Kokkola, Pori and Seinäjoki),providing an umbrella organisation for the fairlysmall university units in these places with a view todiffusing researched knowledge more effectively inthe regions. Each network has a "parent university"responsible for the operation of the centres.

The polytechnic system was created in the early1990s with the aim of upgrading vocationallyoriented education and catering for the changingneeds of the regions and the labour market. Thereis at least one polytechnic in each maakunta.Polytechnics provide degree education in over 80different localities. Their adult education provisionalso covers the whole country.

Polytechnic education is currently beingdeveloped in two dimensions: as a stem network ofdegree education and as a service network providing

extension education and other services. The aim isto build a network in which all the degreeeducation units are large enough to provide high-quality education and to conduct high-qualityR&D in support of their regions. This will enablethem to evolve into units of a high European andinternational standard. The structure and provisionof polytechnics will be developed to enable them tobecome key factors in their regions, supporting localmunicipalities, businesses and work communitiesand catering for local residents' self-developmentaspirations.

4.3 Tertiary education andthe national and regionalinnovation systems

At present universities and polytechnics are seen tobe key components in the national and regionalinnovation systems, in which they operate in closeinteraction with business and industry and otherregional players. As a result of the currenttechnological advances and knowledge-intensiveoperations, economic and social development isincreasingly built on human capital. Thecompetition takes place in a globalising andincreasingly international market. Innovativeoperations require ever more rapid knowledge andtechnology transfer and growing cooperationbetween all those involved in innovation. Thismeans that the HEIs have a growing role inproducing new knowledge and diffusing knowledgeand know-how.

Since the nineties, Finland has beensystematically creating a national innovationsystem, with the aim of putting all innovationresources and products to use as speedily andeffectively as possible through strong and efficaciouscooperation networks. The development of theinnovation system is led by the Science andTechnology Policy Council of Finland, which ischaired by the Prime Minister. The HEIs play a keyrole in the innovation system.

Universities have a special place among theregional stakeholders and have been variously called

37

"anchors", "dynamos" and "magnets". A universityis an anchor when it offers such research-basedassets to businesses in the region that they cannotafford to move their operations, at least not all ofthem, elsewhere. A dynamo generates new businessand a magnet attracts new business. In addition tothis regional mission, universities should naturallyoperate as strong traditional academic institutionswhich provide undergraduate, postgraduate andextension education based on spearhead research.

An obvious axiom with regard to HEIs is that thehigher the quality of their education and research,the better their regional impact. High-standardeducation and research attract good students,researchers, experts and possibly also businesses. Allthis has many positive economic, psychological andcultural effects on the region where the university issituated. When this high-standard knowledge startsto generate regional, national and internationalnetworks between other researchers and researchteams and businesses, it sets in motion a virtuouscircle deepening and complementing knowledgeand promoting effective utilisation of knowledge.This reinforces the economic base of the region andimproves the competitiveness of local businesses.

Another, fundamentally more difficult, questionis how HEIs should operate in order to generatethese virtuous circles. There are basically twoalternative procedures. In the first, HEIs base theirfocus on research, looking for influences,benchmarks and partners from world-class research.The danger is that the HEI may provide high-standard education and conduct world-top research,which may attract students and researchers but forwhich there is no or little demand or need in theregion. The high-standard knowledge andcompetence trickles out of the region to other partsof Finland and possibly outside Finnish borders.

The other alternative is for HEIs to make aconscious, goal-oriented effort to anchor theireducation and research to the needs expressed oranticipated in the region by focusing theireducation provision on fields in which there isdemand for knowledgeable workforce.Correspondingly, they focus their research activitieson those fields of science and technology that are

known to be in demand among the businesses inthe region.

The risk in this strategy is that such a heavyanchor in the perceived and expressed needs is notnecessarily a sufficiently challenging basis for a HEIsoperations and long-term development. There areregions in Finland which offer a challengingenvironment for HEIs, but not all do this.Lowering the sights will inevitably mean that theHEI will not be capable of conducting research at alevel that would open gates to internationalspearhead research. Before long, their researchwould wither, as would, subsequently, their education.

In principle the solution is for HEIs to buildtheir operations on further enhancing the strengthsand opportunities in local production, whileseeking to achieve the highest possible level in thechosen research fields. This makes it possible tobring about a state of affairs in which both localbusinesses and HEIs benefit. However, this requiresadjustment from both business and HEIs. Themajor problem is not necessarily the supply ofknowledge and know-how, but the capacity ofbusiness enterprises to assimilate knowledge andknow-how.

4.4 The new regionalrole of universities

The regional and societal mission of HEIs isrecorded in legislation. According to Section 4 ofthe Polytechnics Act, the mission of polytechnics isto provide education for professional posts andpositions based on the needs of working life and itsdevelopment and on research and artisticconsiderations; to support individual professionaldevelopment; and to conduct research anddevelopment which supports regional developmentand is geared to the industrial structure of theregion. The Act specifies that in executing itsmission, the polytechnic must cooperate withindustry and working life especially within its ownregion, with Finnish and foreign universities andother educational institutions. According to the Actat most one third of the members of the board of

38

6 Maakunta = a traditional county, not part of the official or elective administration; for a longer explanation see footnote in Chapter3.3.

the polytechnic may be persons representingbusiness and industry and other working life.

The Universities Act of 2004 provided "third"mission of universities. According to the Act, "Themission of the university shall be to promote freeresearch and scientific and artistic education, toprovide higher education based on research, and toeducate students to serve their country andhumanity. In carrying out their mission, theuniversities shall interact with the surroundingsociety and promote the societal impact of researchfindings and artistic activities." The Act providesthat at least one member must and at most onethird of the university senate members may beselected from amongst persons who do not belongto the personnel or the students of the university.

Debates concerning the third mission placestrong emphasis on the need to enhance theregional impact of universities. The aim of theMinistry of Education has been to allocateadditional sources to the HEIs for their societalmission in order to prevent this from underminingtheir basic operations and activities. In 2001, 2002and 2003 the Government allocated extra EUR16.5 million for the regional development of HEIs.Many projects were launched. Corresponding fundswere proposed for 2004, but were not forthcoming.

The quality of higher education is seen to be afactor securing national competitiveness. Sustainedeconomic development in the regions entailsinternational competitiveness. One answer to thishas been a policy for centres of excellence. Certainunits in universities are designated centres ofexcellence as a reward for good performance ineducation, research or adult education and inpolytechnics for high quality in education andR&D or in regional impact. Quality assurancesystems are also being developed in bothuniversities and polytechnics.

International competition highlights thesignificance of international contacts. Thecapability of HEIs to conclude internationalcontacts is of crucial importance for the regions.

Measures are being taken to further developparticipation in student and teacher exchanges andin other international cooperation in line with theinternationalisation strategy devised by theMinistry of Education for higher education.

4.5 Strategies underpinningregional development

The growing regional and societal role of HEIs hasled to wide use of development strategies. TheMinistry of Education prepared a regional strategyfor its own sector for the period 2003–2013 and,based on this overall strategy, the Department forEducation and Science Policy devised its owndetailed strategy for the education sector.

The point of departure in the Ministry's regionalstrategy is that "Finland has high-standardeducational, research and cultural services extendingto all parts of the country, which promote welfarein Finnish society and the welfare and equality of itscitizens and are responsive to changes in theoperational environment."

The vision for the development of education andresearch is that Finland's welfare and internationalcompetitiveness rest on the continued vitality andinnovativeness of the regions, which is promoted bya regionally comprehensive provision of educationand research.

The regional impact of HEIs will be furtherboosted by the development of R&D and adulteducation alongside initial education. The responseto the new regional educational needs is to makefull use of the HEIs' current knowledge and servicereserves and to enhance adult education provision.The provision of polytechnic adult education willbe diversified in response to the needs of localbusiness and industry. The maakunta6-baseduniversity centres (networked HEIs) will be develo-ped to respond to regional needs.

The activities of the decentralised highereducation network are underpinned by

39

the universities' and polytechnics' mutuallycomplementary knowledge production, which inturn is based on their respective strengths.Collaboration and structural development promotesthe emergence of sufficiently large and diverse unitsneeded to ensure the quality of education andresearch. The polytechnic network is developed as astem network providing degree education and as acomplementary service network. The presentuniversity network and the university centres willbe further enhanced with a view to a strongerregional impact.

Measures are being taken to strengthen thecapacity of HEIs for cooperating and networkingwith other stakeholders in the region. Researchinfrastructures and support services will bedeveloped to make quality R&D findings availablein different parts of the country. Especiallycooperation between HEIs in the HelsinkiMetropolitan Area will be stepped up and theirknowledge will be utilised more widely in thecountry. Regional cooperation between universitiesand polytechnics in research will be boosted andtheir participation in the regional programmes, thecentre of expertise programmes and in science andtechnology parks will be promoted.

The regional strategies jointly devised byuniversities and polytechnics will form the basis forfurther clarifying the division of work between theinstitutions. At the request of the Ministry ofEducation, the first joint regional strategies weredrawn up in 2002. In the main, the strategies aregood, and the Ministry has allocated projectfunding to several joint undertakings. Severalprojects have also been co-financed from theStructural Funds.

The Ministry of Education has requested theHEIs to update their joint regional strategies byautumn 2005. The common aim is to devisestrategies for areas that are larger than amunicipality or a maakunta and to incorporate newregional development policies into them. Thestrategic significance of knowledge is seen in the factthat many consultative bodies have been set up,mainly at the maakunta level, with membersrepresenting the local HEIs, the regional

administration, local authorities and local businessand industry.

During 2004 the polytechnics will update theirR&D strategies, which primarily deal withquestions of regional development and the role ofpolytechnics in the regional innovation system.

One future aim will be to utilise the EUStructural Funds and other international financingin the regional development of education, researchand innovation in a way which will systematicallypromote the realisation of the objectives set innational higher education and regional policies.Cross-border networking between HEIs and regionsalso boosts the application of new knowledge andknow-how.

According to the policy outlined by the Ministryof Education, regional disparities in the supply ofhigher education will be reduced. The Ministry haslaunched relevant preparations. The work is beingdone in cooperation with HEIs, the regionalcouncils, and the provincial state offices, which arethe regional authorities in the Ministry ofEducation sector. The targets set for regionaleducation supply form the basis for the targetoutcomes determined in the performancenegotiations conducted with the universities andpolytechnic, in which the parties agree on theprovision of each institution.

In an examination of the regional role of HEIs, itis worth bearing in mind that, although HEIs arekey players in the regions, they are only one amongmany other players. Business and industry are stillthe primary generators and appliers of innovations.Other important players are research andeducational organisations, producers of businessservices, etc.

The economic and social relationship betweenthese players is similarly a major factor. The newdevelopment logic favours regions which are able tooffer a wide range of quality opportunities: aninnovative environment.

40

4.6 Structural developmentof the higher educationsystem

In the effort to boost Finnish competitiveness, greatexpectations are directed at the HEIs in theregions. At its worst this has led to theestablishment of externally funded professorships indifferent locations and graduate-entry programmesand graduate schools of small intakes and narrowknowledge base. There has also been growinginterest in launching doctoral programmes.

In 2001 a Ministry of Education committee putforward proposals for stepping up the regionaldevelopment of HEIs. The rationale was that nonew institutions should be established, but theexisting institutions should be reorganised intolarger entities. In early 2005 the Governmentissued a decision on the structural development ofthe public research system. It, too, was based on therationale that larger units will ensure better qualityand impact. At the same time measures must betaken to intensify cooperation and networkingbetween HEIs, major research institutes andbusiness enterprises. Future input should betargeted to sharpen university profiles and toenhance internationalisation, new growth areas andimpact. There has also been a debate on what kindof higher education system Finland will need tenyears from now, as the age groups keep gettingsmaller.

The Ministry of Education is launching anaction programme for structural development withthe aim of achieving better value for money inuniversities and freeing resources needed to attainthe targets mentioned above. Another aim is to takea critical look at the educational responsibilities of,and division of work between, the existingeducational units. The structural developmentprogramme will be a major topic in the 2007–2009performance negotiations.

Alongside this development, there is an activequest for measures to enhance the regional andsocietal impact of universities. This is facilitated bythe possibility for universities to set up companiesor purchase stock in companies whose aim is to

promote knowledge transfer and thecommercialisation of inventions. The jointuniversity-polytechnic regional strategies devised inautumn 2005 seek to intensify interaction betweenHEIs and the region where they are located. HEIshave also been actively involved in nationalprogrammes for regional development, such as theregional centre and centre of expertise programmes.

41

CHAPTER 5.The role of tertiary educationin research and innovation


5.1 Introduction

In the division of labour between universities andpolytechnics in research, universities are responsiblefor scientific research and education based on it,including researcher training. Doctorates areawarded only by universities. Polytechnics mainlyconduct R&D which caters for working life needs,serves teaching, supports industrial life and regionaldevelopment, and is based on the industrialstructure of the region. Universities also maintainamost of the general scientific and researchinfrastructure, which and is funded through theuniversity budget.

The Development Plan for Education andResearch 2003–2008 sets general priorities forR&D conducted in universities and polytechnics.According to it, the prerequisites of universityresearch and polytechnic R&D will bestrengthened, and development will stress high-quality, internationally competitive and ethicallysustainable research. A more recent policydocument, already mentioned above, is theGovernment Resolution on the StructuralDevelopment of the Public Research System (April2005), which is expected to have a strong influenceon the development of the whole higher educationand research system in the coming years.

5.2 Financing sources for HEIs

Finland's input into R&D has grown substantiallyfrom the mid 1980s. In 2002 R&D expendituretotalled EUR 4.8 billion, which makes 3.5% of thegross domestic product. Investment in R&D hasgrown especially rapidly since the mid 1990s as theprivate sector has increased its R&D inputradically. At the same time there has also been aconsiderable increase in public R&D funding. Thesubstantial increase in R&D in the businessenterprise sector has been mainly due to the ICTsector and more specifically certain major actors inthe field.

From the mid eighties, when Finland's inputinto R&D was around EUR 900 million, it hadmore than doubled by the mid nineties. Today thetotal R&D expenditure in Finland is about EUR5.250 million, which is five times the mid-eightiesfigure. The tertiary education sector expenditure(universities, polytechnics and university centralhospitals) has grown accordingly from EUR 200million in the mid 1980s, through some 400million in the mid 1990s, to about EUR 1,000million today.

42

Table 4. Tertiary education sector R&D expenditure

1999–2003, million euros (Statistics Finland)

1999 2000 2001 2002 2003

Polytechnics 27 32 44 56 67

Universities 667 689 716 786 820

University

central

hospitals 70 69 75 84 75

Total 764 790 835 926 962

Compared with the core funding of the universitiesand government research establishments, thecompetitive funding (the Academy of Finland,TEKES) has increased considerably faster.Consequently the Academy of Finland and TEKESare the most important sources of extramuralresearch funding in universities. Their role and thevolume of funding though is quite different indifferent institutions of higher education.

The total university funding was EUR 1,824million in 2003. This comprised funding from thestate budget and external financing. In 2003budgetary funding accounted for 65% and externalfunding 35%. Broken down by performance areas,the total university spending in 2003 was asfollows: teaching 39%, research and artistic activity51% and societal services 10%, and the universitycore funding was: teaching 49%, research and art41% and societal services 10%.

Historically scientific research has concentratedon universities. During the last years the scientificrole of universties has been emphasized in publicdebate. Partly this is due to international rankinglists, which show that Finnish universities are donot appear at the top of the lists. There is also astrong belief that intensifying research is the key toeconomic success of the country.

The political tradition of Finland emphasizesequality between universities. It is a strong sociallyoriented belief that students in North-Kareliashould be served as equally than those studying in

Figure 10. R&D expenditure by sectors (million euros) Source: Statistics Finland, Science and Technology Statistics

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Helsinki. In reality there are evident differences inscientific output between universities. It is howeverobscure where the lines go. Some universities indepressed areas have made better reputation thanthose of metropolitan areas. discussion lines indiscussion are very confusing and there is lack ofrigour in public policy.

At the outset polytechnics were consideredmainly as teaching organisations but their role inresearch has increased very rapidly over the past fewyears and at the moment R&D are included intheir statutory tasks too. On the whole their role inresearch is still quite small. Statistics on polytechnicR&D input are available from 1999, whenStatistics Finland started to collect them.

In their research role, the Polytechnics have twomain problems. The first one is lack of basicfunding for research activities. The second is lack oftradition. Genuine research communities inpolytechnics are only slowly emerging. Progress inboth directions has been quite slow. The(geographically) rather scattered structure of thepolytechnic system also makes it difficult for robustresearch environments to emerge.

5.3 Human resourcesin research

In Finland some two per cent of the employedlabour force work within R&D, which is the largestpercentage in the OECD. In 2002, the totalnumber of R&D personnel was 73,000, of whom54% worked in business and industry and 32% inthe tertiary education sector. The average annualincrease from 1995 to 2002 has been 6%. In 2002the number of the tertiary sector R&D personnelwas 23,100, of whom 82% worked in universities,10% in polytechnics and 8% in university centralhospitals. Women accounted for nearly 46% of theR&D personnel within tertiary education. Thenumber of person years in the sector was 16,900 inall, of which 90% in universities.

In universities the teaching personnel was 7,849(in person years) in 2002, of whom 28% were pro-fessors, 9% senior assistants, 18% assistants, 28%

lecturers, 3% full-time instructors and 14% other(part-time) instructors. Other personnel were21,043 in all, of whom 27% were researchers and7% student-researchers. The number of personneland their relative shares vary from one university toanother. (Source: KOTA database 2002).

In 2003 polytechnics had a total of 5,921 full-time teachers, of whom 16% were principallecturers, 58% senior lecturers and 26% lecturers.Of the teaching staff, 6% had doctorate, 11%licentiate and 67% Master's degrees. In addition,there were part-time teachers and lecturers,accounting for 339 person years in all, and externalteachers (purchased services) corresponding to 503person years. Other personnel in polytechnics(including purchased services) amounted to 5,031persons, of whom 529 (11%) worked in R&D.(Polytechnics 2003).

There is a Government Decree which determinesthe duties of polytechnic teachers. Alongside theirteaching and guidance duties, lecturers (1) developteaching in their field in response to changes inworking life; (2) participate in curriculum designand student selection; (3) perform duties relating toR&D assigned by the polytechnic; (4) participatein updating and upgrading training assigned by thepolytechnic and undertake secondment to industry;and (5) perform duties relating to membership onpolytechnic administrative bodies and other dutiesbelonging or assigned to them.

The number of foreign researchers workingwithin R&D is considerably lower in Finland thanin the other EU countries. With a view to attractingforeign researchers, which is an important objectivefor Finland, measures are being taken to promote ahigh level of R&D and high-standard researchconditions and to eliminate obstacles to therecruitment of foreign researchers.

Over the past ten years, Finland has madesignificant input into developing researchertraining. In 1995, the Ministry of Education putin place a postgraduate scheme of fixed-termgraduate schools. The selection of both the graduateschools and the students is based on competition.Students study full-time in the schools, aiming fora doctorate in four years. One important aim has

46

been to step up guidance, to enhance the quality ofpostgraduate education and to lower the age ofdoctoral candidates. As Finns still show greatinterest in researcher training, there has been noshortage of competent applicants. The decision toestablish a graduate school is made by the Ministryof Education based on an evaluation made by theAcademy of Finland. At the beginning of 2003there were altogether 114 graduate schools attachedto universities, with 1,426 student researcher postsfinanced by the Ministry. In addition, the graduateschools have approximately 2,500 researcher postsfinanced from other sources. The graduate schoolsare cooperation networks of universities andresearch institutes.

Since the early 1990s, there has been asignificant increase in the number of doctorates:from 490 in 1990 to 1,257 in 2003. Theproportion of women has grown from 32% in 1990to 46% in 2003. In 2002, the average age of newPhDs was 36 in the whole country but 32 in thegraduate schools.

The development of postgraduate education willcontinue. The Development Plan for Education andResearch 2003–2008 sets a target of 1,600doctorates in 2008. Another important aim is toenhance conditions for professional researchercareers. The Ministry of Education appointed acommittee in October 2004 to propose a strategyfor developing professional researcher careers and formaking it an attractive career choice. The aim is toensure varied expertise for the public and privatesectors. The committee is to complete its work bythe end of 2005.

5.4 Quality assessmentand impact analysis inresearch

Evaluation plays an important part in thedevelopment of the research system. Internationalevaluations are an established tool for research andscience policy.

The decisions made by the Academy of Finlandand TEKES on research funding are predominantly

based on expert evaluations.There have also been several evaluations of

individual universities and research institutes.Further, universities themselves organise evaluationsof their activities and operations. For example, theUniversity of Helsinki conducted an evaluation inwhich international experts assessed the quality ofresearch in its faculties. The University has used thefindings in its internal resource allocation.

The Academy of Finland undertakes a review ofFinnish research every three years in accordancewith the Government Resolution on theDevelopment Plan of Education and Research andthe performance agreements concluded between theAcademy and the Ministry of Education. TheAcademy has conducted a review of the state andquality of scientific research in Finland in 1997,2000 and 2003. The primary aim of the review isto serve the needs of national and internationalbodies and organisations responsible for science andtechnology policy as well as research funding. Thetheme cutting across the most recent review was theimpact of research.

The Academy organises disciplinary reviewswhich look at the inputs made in the field, researchprocesses and results. The quality of research iscompared with international research in the fieldunder review. The findings are generally used to putright the weaknesses identified in the review. Theseevaluations have also led to wider science policydevelopment, such as the establishment of thegraduate schools and new research programmes. Anaction programme was put in place forimplementing the recommendations put forward inthe evaluation report Biotechnology In Finland.Impact of Public Research Funding and Strategiesfor the Future (2002). The recommendationsconcerning the funding of biotechnology in universitieshave been realised: the performance agreements bet-ween the Ministry and universities for 2004–2006include a statement that the core funding of the fivebio-centres will be kept at least on the 2003 level(M€ 16.6). Special project funding of about sevenmillion euros will be allocated for research, equip-ment purchases and new development projects in2004, 2005 and 2006.

47

Attached to the Ministry of Education is anHigher Education Evaluation Council, which assiststhe Ministry and HEIs in evaluation, evaluatedpolytechnics applying for accreditation andorganises evaluations relating to HEI operations andhigher education policy. The Council makesproposal to the Ministry of Education forpolytechnic centres of excellence in regional impactand has also conducted impact analyses inuniversities.

5.5 Cooperation withbusiness and industry

For several years now, measures have been taken tostep up cooperation between HEIs and businesses.There is not, however, any specific policy orprogramme to this end. Objectives forstrengthening cooperation have been included inmajor strategic lines in higher educator and researchpolicy.

In its reviews, the Science and Technology PolicyCouncil has stressed the importance of HEI-business cooperation. According to the Council,effective contacts and flexible cooperation formshave a significant effect on the spread of researchfindings and, with it, on the emergence ofknowledge-intensive business. They furtherstrengthen the capacity of the research system toreact to changes in business life and to respond toresearch challenges arising from business andindustry. According to the Council, universities,research institutes and polytechnics must bedeveloped as active and dynamic cooperationpartners to business and industry with balanceddevelopment of research organisations' resources.The rules of the game in cooperation must beclarified and developed to give more incentive.

The Development Plan (2003–2008) alsostresses the importance for universities andpolytechnics to cooperate with business andindustry. The aim is to clarify the principlesunderlying this cooperation and to develop thecapacity of universities and polytechnics to promotethe utilisation of research findings.

TEKES funding has had a great role inpromoting cooperation between HEIs and business.TEKES has an aim to enhance the competitivenessof manufacturing and service industries byfinancing and activating product development andR&D projects conducted by companies and byuniversities, polytechnics and research institutes.TEKES has financed the development of thetechnological knowledge base of universities andpolytechnics and their cooperation with businessand industry. TEKES funding is specificallytargeted to technologies and natural sciences.

Most of Academy of Finland financing is targetedto research conducted in universities and researchinstitutes. The Academy supports researchertraining by awarding grants to persons active inworking life for doctoral studies. The applicantmust have a postgraduate education plan approvedby a university and be in an employment relationwith his or her employer for the whole duration ofthe doctoral studies.

The centres of expertise programme administeredby the Ministry of the Interior encourages theregions to utilise their top expertise in order tostrengthen the competitiveness of the region. Thereare 22 centres of expertise to this end. The pro-gramme seeks to enhance the innovation environ-ments in regions by improving cooperation betweenthe research sector and local business and industry.The centres of expertise are mostly run by the localscience/technology park. Technology/science parksalso implement the TULI (From research to busi-ness) programme financed by TEKES, which seeksto identify research-based business ideas especiallyin universities, polytechnics and research institutes.It offers expert services to research teams and resear-chers in commercialising ideas.

Universities and polytechnics offer severaldifferent support services relating to research andinnovation. The most important services relate to theacquisition of R&D funding and contractual procedures.In addition, they offer careers and recruitment ser-vices to students and employers; some HEIs offerbusiness incubator services to students. Universitiesand polytechnics offer different extension and pilo-ting and testing services to business.

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CHAPTER 6.Achieving equityin and throughtertiary education

6.1 Introduction

When Martin Trow worked as an expert for OECDin Europe in the beginning of 1970s hedistinguished three phases in the development ofhigher education: elite higher education is accessedby less than 15% of the age grade, mass educationaccommodates from 15 to 50%, and universaleducation more than 50% of the youth cohort(Trow 1974). When Trow (1999, 307–308)decades later returned to this report, he could statethat there is really only one aspect he was unable toforecast fully. The traditional enrolment ratecounted from cohorts can no longer serve as anunambiguous criterion because the composition ofthe student body has changed. Trow's famousdistinction was appropriate as long as highereducation was mainly accessed by youngsters, butsoon only half of all higher education students willbelong to the young cohorts. The other halfcomprises adult students complementing theireducation according to the principle of lifelonglearning and those who take up higher educationstudies purely in pursuit of self-development. Accessunderstood as 'enrolment' has to be replaced by aconception of 'participation' in lifelong learning


49

7 The so called youth data sets comprise the entire age group of 20 to 24-year-olds in the longitudinal census data (see StatisticsFinland 1996). The information regarding university registration is obtained from the registry of HEIs. In addition, information regardingthe education, profession and socio-economic status of the parents of the group is included from the longitudinal census data set.The 1985 data includes 377 983 young people, and the 1990 data focuses on 343 608 young people. The 1995 and 2000 data setsare 50% random samples of the same age group comprising 152 526 and 163 615 young people respectively.

(Kivinen et. al. 2004).In Finland – as in the other Nordic welfare states

– the central goal has been to provide equalopportunities for students from differentbackgrounds (socio-economic starting points,gender, place of residence, etc.). All equalopportunity concepts involve determining where todraw the line in the equalisation of opportunitiesand at which point to hold it fair that individualsshould make an effort on their own and competewith each other (Roemer 2000). In the case ofFinnish higher education, the government hassought to level out the field first and foremost bymeans of comprehensive basic education, but just asimportantly by increasing study places in highereducation (new universities and the polytechnics) –with a view to equal opportunity in regional terms– in different parts of the country.

6.2 Social equity

The following is a discussion of the correlationbetween expanding higher education and equalopportunity. Evidence is presented in terms of fourfactors: parental education, place of residence,gender and age. In Finland, the most appropriatedata available for the purpose is the longitudinalcensus data. The following is mainly uses data on20-to-24-year-olds7. Other data sources arementioned where needed.

Equal opportunity in education has beensystematically operationalised as differences inparticipation in higher education (e.g. Hermunen1984, Isoaho et al. 1990; Kivinen et. al. 1996,2001, 2002, 2004). In Finland the differences inparticipation to university education betweenchildren with academic fathers and those whosefathers only have basic education remained largethroughout the 1980s and 1990s.

Table 5. Participation in tertiary education of

20-to-24-year-olds by father's educational level

Father's 1985 1990 1995 2000*

educational level % % % %

Tertiary (>4 yrs.) 45.2 47.8 48.0 43.2

Vocational II

(3-4 yrs.) 22.9 24.0 25.1 23.6

Vocational I

(<3 yrs.) 10.1 10.1 10.7 11.9

Primary 6.4 7.5 8.5 9.5

* In 2000 the father's degree classification was

updated by Statistics Finland. The data in this table

has not be adjusted to accommodate the change. It

should be noted that tertiary education in 1985,

1990 and 1995 was almost exclusively university

education.

the 20-to-24-year-olds in 1985, 1990, 1995 and2000 by father's educational level. The stable trendfrom 1985 to 1995 seems to be disrupted in 2000:while the relative number of those with poorlyeducated fathers participated kept growing, thosewith highly educated fathers participated less. Oneexplanation is that the competition for universityeducation places reached a saturation point amongyoung people from favourable family backgrounds,while less-advantaged young people stillpredominantly do not participate (see Kivinen et. al.2001, 2002). Another reason is the establishmentof the polytechnics in the mid 1990s. Since then,students with highly educated parent, whopreviously went to universities, have also opted forthe most attractive alternatives offered by thepolytechnics.

The overrepresentation of the offspring ofacademic fathers in universities, as indicated by

Table 5 shows the university participation rates of

50

odds-ratios in five-year terms from 1980, has beenslightly decreasing, the odds being 13–12–11–10,whereas in 2000 there was a drop to 7. As such, aseven times greater chance to participate is still aconsiderable advantage in equal opportunity terms.Some recent Finnish studies have taken bothparents' educational attainment into account(Kivinen et. al. 2001, 2002, 2004). The results areconsistent with the trend shown above. Thedifferences in participation rates between childrenof PhD parents and children of parents who haveonly basic education are substantial and persisting,the odds ratios remaining above 28 through 1980sand 1990s. When both parents' educationalattainment is taken into account, the differencesbetween the father's and mother's educationalattainments have only marginal effect on girls' orboys' participation and they are embedded in awide spectrum of differences in family backgrounds.

As regards university education, the relativechances (odds-ratio) of young people withacademically educated fathers were ten-times thoseof their less advantaged counterparts throughoutthe 1980s and 1990s. At the turn of themillennium, the relative advantage due to afavourable family background was still almostseven-fold. At the other extreme, the relativechances for non-participation of those withuntrained fathers remain unchanged. Overall, asregards the family background of the 20-to-24-year-olds, the situation still is that the offspring offathers with tertiary education go to university,while the offspring of untrained fathers find full-time jobs or seek other training.

What has been said about university level educa-tion applies, albeit less robustly, to the polytechnicsector. The social background of the polytechnicstudents resembles more that of university studentsthan that of secondary vocational students. Thereis, however, a clear social distinction, as shown by

Table 6. 20-to-24-year-olds students by sector and

father's education in 2000

Father's education

Basic Vocational Higher Total

Polytechnic 34 50 16 31.756

University 22 40 38 27.027

The most recent national data (Kivinen et. al.2004) relates to intergenerational inheritance ofeducational opportunities and outcomes from1940s to 2000s. Kivinen's findings show that thetransition from the era of the elite university("baby-boom generation") to the era of mass highereducation ("baby-boomers' offspring") entails notonly persistent educational legacy, but also evengrowing differences in the inheritance of thebenefits of education (i.e. labour market status andincome).

6.3 Regional equity

As noted above, probably the most importantmeasure taken to promote equal opportunity inFinland was the regional expansion of the universitysector. In the name of regional policy, efforts havebeen made to guarantee equal opportunity foryoung people to participate in university education,

presents the distribution of 20-to-24-year-oldstudents by father's educational level (basic andtertiary) in 1985, 1990 and 19958. The proportionof students with academic fathers has increased inall university towns except Vaasa. Correspondingly,the relative number of students with untrainedfathers has fallen without exception. The mostsignificant change (in percentage points) in terms offamily background is that the share of youngstudents with untrained fathers has decreased inmulti-university towns.

8 Concerning years 1985, 1990 and 1995 the information on the location of the university at which the students are enrolled is available.For 2000 this information is not available.

irrespective of their place of residence. Table 7

Table 6.

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Table 7. University students (20-to-24-year-olds) by father's educational level in 1985, 1990 and 1995.

Basic Tertiary

multi-university towns 1985 1990 1995 1985 1990 1995

Helsinki 28 23 15 45 48 57

Turku 37 30 22 31 34 39

Tampere 42 31 21 25 32 39

Oulu 45 37 26 25 29 36

University town

Jyväskylä 45 38 22 22 27 39

Lappeenranta 38 33 24 24 30 36

Kuopio 43 38 25 24 30 34

Joensuu 52 42 30 18 21 33

Rovaniemi 41 33 28 27 28 31

Vaasa 48 34 33 20 30 29

* Multi-university towns offer the whole range of studies from arts and humanities to engineering and medicine.

There are no comparable figures available for 2000.However, judging by the odds-ratios presented

to believe that the trend has changed. In otherwords, the share of young students withacademically educated fathers is likely to continueincreasing in the university sector as a whole.Similarly the share of students with untrainedfathers will probably continue to decrease morerapidly in multi-university towns than in universitytowns. The first trend is primarily due to an overallincrease in the number of higher educationgraduates and the latter to the diversifying facultystructures in the universities.

(20-to-24-year-old students by the location of theirsecondary school) and supply of universityeducation for young people (total enrolment by thelocation of university) by regions in 2000. As theregional over-/under-representation coefficientsshow, young people from the Helsinki MetropolitanArea are heavily under-represented in theuniversities of that area. As was already shown in

Metropolitan Area are more "selective" in terms ofthe family background of students. The

corresponding regional over-representation islocated in the rest of southern Finland and in theeastern Finland.

Earlier studies (Hedman & Hyyppä 1997;Hedman & Aaltonen 1999) have analysed themove from the place of birth via the university townto the place of residence of the graduatepopulation. Although the data is not up-to-date,they can be used to describe some basicmechanisms of migration related to the regionalstructure of the university sector.

tes have also been born in the area. Further, aboutone third of all graduates both originate from andsettle in the province. A significant difference bet-ween the university towns is that in Helsinki sevenout of ten 'native' graduates settle in Helsinki aftergraduation. The other centres fall clearly behind inthis figure. The explanation for the rather largemigration of 'native' graduates is two-fold. First,many professional posts (e.g. teachers, physiciansetc.) are local authority posts and therefore someuniversity graduates "have to" to move all aroundthe country. Second, a larger proportion ofacademic posts are located in the HelsinkiMetropolitan Area, which means that some

above and the figures in Table 7, there is no reason

Table 8 shows the breakdown of demand

Table 6, the universities in the Helsinki

As shown in Table 9, about half of the gradua-

52

graduates from other university towns "have to"migrate to the capital area. A feature all the Finnishuniversities share is that they promote the mobilityof both students and graduates. Since the numberof universities and their locations and structureshave remained unchanged, it is fair to assume thatthe migration flows have not significantly changedfrom the 1990s.

The general conclusion to be drawn as regardspolicies designed to even out social and regional

disparities in educational opportunity is that theonly effective and thus widely and consistently usedmeasure has been to increase education provision atall levels and throughout the country. However, inspite of the at times aggressive expansion,differences in participation rates have been relative-ly slow to decrease, which is an indication of themechanisms of social selection operating within theeducational system.

Table 8. Regional representation in university education in 2000.

Region 20-to-24-year- Total enrolment Regional Regional

old students by location of under- over-

by location of universities representation representation

their secondary coefficient coefficient

school

Uusimaa

(Helsinki Metropolitan Area) 25% 35% 0.71 -

Rest of Southern Finland 12% 4% - 3.0

Eastern-Finland 12% 9% - 1.3

Oulu 10% 11% 0.9 -

Lapland 1% 3% 0.3 -

Ahvenanmaa/Åland 0% 0% - -

Western-Finland 40% 38% - 1.1

Total 100% 100%

N 27 413 19 919

Source: Census data, KOTA-database

Table 9. Graduates of selected universities originating and settling in the university province.

A B

Multi-university graduated share of graduates share of graduates share of settling graduates (B)

town by 1995 originating originating and settling from originating graduates (A)

from province in the province

Helsinki 100% 45 32 71

Turku 100% 53 33 62

Tampere 100% 39 21 54

Oulu 100% 52 30 58

Source: Hedman & Aaltonen 1999

53

6.4 Gender equity

For almost three centuries, higher education was anoverwhelmingly male pursuit. In Finland, firstwomen entered university in the 1870s. Later on,the number of women students increased rapidly,and throughout the 20th century Finnish women'sparticipation rates have been relatively high,compared with other European countries. In 1905as many as one third of the university entrants werefemale. Ten years later their share was 40%. Thefifty-fifty landmark was reached during the 1950s.Today, women account for 54% of universitystudents and 53% of polytechnic students.

This academic activity of Finnish women derivesfrom the western liberal, individualistic andutilitarian concept of the human being and isconnected with the development of the nationstate. The structure of the Finnish education systemeffectively channelled women's demand foreducation through the upper secondary school tohigher education. Overall cultural development andideas of women's education coincided with socialand economic development which opened manyjobs for women, especially within the educationsystem itself but also in other spheres of society.(Ahola 1995.)

For several decades, women have been inmajority in Finnish higher education. Only thefield of Engineering has remained a male territory.In the early 21st century, women account for some20% of engineering students in universities. Fieldslike economics and natural sciences have equalnumbers of women and men. On the other hand,education, psychology and health sciences areexamples of huge female overrepresentation, theirpercentage rising as high as 80% of annual

In the university sector, the overall increase inthe enrolment of both men and women was 31%from 1990 to 2003 . A look at the relative increasein female enrolment in different fields of studyshows a clear difference to men's participation.Veterinary Medicine, for example, has becomealmost exclusively women's field in Finland:women's enrolment has grown by 40% and men's

enrolment plummeted by 70%. Similar strongincreases in women's participation can be seen inLaw, Agriculture and Forestry, Art and Psychology.

In the polytechnic sector, the situation is similarto the universities. In the field of Technology andTransport, women made up only 16% of newstudents in 1997 and 20% in 2003, which wasabout the same as in the university sector. Thelargest majority of women (88%) is found in Social

overall increase in enrolment in the polytechnicsector was 13% from 1997 to 2003. The relativenumber of women has grown fastest in NaturalResources and in Tourism, Catering and HomeEconomics. In Culture and in Social Services andHealth Care the share of men has been growingfaster.

Women's high participation rates in highereducation are not an indication of increased equalopportunity as such. In the first place, it can beexplained by their large proportion of uppersecondary school leavers (matriculated students),which for instance in 2002 was 59%. Partly becauseof their educational preferences and partly becausemore female (76%) than male (70%) matriculatedstudents apply for higher education, it is moredifficult for women to gain entry to tertiaryeducation. In 2002, 42% of women applicants and58% of men applicants gained entry and enrolled.(Statistics Finland 2003.)

There are also clear differences in the chances ofmen and women to gain entry to different fields ofstudy owing to their educational preferences and tothe extent of supply in different fields. Selectioncriteria also vary from field to field, which alsoinfluences entry chances. In the polytechnic sector,where statistics on applicants' preferences areavailable, women whose preferred field wasAdministration and Trade were more likely to gainentry in 2003 (24% vs. 14%). A similar observationcan be made regarding Social Services and HealthCare (20% vs. 13%). In Technology andTransportation, on the other hand, male applicantswere more successful in gaining entry than females(36% vs. 27%). Corresponding differences alsoexist in the university sector, but because of and the

Services and Health Care (see able 11). The

enrolment (see Table 10).

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Table 10. Women's share of new university entrants by field of study in 1990–2003

1990 1994 1997 2000 2003

Veterinary medicine 72.9 85.4 94.0 90.7 92.5

Health sciences 95.8 92.2 91.0 95.8 91.1

Pharmacy 90.2 85.9 85.3 92.0 87.6

Psychology 77.8 79.5 85.2 85.1 83.6

Education 81.2 82.0 82.9 85.5 81.6

Humanities 77.2 78.0 77.5 79.5 78.1

Social sciences 64.7 62.2 65.6 68.6 65.7

Arts 60.0 57.2 59.6 59.9 64.1

Agriculture and forestry 53.0 55.1 53.7 63.6 62.7

Law 53.2 55.7 48.8 62.0 59.9

Medicine 64.7 65.4 65.1 68.7 59.5

Dentistry 71.6 74.1 69.6 67.1 59.0

Theology 51.8 63.6 64.3 62.6 57.8

Sport sciences 46.0 50.6 46.0 58.5 49.6

Natural sciences 47.6 44.8 44.8 50.1 48.5

Economics 48.4 46.4 45.7 49.7 46.6

Engineering 19.3 18.7 19.7 22.9 22.9

Source: KOTA

Table 11. Women's share of new polytechnic students by field of study in 1997–2003

1997 1998 1999 2000 2001 2002 2003

Social services

health and sports 88,5 88,3 87,1 88,2 89,3 89,9 88,1

Humanities and

education 63,0 76,8 69,4 72,9 72,9 72,1 83,2

Tourism, catering and

domestic services 69,1 71,5 71,6 73,4 74,5 75,1 78,7

Culture 69,5 67,6 69,2 67,2 70,6 68,6 69,2

Social sciences, business

and administration 60,9 62,3 64,0 65,4 64,1 61,7 68,6

Natural resources 44,6 47,0 50,1 46,3 49,1 50,9 55,4

Technology,

communication

and transport 16,2 18,6 17,4 18,1 18,6 17,3 19,6

Source: AMKOTA

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admission system and the manner in which theapplicant statistics are compiled, it is more difficultto get reliable data for conclusions.

In the university sector, where over half of theentrants are female, the discussion on women'sequal opportunities now focuses on postgraduatestudies. The higher on the echelons of power welook, the fewer women there are. In the early 1990swomen's share of basic university degrees (Master's)was 54%, but only 31% of new doctors and 13%of professors were women. In 2003 thecorresponding figures were 60%, 47% and 22%.The current equal opportunity policies seek topromote women's research careers and equality inacademic employment. In addition, specialprogrammes are being launched in the field ofEngineering in order to encourage more women totake up technology subjects. Another policydecision which has helped women's research careerswas the establishment of Graduate Schools in themid 1990s. These policy measures have been veryeffective: from 1990 to 2003 the number of malePhDs doubled, the number of doctorates awardedto women rose by 277%.

Overall, women's share of doctorates is lowerthan their share of Master's degrees. We can alsosee from Figure 5.1, if we exclude the 'deviant' caseof engineering, there seems to be a clear correlationbetween the proportion of women in a given field ofstudy and the probability that they continue inpostgraduate education. In Law and Theology,where 59% of Master's graduates are females,women are less likely than men to go on for thedoctorate. In Health Sciences, on the other hand,where nearly all Master's graduates are women,most of PhDs are also women. Dentistry is the onlyfield in which the share of female PhDs (73%)slightly exceeds their share of Masters (71%).Engineering makes an interesting exception.Notwithstanding the male dominance in the field,those women who pursue engineering studiescontinue to postgraduate studies almost as often astheir male colleagues. As pointed out above, theremight also be some labour market reasons for thesephenomena.

6.5 Access and theproblem of late entry

A special Finnish problem is the so calledmatriculation backlog (see Ahola 2002) and theresulting delayed entry to higher education.Eligible for university education in Finland arethose who have a certificate of the Finnishmatriculation examination, the InternationalBaccalaureate or the Reifeprufung. In addition tothis, applicants who have a higher vocationaldiploma (e.g. vocational college and polytechnicgraduates) or whom the university otherwiseconsiders to have sufficient knowledge and skills foradmission may be accepted. In a situation ofpersistent over-demand for higher education, it isalso justified in terms of equal opportunity thatmost fields set entrance examinations.

The annual intake in the university sector isabout 21,000, which represents one third of thecorresponding age group (19-year-olds). Togetherwith the total intake in the polytechnic sector(26,000 in youth education), the supplycorresponds to three quarters of the relevant agegroup. This means that roughly one in four19-year-olds is left outside higher education. Sinceonly half of the age group takes the matriculationexamination, in principle all matriculated studentscould enter tertiary education and still leave placesfor half of the non-matriculated young people. Inlight of this rough calculation, Finland offers goodopportunities for young people to continue intertiary education (HEIs). However, the competitionfor admission is as tough as ever.

The ground rule is that the universities, theirfaculties or departments select their own studentsbased on matriculation examination grades, theschool-leaving certificate and/or entranceexaminations. For some ten years, the universitiesand the Ministry of Education have agreed on jointtargets to speed up transition from secondary tohigher education. The aim has been to put in placea nation-wide co-ordinated application systemserving both applicants and universities, which isnow about ready to be launched. The recentdevelopment has been geared to speed up entry to

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and graduation from higher education with a viewto providing labour force to fill the vacanciesopening due to the retirement of the baby-boomgeneration.

Finland's university admissions system is uniquein Europe. It is highly decentralized in contrast toother Nordic countries, for instance Sweden andNorway, where the system is more centralized andbased mainly on grades in school cxertificates. InFinland admission is based on entranceexaminations, which in majority of cases differ fromone university to another. The system in general isconsidered to be heavy and expensive. The Ministryof Education has permanently pushed universitiesto collaborate, with a relative small success. Onereason for the growth of various forms of entranceexamination has been the belief – supported bysome research – that school success does notnecessarily lead to success in higher education.Separate examinations have also served as a part of"second chance" policies, especially in those fieldswhere the number of adult applicants is relativehigh. Also the interests of the applicants themselveshave also geared an increasing number of exams.

Due to the persistent over-demand for highereducation, and the mismatch of the educationalpreferences of secondary school leavers and theavailable places in higher education, an enormouspool of potential applicants has accumulatedduring decades. At the moment the annual numberof applicants is three times the size of thematriculated cohort. Every year only a half of thesegain entry to higher or vocational education, whilethe other half remains in the backlog, waiting for

view of the type of entrance examination used inFinland, it is not difficult to guess that the 'oldtimers' have better chances of getting in than the'greenhorns'. In spite of all this delay great majorityof students find their learning place within threeyears.

Table 12. Applicants with Matriculation Examination,

their success rate, and the size of the annual

matriculation cohort 1995–2002

Total number of Successful Annual

applicants with applicants number of

Matriculation (%) matriculated

Examination students

1995 87 896 50,9 34 506

1996 99 737 45,2 34 817

1997 100 416 47,8 35 187

1998 97 829 50,6 34 883

1999 104 692 51,7 34 489

2000 109 588 51,2 35 864

2001 109 981 50,8 35 500

2002 110 997 52,9 36 524

Source: Statistics Finland1 Includes applicants of all post-secondary education

The present Government has recently set anobjective to raise the overall employment rate of thework-age population to 75%. As a part of thispolicy, young people should enter higher educationwithout delay, study more effectively, graduatefaster, and stay in the labour force longer thanbefore. In order to realise the 'fast in – fast out'goal, the Ministry of Education has agreed with theuniversities in the performance negotiations thatabout 50% of new students should be recentsecondary school leavers. For instance in 2003, onlya quarter of new university students were the sameyear's matriculated students, and another quarterhad matriculated in the previous year. Admission touniversity takes 2–3 years on average. In thepolytechnic sector those entering are of age 19–20,which indicates that the problem of late entering isnot as acute as in universities.

According to the Ministry, the forthcomingsimple and transparent joint selection andadmission system would give newly-matriculatedstudents better chances of gaining entry touniversity. In order to avoid age discrimination,which could result from this, the Ministry has plansfor enhancing the open university track, making full

next year's application round (see Table 12). In

57

use of the of the new two-cycle structure promotedby the Bologna process, and developing specialadmission procedures for older students who haveprior studies or who are already studying in highereducation.

The aim of the government is that 55% percentof new entrants to the universities by 2008 will bematriculated in the same year. The age of enteringto universities will lowered according to the planwith one year by 2008. For this goal governmenthave launched a programme consisting of severalmeasures.

Figure 15. Student age distribution in the polytechnic and the university sectors in 2000

university and polytechnic students in 2002.Especially in the university sector the problemseems to be two-fold: late entry and a relatively largeshare of delayed studies. In 2002 the median age ofpolytechnic students was 23 and that of universitystudents 26. Of those entering into universitystudies in 2003 one fourth (24 per cent) were olderthan 25 years. The relatively large numbers of olderstudents entering the system also reflect formerlifelong learning policies. In this respect, theFinnish tertiary education system seems relativelyopen and flexible.

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Figure 15 shows the age distributions of

58

CHAPTER 7.Resources in thetertiaryeducation system

7.1 Staff and financing

StaffUniversities appoint their own teachers. The generalqualification requirement is scientific competence.Recently more attention has been paid to teachingskills as well. Teachers' duties are teaching andresearch. The job description is agreed within theannual work time plan.

The aim has been that the salary level iscorresponding across universities. This is why thesalary structure and salaries are negotiated as part ofthe state collective bargaining system. Theuniversity salary system will be reformed during2005 with a view to effecting a competitive salarylevel. Another aim is to review the viability of thepost structure and to make necessary changes.

The tertiary education system is increasinglyrequired to cooperate with business and industryand with other stakeholders. This will entail chan-ges in the job descriptions of the teaching staff. Onthe other hand, the increase in project funding hasbrought with it a large number of fixed-term teachingand research personnel, whose status in the systemhas been felt to be problematic to some extent.


59

Owing to the age structure of universitypersonnel, an above-average number of staff willretire in the near future. Thanks to the measures tosep up postgraduate education, there will not beany shortage of competent teachers.

FinancingThe education system in Finland is publicly fundedand run. Municipalities are responsible forproviding pre-primary and basic education andgeneral upper secondary education. Vocationaleducation and training is co-financed by thegovernment and local authorities. Universities arestate-run institutions with constitutionalautonomy. Polytechnics are mainly funded bymunicipalities and private foundations. Market-based private institutions exist only in adulteducation.

Traditionally there has been no tuition fees onFinnish higher education institutions. Debate onthe introduction of tuition fees for foreign studentshas lasted two decides. In August 2005 a ministerialworking group proposed an introduction of 3500–12000 Euros annual tuition fees for studentscoming from outside EU and ETA countries. Thegroup proposed also improvements on student services.

The on The student financial aid system wascreated in 1969 when the government beganguaranteeing and providing interest subsidies forstudy loans. Prior to this, university studies had tobe financed by the student's family or by studentsthemselves by working; loan guarantees and smallgrants were available only for a limited number ofdisadvantaged talented students. The aim of thenew study loan system was to offer equalopportunities to study; parental income or wealthno longer played such a great role in the financingof studies. A study grant was introduced to thestudent financial aid scheme in 1972. In 1977, asystem much like the current one was adopted. Inaddition to the study grant and the loan, studentswith no family who lived in rented housing couldapply for a housing supplement. Financial aid wasavailable for seven years.

In the 1980s, much like today, there were

pressures for improving the financial situation ofstudents, as well as for making the financial aidsystem more efficient. In 1992, the system wasremodelled to consist of a study grant, which wasdouble the previous amount, a housing supplementand a market-based, government-guaranteed studyloan. The entitlement was set at 55 months. Themaximum allowed work income for grant-recipientswas lowered to encourage full-time studying. Thecurrent income limit, introduced in 1998, madethe system more flexible.

A reform prepared during 2004 will increase themaximum amount of loan guaranteed by thegovernment. After graduation, the repayment of theloan capital will be deductible in taxation. The newsystem will take effect in 2005.

Student financial aid is intended to provide anincome for needy students whose parents do nothave responsibility for financing their studies andwho are not eligible for aid under some otherschemes. In order to qualify, a student must havegained admission to a school, study full time, andbe in need of financial assistance.

Student financial aid comprises a study grants, ahousing supplement and a government guaranteefor a student loan. The study grant and the housingsupplement are government-financed benefits paidmonthly to the student's bank. The study grant isregarded as taxable income.

The amount of aid depends on the type of school,the student's age and marital status, and the modeof accommodation. The student's overall financialsituation is also taken into account. The means tes-ting concerns the student's own income and, insome cases, the parents' or the spouse's income.

Student financial aid is available for full-timepost-compulsory studies of at least eight weeks'duration in an upper secondary school, a folk highschool, a vocational school or a HEI. Financial aid isalso available for studies abroad. The total numberof students eligible for student aid is around500,000, but only 300,000 receive support (60%).This low percentage is due to the fact that supportfor students in secondary education under the ageof 20 is means-tested. About 50% of universitystudents study part-time and often make a living by

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working and do not receive student support. It isalso common for students in polytechnic sector towork during studies

available to students.

Table 13. Monthly rates of study grants

(in euros before taxes)

Student Secondary Higher

school education

married or has

dependents 213,60 259,01

lives alone,

aged 20 or over 213,60 259,01

lives alone,

aged 18-19 213,60 259,01

lives alone,

aged under 18 84,09 126,14

lives with his or her parent,

aged 20 or over 63,91 105,96

lives with his or her parent,

aged under 20 21,86 38,68

The arrows indicate that amounts may be increased or

decreased on the basis of parental income.

The category "higher education" comprisesuniversities, polytechnics and university extensioneducation centres. The category "secondary schools"includes all other educational institutes. A studentliving with his/her parents can get an increasedstudy grant if the parents' taxable annual income isunder EUR 26,100.

The housing supplement covers 80 percent ofthe accepted rent and can vary between EUR 26.90and EUR 171.55. It is not granted if the monthlyrent is under EUR 58,87 or for the part of themonthly rent exceeding EUR 214,44(in 1.11.2005 it will be increased to 252 euros).Students who are not qualified for the housingsupplement can apply for a housing allowance un-der the general benefit scheme.

Student loans are granted by banks operating inFinland. The interest rate, the terms of repayment

and other terms are agreed by the bank and thestudent. Repayment normally begins after thestudies have ended. Because the loan is guaranteedby the government, no other security is required.Interest is capitalised (added to the loan) as long thestudent is enrolled in higher education or in adulteducation. At this stage, the student pays interestat a rate of one percent twice a year. Whenrepayment begins the interest is 3.5–4%.

The number of students eligible for loans isaround 300,000, but only 125,000 use this

guaranteed by the government.

Table 14. Monthly sums of student loan guaranteed by

the government (in EUR)

Student Recipients of adult

18 or over 220 education support 310

Student Student studying

under 18 160 abroad 360

Interest assistance is available to all those who havea low income and who have not received financialaid for a specified period. In order to qualify, thegross income may not exceed EUR 775 per month(on average) in the four months preceding the duemonth. Higher income limits apply to those withdependent children.

As regard other benefits, full-timeundergraduates and Master's students getconcessions in public transport. Student cafésreceive government subsidy for degree students'meals. Students get meals at the subsidised price byshowing their student cards.

In addition, student housing foundations offermoderately priced accommodation for students.The rents are usually between EUR 120 and EUR220 a month, for which students can get a housingsupplement (single students) or a housingallowance (student families).

Students pay a health care contribution(€31.62) included in the student union fee. Thisentitles them to use physicians' or public healthnurses' services at the Finnish Student Health

Table 13 is an overview of the monthly grants

option. Table 14 shows the monthly loan amounts

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Service clinics free of charge.As regards indirect support, all parents of

students under 17 years of age get child benefitswhether child is in school or not. There are noother indirect benefits (i.e. specific family allowanceor tax relief ). But the interest of study loans isdeductible in taxation.

7.2 Finnish student's income

According to the 2002 report Euro Student. Socialand Economic Conditions of Student life in Europe2000, the share of parental support in the financingof studies was smallest in Finland. Similarly,students' working rate was lower in Finland than inthe other countries under review, but when aFinnish student works, he/she spends more time onwork and has a larger work income than students inother countries.

A corresponding, more recent study conducted inFinland in 2003 surveyed higher educationstudents' income and expenditure, work, housing,studies and future prospects in 2003. The medianincome for all students was EUR 680 a month. Astudent's foremost sources of income were thestudy grant and the housing allowance. Over half ofthe students worked to supplement their income.Parental support was the third source of income,and loans came fourth. All in all, about 40% of therespondents had taken a student loan. By far thegreatest cost for students was housing and thesecond largest expenditure was meals; thesenecessities together represented some 60% ofstudents' costs.

7.3 Institutional resources

The main policy guidelines and developmenttargets are determined at a general level in theDevelopment Plan for Education and Research.Performance management and target outcomesconstitute the most important tool for the Ministryof Education in steering the operations of theuniversities and the polytechnics. This is strategic

steering which implements the national highereducation policy.

The polytechnics and universities are responsiblefor evaluating and developing their own operationsand outcomes. The Higher Education EvaluationCouncil, established in 1995, is an advisory bodyassisting the universities and polytechnics and theMinistry of Education in evaluation matters andpromoting evaluation as an integral part ofinstitutional operations.

7.4 Performance managementin universities

The procedures for steering universities were jointlydeveloped by the Ministry of Education and theuniversities towards management by targetoutcome in the 1990s. In recent years, with thelessening of legislative and budgetary control,university autonomy has grown. The transformationin university budgeting started in 1994 with theintroduction of one operational appropriation.From 1997 onwards there was a gradual transitionto core funding based on calculational unit costs.The new Universities Act, promulgated in 1998,increased university autonomy by delegating manymatters previously regulated by separate Acts andDecrees to the university decision-making bodies.The distribution of educational responsibilitiesbetween the universities is still determined bydecree. In return for the larger latitude in resourceuse, the universities agree on target outcomes withthe Ministry, monitor the achievement of thetargets and report on them to the Ministry.

Steering systemThe Ministry of Education is responsible forpreparing Government matters in its sector, forensuring appropriate operations and for steeringrelevant administration. The primary means to thisend are resource allocation, legislation andinformation. One important tool is the performanceagreement concluded by the Ministry of Educationand each university, another is the performance

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monitoring systems, notably the KOTA database.With management by results and target-setting,

the Ministry of Education seeks to promote thecentral aims set for the development of educationand research in the Government Programme, theDevelopment Plan for Education and Research, theMinistry's own Action and Economic Plan andother national strategic programmes.

The aims in the development of universityperformance management are:

- To secure favourable conditions for the operationof a regionally representative university system;

- To ensure strategic steering, with emphasis onevaluation in development;

- To support universities in defining their strategiesand profiles; and

- To achieve a high quality of university operationsand their strong impact on society and theregions.

The process of performance agreement and thesetting of target outcomes starts in June (year n-2)when the Ministry sends the instructions based onthe strategic guidelines to universities for thefollowing performance negotiations. The universityperformance agreements determine quantitative andqualitative targets, the resources needed to achievethese targets, the monitoring and evaluation ofoutcome, and further development of operations.The university target outcomes are set for a three-year period. In the intervening years, the targets arereviewed and confirmed and resources aredetermined for the following year. Aims relating toquality and its enhancement are largely theuniversity's own responsibility.

In the agreement period 2004–2006 quantitativetargets are set for entrants to Bachelor's andMasters' programmes; for Master's degrees; fordoctorates; for international student exchanges; forfull-time equivalent student places in openuniversity instruction; and students transferring todegree programmes via the open university track.The target numbers are set by fields of study.Where no quantitative targets can be determined for

societal impact, the objectives describe the natureof activities. All except the quantitative performancetargets are common to all universities, but an effortis also made to take account of each university'sown specific profile and relevant aims.

The performance agreement process also includespreparatory seminars and other joint events for theuniversities and the Ministry of Education beforethey embark on the actual performancenegotiations. The aim of these events is to increaseinteraction between different levels and to promotecommitment to the targets. The universities sendtheir target performance materials to the Ministryin February (year n-1), such as strategic policy lines,project proposals and a brief memorandumdescribing the achievement of the previous targetsand explanations for possible failure to do so. Atthis point, the KOTA data become available for thepreparation of the performance agreements. InMarch, before the actual negotiations, the Ministryof Education sends a draft agreement to theuniversities. They give their opinion on theagreement to the Ministry before the negotiations,which are conducted in April when the universities'financial statements are available.

In the Ministry-university performancemanagement procedure, monitoring is mainly basedon the financial statements and the KOTAdatabase. The database is being developed toinclude better-documented planning andmonitoring data and to be more flexibly accessibleto the various parties. In addition to these data, theMinistry requests separate reports on the progressmade in national programmes and projects.

In the performance negotiations, the universitiesare given oral feedback concerning the previousyear's performance. In September-October, theMinistry gives written feedback about the quality ofreporting, the effectiveness of operations anddevelopment needs in strategic priority areas.University finances are audited by state auditorsappointed by Parliament and the independent StateAudit Office attached to Parliament.

The new steering system has highlighted the roleof evaluation in university development.

The Universities Act assigns the universities a

63

statutory obligation to assess the quality of theiroperations. In the Finnish system, there is nosignificant connection between evaluation findingsand the resource level, especially as concernsteaching. The purpose of evaluation is to enhancethe quality of operations, and the mainresponsibility for acting on evaluation findings restswith the university. Evaluation findings are alsoused in the monitoring of activities which cannotbe given quantifiable targets. Universities are assistedin educational and other evaluation by the HigherEducation Evaluation Council. The Academy ofFinland is responsible for evaluating research.

Operational expenditure in theagreement period 2004–2006

University resources consist of state funding,allocated by the Ministry of Education, andexternal funding. The resources for the Ministry ofEducation sector are annually decided by theGovernment in the budget framework. TheMinistry determines the share of the universitybudget within this framework.

The Ministry of Education steers universityactivities financed from the core funding, primarilyconcerning itself with financing university researchand relevant teaching and maintaining the relevantinfrastructure and thereby the infrastructure of thewhole national research system. The basic principle

is that the main responsibility for externallyfinanced activities rests with the university.However, external financing is linked to the steeringsystem through economic planning and netbudgeting. The external funding should support theuniversity's basic mission.

One aim in the development of the financingsystem is to include only the funding of essentialdevelopment needs in the financing model and toensure continuity. Another aim is to effect a closerconnection between targets and resources. i.e. thatthe expanding activities and the growing facilitiesexpenditure are reflected as a corresponding increasein the budget. The core funding formula based onunit costs has been developed as a nationalframework allocation model geared to secure boththe core mission of universities – teaching andresearch – and the financing of the societal servicesthey provide. Universities use their own criteria ininternal resource allocation.

The financing allocated by the Ministry ofEducation to universities during the agreementperiod 2004–2006 comprises the following (as apercentage of operational expenditure in 2004):

- Actual core funding (89.4%)- Financing of national tasks (1.5%)- Financing of national programmes (4.7%)- Project funding (1.9%)- Performance-based funding (2.4%)

Table 15. Core funding in 2004–2006

Core funding 1)

(M€ 1 013)

Extent factor (19%) Education (44%) Research (30%) Societal services (7%)

Basic New Facilities Master's Graduate Doctorates Open - Other

component students (M€ 65) degrees schools (M€ ~262) university societal

(M€ 65) (M€ 65) (M€ ~447) (M€ 36,5) - targets 2/3 (M€ 13) services

- targets 2/3 - realised 1/3 - targets 2/3 (M€ 60)

- realised 1/3 - realised 1/3

1) The calculation is based on an assumed total of EUR 1013 million, from which the percentages are

calculated. The extent factor and societal services are fixed sums. The teaching/research ratio is 60:40. Any

increases in the framework funding must spent on finance teaching and research.

64

Core fundingThe aim is to keep core funding as stable as possibleand at a level which covers most operationalexpenditure, around 87%. The core funding isallocated by means of the unit-cost formula, whichhas been designed to be as transparent andpredictable as possible. The purpose is to divide theframework funding between the universities, not toallot funds directly to different degrees or otheractivities. This will also secure resources for otheractivities besides undergraduate and graduateeducation. Whenever necessary, activities notcovered by the formula are agreed as part of thesocietal services financing.

The formula used to allocate university core fun-ding comprises four segments: extent of activities,teaching, research and societal services.

Apart from regulations concerning graduateschools and open university teaching, the universi-ty can allocate core funding at its discretion.

The extent factor comprises the basic componentallocated to all universities, resources based on thetarget number of new students determined in theperformance agreement, and facilities expenditure.The basic component is determined in relation tothe 2003 operational expenditure. The newstudent allotment is determined in relation to thetarget numbers set in the performance agreementsfor 2004–2006 and the facilities expenditure isdivided in relation to the 2002 data on realisedbudgetary expenditure on facilities as recorded inthe KOTA database. The extent appropriation isagreed for a three-year period.

The criteria use din the teaching and researchappropriations are the target numbers of Master'sdegrees and doctorates (coefficient 2/3) and thedegrees conferred (coefficient 1/3) in each field ofstudy. The realised number of degrees is calculatedas a three-year average to minimise annualvariation. The target and realised numbers ofMaster's degrees are further weighted with a field-specific cost coefficient.

As regards doctorates, it is assumed that thecosts do not vary between fields to the same extentas in undergraduate education. The differences arefurther levelled out by external research funding.

Field-specific cost factors are difficult to determinebecause the fields of study differ in their internalstructure. In addition, separate financing is grantedfor certain activities in some fields of study. Thereare still some weaknesses in the cost calculationdata with regard to time-use.

The Master's degree coefficient in different fieldsof study in the period 2004–2006:

I group (1.25): The Humanities, Economics, Law,Theology, Health Sciences And Social Sciences

II group (1.5): Education; Sport Sciences;Psychology

III group (1.75): Technology, Natural Sciences;Forestry-Agriculture

IV group (3.25): Pharmacy; Veterinary Sciences;Dentistry; Medicine

V group (Arts): Fine Arts and Art & Design (3.75);Music (4.5); Theatre And Dance (5.5)

In the research allotment, account is taken of thefinancing of graduate schools, which is decided bythe Ministry of Education on the basis of Academyof Finland evaluations and the proposal of thegraduate school follow-up group.

The size of the societal services appropriationsdepends on open university provision and othernon-core services. The financing of open universityinstruction is based on the target and realised numbersof full-time equivalent student places (2/3–1/3).

The funding allocated to other societal services isintended to support equipment-intensive activitiesand those that reinforce the university's regionalimpact. The financing is partly calculated on thebasis of R&D expenditure and research personnel.

National tasksNational tasks are activities of major significance interms of national education, research or culturalpolicy and have been assigned to the universities inlegislation. These tasks (e.g. the National Library)are not directly connected with degree education.The financing of national tasks also covers posts

65

based on cultural exchange agreements, and theteaching of languages and cultures less widelyknown in Finland. The government funding onlycovers part of the costs and the universities have toprovide the rest themselves.

National programmesThe multi-annual national programmes initiated bythe Ministry of Education derive from the GovernmentProgramme, the Development Plan for Education andResearch and the Ministry's own resolutions.

Programmes relating to national priorities in theperiod 2004–2006:

- Educational development (two-cycle degreestructure, student selection, quality assurance)

- The Virtual University- Development of teacher training- The national health project- Language technology- Business know-how- Biotechnology- Russia Action Programme- Information industry- Regional development

Project fundingProject funding is allocated to universities' ownventures which support nationally set objectives,universities' joint networking projects, and thefurnishing and equipment of new buildings. Thisaid is targeted at strategic priorities which are aspecial focus in the year concerned. The aim is thatuniversities take care of smaller projects by meansof internal arrangements. The condition for theMinistry subsidy is that universities provide part ofthe financing themselves. The purpose is to ensurethe university's commitment and thereby thecontinuity of the project even when the Ministryfinancing ends.

Where necessary, questions relating to nationalcooperation networks are agreed in the performancenegotiations. Project funding is primarily allocatedto cover the cost of coordination in joint projects.

The financing of projects necessary for the operationof educational networks is agreed with thecoordinating university. Development projectsimplemented as educational networks mustconstitute a model of action which supplements theoperations of the university institutes and enhancesprofile definition, structural development, cost-effectiveness and productivity.

Performance-based fundingSince 1998 some university resources have beenallocated on the basis of performance. Performance-based funding rewards universities for the qualityand effectiveness of their operations and givesincentive to develop the operations further. Theperformance-based funding is allocated according toperformance criteria relating to policy objectives.The criteria are the same throughout the agreementperiod, with emphasis on centres of excellence,which are designated on the basis of evaluations andwhich highlight the quality aspect. Universities candecide independently whether to allocate thesefunds to their centres of excellence or to use them astheir internal performance-based financing. Theperformance-based funds represent about 2.4% ofuniversities' operational expenditure.

The performance criteria for 2004–2006 are:

Quality of research and artistic activity- Centres of excellence in research designated

by the Academy of Finland- Academy of Finland financing- Other external research funding- Centres of excellence in artistic activity

designated by the Arts Council of Finland

Quality, efficiency and effectiveness of education- Centres of excellence in education designated

by the Higher Education Evaluation Council- Universities of excellence in adult education

designated by the Higher Education EvaluationCouncil

- Progress in studies: credit accumulation, theproportion of Bachelor-level graduates, durationof studies before graduation

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- Graduate placement: the graduateunemployment rate and changes in it

- Internationalisation: student exchanges, balancein exchanges, degrees awarded to foreignstudents.

Institutional reviews According to a Ministry of Education resolution,institutional reviews are carried out in order toappraise the extent to which the personnel's view istaken into account in university activities, themeasures taken to strengthen societal impact, andthe university's capacity for renewal.

KOTA databaseKOTA (http://www.csc.fi/kota/kota.html) is a statisti-cal database maintained by the Ministry of Educa-tion. It contains data describing university perfor-mance by institutions and by fields of educationfrom 1981 onwards. The universities are respon-sible for the accuracy of the data they provide.

KOTA has been designed to give the Ministryand the universities access to data needed in theplanning, monitoring and evaluation of universityoperations and management. In the development ofKOTA, overlapping data collection has been prunedand concepts have been unified. The technicaldesign has been constantly improved from 1986onwards. In response to changes in the operationalenvironment, the data content has been graduallyexpanded and old concepts have been redefined.

The database is accessible in the Finnish inter-university network and stored at the Centre forScientific Computing, which is also responsible forthe technical design.

Each university has a KOTA liaison responsiblefor the updating of data, the sharing of informationand other contacts. The liaison feeds the previousyear's data directly into the database at thebeginning of each year. Part of the data comes frommaterials provided by the National Board ofEducation, the Centre for International Mobility(CIMO) and Statistics Finland.

The KOTA data content has progressively

become more reliable and up-to-date, which haspromoted its applicability. Most informationconcerning the previous year is available in KOTAin January – February.

After gradual expansion and inclusion of newdata groups, KOTA now contains the followingdata mainly classified by university and field ofstudy:

- Applications and admissions- Students- Foreign students- Degrees- Duration of studies- Graduate placement- Teaching staff- Other staff- Appropriations- Costs per performance areas- Premises- Continuing professional education (extension

education)- Open university instruction- Researchers' and teachers' visits abroad- International student mobility- Target number of degrees- Scientific publications- Courses taught in foreign languages- Practice schools

In addition to the statistical data, KOTA containsinstructions for use and data compilation,definitions and the classification of data. It includesa handbook which defines the classifications andthe common data basis required for nationaluniversity statistics and the compilation of data.The handbook is jointly updated by the Ministryof Education and Statistics Finland. The databasealso contains the contact information of the KOTAliaison in each university.

Today, the KOTA database constitutes a crucialmonitoring tool for performance management.However, compared with state-of-the-art systems, itis somewhat outdated as regards both technologyand content. The numerous changes that havetaken place in the public sector and in the academic

67

environment necessitate a major overhaul of KOTA.In view of this, a process has been launched fordeveloping the database into an interactive systemwhich caters better for the needs of performancemanagement and decision-making and whichcontains not only numerical data but also elementsrelating to quality and impact.

7.5 Performance managementin polytechnics

Steering systemThe polytechnics are governed by the PolytechnicsAct and Decree. They determine their status in theeducation system, their mission, administration,management, evaluation, teaching and degrees, theeligibility of polytechnic graduates for furtherstudies, teachers' qualification requirements, andthe principle of free degree education.

Major policy guidelines and development targetsare determined at a general level in the GovernmentDevelopment Plan for Education and Research.Performance management is the most importanttool used by the Ministry of Education in steeringthe operations of the polytechnics. This is strategicsteering based on the national polytechnic policy.The Ministry and the polytechnics have agreed onobjectives and target outcome since 1994. Initiallyannual agreements, they are now concluded forthree years, the current one for 2004–2006.Funding and education supply are determined foreach year separately.

The performance agreements are the result of ayear-round process:

- In the autumn, the Ministry of Educationdiscusses the following year's agreement andtargets with the polytechnic rectors and withstakeholders, such as the polytechnic studentorganisation, the Association of Local andRegional Authorities and labour market partners.

- In November, there is a seminar on targets andperformance management for representatives ofthe Ministry of Education, polytechnicmanagement and the owners of polytechnics.

- In December, the Ministry issues instructions tohelp the polytechnics draw up their proposals.

- In early February, the polytechnics submit theirproposals.

- In March, the rectors meet to discuss the mostimportant issues to be negotiated.

- The Ministry gives feedback to each polytechnicindividually.

- Further negotiations are held in March – April.

- In September, after the negotiations have beenconcluded and the Government has published itsbudget proposal, the agreements are signed.

The agreements between the Ministry of Educationand the polytechnics have the following structure:

- The polytechnic's own assessment of itsperformance

- Objectives common to the polytechnic system asa whole

- The mission of the individual polytechnic

- Goals for structural development

- Number of study places by fields of study,including adult education

- Other development objectives

- Development of teaching

- Regional development, cooperation with theworld of work, and R&D

- Internationalisation

- Staff development

- Resources: core funding, project funding,performance-based funding.

FundingThe providers of polytechnic education (localauthorities, joint municipal bodies or foundations)receive all their core funding from the government.Under polytechnics legislation, the governmentprovides 57% of the core funding and local

68

authorities the remaining 43%, according to theirpopulations. In other words, the local authority'sshare does not depend on how much education itprovides or how many of its residents are participa-ting in education, but solely on the number ofresidents.

The government share is recorded in the statebudget as a net sum. The local authorities' share ofthe financing also goes through the government. Ifthe education provider is a local authority, its ownfinancing share is deducted from the sum allocated,whereas joint municipal boards and privateeducational providers receive all their core fundingthrough the government.

Although local authorities have no obligation touse all the statutory government aid specifically oneducation and training, the Ministry of Educationand the polytechnics have agreed in theperformance negotiations that the polytechnicsspend the core funding they receive on runningcosts in full.

Polytechnics obtain almost all their financing fordegree programmes from public funds and chargeno tuition fees. They also receive external funding,mainly for extension education services and R&D.This funding amounts to 22% of their budgets.

The polytechnics receive three kinds ofgovernment funding:

Core fundingGenerally speaking, the system of core fundingincludes both statutory aid and subsidies forrunning costs and new establishment projects. It iscalculated on the basis of unit costs.

The main characteristics of the unit cost systemare the following:

- The unit costs are determined in advance for the following year; they are not influenced byany decisions taken by a local authority or otherpolytechnic owner concerning educationalarrangements or any funds supplied by themfor these purposes.

- The criteria used in granting and calculating theco-financing shares do not govern the actual use

of the funds. The financing of polytechnics isincluded in the overall sum of statutory state aidallocated to the local authorities, who haveconsiderable leeway in allocating the resourcesat their disposal.

- The local authorities' co-financing share (43%)is based on unit costs, which are the same for allthe local authorities.

- Statutory government aid is intended to coverrunning costs relating to polytechnic degreeeducation and long-term specialisationprogrammes.

- The unit costs are calculated per student. Thefunds are paid directly to the owner of theinstitution which has admitted the student.

- The unit costs are calculated from realisedexpenditure every two years. Unit costs aredifferent for different fields of study.

- To determine the basis for the following year'sstatutory government aid, the unit prices aremultiplied by the number of students.

Project fundingThe polytechnics also receive project funding. Inrecent years, this has been predominantly targetedto the support programme (staff developmenttraining, internationalisation, development ofinformation networks and virtual learningenvironments, and careers and recruitmentservices); the basic prerequisites of R&D; and thedevelopment of the Virtual Polytechnic. Projectfunding is allocated to joint ventures involving allthe polytechnics, the focus in the period2004–2006 being on the development of studies.Growing resources are also allocated to polytechnics'regional projects. Polytechnics always provide partof the funding for these projects themselves.

Performance-based fundingThe performance of polytechnics is assessed on thebasis of five theme entities: the development of

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teaching and teaching methods; the attractiveness ofthe education and progress in studies; relevance to theworld of work and R&D; regional impact; andoperations and capacity for renewal. The performancecriteria have been determined and revised by a broad-based committee. Some performance-based fundinghas also been allocated to polytechnics on the basis ofevaluations made by the Higher Education EvaluationCouncil, which in 2002 reviewed the centres ofexcellence in teaching and in 2003 the centres ofexcellence in regional impact. In 2003, anappropriation of 1.7 million euros was allocated on thebasis of general performance criteria and 1.7 millioneuros to centres of excellence selected on the basis ofthe evaluations.

The government grants subsidises for certainnational projects of a permanent nature, as in theuniversity sector. These include web connectionsand information networks, the polytechnicmonitoring and evaluation database AMKOTA, thestudent selection system, and library systems.

Reform of the financing systemThere are plans for overhauling the system ofpolytechnic financing with a view to a more stablecalculative and encouraging system. The oldfinancing system was based on real studentnumbers and real costs in main fields of study. Thesystem was quite instable and it missedencouraging elements.. The new system would baseon calculative student numbers, which would beagreed in negotiations with the ministry andpolytechnic and number of graduating students.The reform is connected into larger finance reformin social and health care system and is for themoment in preparatory stage.

7.6 Monitoring andevaluation database

The performance agreements concluded betweenthe Ministry of Education, the organisationsrunning polytechnics and the polytechnicsconstitute an important mechanism for translating

major higher education policy objectives into eachpolytechnic's reality.

The monitoring and evaluation of the objectivesset for the polytechnic system form an importantpart of the steering system. The evaluation andmonitoring database AMKOTA is a key tool for theMinistry in information-based steering andmanagement.

The AMKOTA system has been developed froma traditional statistical database into a decision-making tool for the Ministry and a channel ofcommunication in the performance negotiationsbetween the Ministry of Education andpolytechnics.

Data content and data production

Data on polytechnics' operationsThe polytechnics use electronic forms or transferfiles to update data not collected by StatisticsFinland and data which, owing to the productiontimetable, are not otherwise ready in time for thenegotiations.

Licence dataThe provision of polytechnic education is basedon a licence issued by the Government.

Degree programmesThe Ministry of Education makes decisionsconcerning degree programmes based on thepolytechnics' proposals, determining whatprogrammes and degree education eachpolytechnic offers. Polytechnics submit theirproposals through AMKOTA. The Ministry makesits decisions with the help of AMKOTA; thenecessary information is recorded in thedatabase and the decision is printed outand signed.

Entrant placesPolytechnics make proposals for the number ofentrant places for the following year, dividedbetween the degree programmes determined inthe Ministry's decision. Both the decision and

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the entrant data are used in the writing of thestudy guides and in the joint national applicationsystem.

Project proposalsEach polytechnic and the Ministry of Educationagree on project funding in the performancenegotiations. The project proposals are submittedthrough AMKOTA. It contains a form which hassections for priorities, the number of projects,and cost and financing data, and a predefinedstructure for describing the purpose of theproject.

Data from Statistics FinlandStatistics Finland has been contracted toproduce statistics, publications and othermaterials which the Ministry of Education usesfor planning and evaluation together with otherAMKOTA data.

The statistics and data collection are primarilydeveloped by Statistics Finland. The principle isto avoid overlapping and doubling in datacollection and to acquire data from the sourcewhere it is recorded when a matter is processed.Statistics on polytechnic R&D are also compiledby Statistics Finland. They are delivered as filesfrom which AMKOTA users can retrieve data inthe form of reports or statistics.

Development of information managementThe production of data needed for polytechnicevaluation and performance management and itsdevelopment, the performance criteria and thequantification methods are reviewed regularly. Thethree-year agreements provide the time span withinwhich development objects are examined.

The database is being expanded and the dataprocessing improved with a view to developing aversatile tool for performance management andperformance negotiations between the Ministry andpolytechnics.

The development also caters for the needs oflegislative work, financing and cost control. Dataproduction must be capable of responding to newneeds ever more rapidly. Some data needs areoccasional, others periodical, while other needs areconstant (student numbers, graduation rates). Dataenquiries entail an interactive system.

OPALA, student feedback systemOPALA is a joint Ministry-polytechnic system forcollecting student feedback. The OPALA question-naire is used to collect current information aboutthe placement of polytechnic graduates and stu-dents' opinions of education and work practice.

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CHAPTER 8. Planning, governing andregulating the system


8.1 Introduction

The Finnish tertiary education system comprisesuniversities and non-university institutions, i.e.polytechnics. The Universities Act provides for themission, overall administration and structure of theuniversities. There is a corresponding PolytechnicsAct. The Government Decree on Higher EducationDegrees lays down the status of each highereducation degree. It determines the degrees to beawarded in higher education, their objectives andoverall structure, the responsibilities of differentHEIs for different fields of education and thedegrees to be awarded in these fields.

The universities themselves determine thestudent selection procedure and the intakes. In theperformance agreement, the Ministry of Educationand each university agree on the target number ofdegrees, which forms the basis for the budgetaryfunds allotted to the university. The newGovernment Decree on Higher Education Degreespromulgated in 2004 replaced 20 former field-specific Decrees. All universities, including the artacademies, have the right to award academicpostgraduate degrees, doctorates. There is anintermediate postgraduate degree called thelicentiate, which often has a professional focus.

Being autonomous, the university maydetermine the content of the educationalprogrammes and courses it offers and the courseprofiles. In performance negotiations, the Ministryof Education may grant specific funding for a neweducational entity, if this is in line with the nationaleducation policy objectives. In some fields (e.g.Technology), the Ministry approves and confirmsthe degree programmes offered by the universities.The purpose is to ensure national coordination andthe quality of the programme within the scope ofthe university's educational responsibilities and theresources available to it. The new degree statutes arebased on the principle that the Ministry ofEducation confirms and approves new Master'sprogrammes with the aim of ensuring that thedecisions are based on educational needs and have ahigh quality.

Universities have full freedom of research andteaching. The universities themselves decide ontheir research priorities. Similarly, the Ministry ofEducation takes these policy lines into account insteering the universities by means of performancenegotiations and information-based guidance. TheAcademy of Finland has its own research policy

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which is realised through its research programmesand different instruments it uses to developresearch, such as centres of excellence and graduateschools, and implements its own research prioritiesthrough resource allocation. The Ministry ofEducation allocates resources to research areas itconsiders important by means of nationalprogrammes and projects for infrastructure andlaboratory development.

Universities recruit their own personnel, appointprofessors and elect their rectors and senates, butthe Ministry of Education signs collectiveagreements with the employee organisations. Theagreements determine the minimum terms, fromwhich the universities can deviate upwards if theyso wish. The aim is to adopt a new salary system in2005, which will give universities more latitude indifferentiating salaries on the basis of goodperformance.

The government uses a formula in the allocationof budgetary funding. Core funding is mainlyallotted to universities in a block sum, which theuniversities can use at their discretion. Only afraction of the core funding determined in theperformance agreement is earmarked for specificpurposes, such as postgraduate education salaries orjointly agreed development targets.

The universities themselves make decisionsconcerning their facilities. They do not own thepremises they use, most of them belong to the statecompany Senate Properties. The Governmentdetermines the principles of rent collection. Since1995 the universities have been able to decideindependently on the construction of theirfacilities, which led to a building boom. Thegrowing facilities costs have caused difficulties tosome universities and led to demands for additionalgovernment funding. This is why a new procedurewas adopted in 2003: all major constructionprojects need to be approved by the Government,and the state budget determines a ceiling foradditional costs due to new investments in theuniversity system. Universities may also rentpremises in the commercial market but cannot owntheir own premises.

University autonomy and accountability have

been under active discussion for several years.University autonomy has been developedsystematically and extensively for years. TheDevelopment Plan for Education and Research2003–2008 records the aspiration to furtherstrengthen university self-government. Theuniversity has full autonomy in scientific research,independent jurisdiction in personnel recruitmentwithin the scope of the collective agreements, fulldecision powers in hiring personnel, full decisionpowers in determining its own organisation andfaculties, and freedom in teaching within the scopeof the Government Resolutions concerning fields ofeducation and the conferral of degrees and theprocedure whereby the Ministry of Educationapproves degree programmes on the basis of qualityand educational needs.

Within their economic autonomy, universitiescan conclude agreements, acquire external fundingand use the income generated through externalfunding. Universities have expressed their desire tobe excluded from the system of auditing applied toother state agencies and from the supervisiongeared to ensure that budgetary funds are usedaccording to the procedures and restrictions laiddown in the budget. Universities have criticised thefinancial accountability regulations for renderingthe content and form of bookkeeping and theclosing of accounts too inflexible.

Universities have wanted larger discretion in theuse of budgetary funds. In the 2005 budget,universities will be given more latitude for settingup business enterprises and participating inbusiness with a view to implementing the missionsassigned to them in the Universities Act, especiallythe third mission of contributing to socialdevelopment. Similarly, the universities havewanted greater freedom in charging fees for courses.Debates, for instance in connection with a nationalglobalisation review conducted by the Governmentin summer 2004, have raised the question of feescharged to foreign students, the possibilities ofbusiness and industry to purchase degree educationand the possibility of the universities to enter theinternational educational market.

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8.2 Priorities in expansion

During the past ten years, there has beenconsiderable expansion in Finnish higher educationprovision: in 1995, the number of new students inuniversities was 17132 and in 2003 20936, thenumber of higher (Master's) degrees awarded 9807in 1995 and 12412 in 2003, the number ofdoctorates 758 in 1995 and 1257 in 2003. Thegrowth has been effected according to theGovernment's overall strategy, which sees educationand training and a higher level of education as ameans of improving Finland's competitiveness andwelfare. Part of the growth has been due to specialmultidisciplinary expansion programmes (teachereducation, information industry fields, businessknow-how), implemented in response to the rapidchange in the demand for highly educatedprofessionals and in the industrial structure and tothe foreseeable shortage of highly educatedworkforce owing to the retirement of the large agegroups.

Researcher training and the number ofdoctorates have grown three-fold in ten years owingto the stated political aim to step up researchertraining and the Government Resolution to increasethe level of R&D funding and relative R&D input(measured as % of GDP) to the world top. Thisincreased the demand for researchers and forresearcher training. Postgraduate education andresearcher training were targeted to fields in whichthere is demand for researchers and researchers canfind jobs outside the academic community.

The expansion was also geared to regionaldevelopment: education in Economics and BusinessAdministration was enlarged and initiated in newuniversity units in Rovaniemi, Kuopio, Joensuu,Mikkeli and Pori. All other expansion schemes havealso been regionally equitable. The maakunta9-counties, regions and cities have also sought toinfluence the expansion. As a result, universityeducation is now provided in six new in universitysubsidiaries (the university centres of Pori, Lahti,

Mikkeli, Seinäjoki, Kokkola, Kajaani). Thesesubsidiary units form a local university campuscalled university centre. Local stakeholders, cities,counties and businesses play an important part intheir operations. The strategic steering of theMinistry of Education stresses regional cooperationbetween the new university centres andpolytechnics.

Alongside the growing university supply,polytechnics have also developed rapidly.Polytechnic education is one to two years longerand of a correspondingly higher level than theeducation provided by the vocational colleges fromwhich it was developed. In 2003 polytechnicsawarded N higher education degrees.

8.3 Institutionalgoverning bodies

The Universities Act contains provisions concerningthe tasks and structure of university administrativebodies. According to a recent amendment,university senates must include at least one memberexternal to the university from 2005 onwards,whereas the former provision stipulated that thesenate may include external members. The Actfurther provides that university administrativebodies must have tripartite representation, i.e. ofteachers, other staff and students. In itsinformation-based guidance, the Ministry ofEducation has advised universities to devisecomprehensive quality assurance systems anddescribe the good administrative procedures theyseek to implement. Otherwise the universities aresubject to the principles and regulations governingpublic administration.

Universities are autonomous institutions andhave the right to disburse the lump sum budgetthey receive from the Government in accordancewith their own decisions. Universities may takedecisions on their management structure, studentadmission policies, the nomination of their

9 Maakunta = a traditional county, not part of the official or elective administration; for a longer explanation see footnote in Chapter 3.3.

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academic and other personnel and the content ofthe education curricula for their academicprograms. In addition, since August 2005,universities have been permitted to establish privatecompanies through which they can further supporttheir activities such as the commercialisation andexploitation of research. Universities continue to beaccountable to the Government for their activitiesand the manner in which they use funding fromthe public purse.

The government decides which fields ofeducation each university is accredited to offerdegrees in. Currently all universities which have theright to offer masters-level degrees also have theright to offer doctoral degrees. Both the needs oflabour market and a range of quality requirementsare taken into account before permission is granted.At the moment, systematic and comprehensiveexternal quality assessment processes are notrequired in most cases. There is discussion as towhether the right to offer doctoral degrees shouldbe limited to those institutions which fulfil a rangeof quality criteria.

In general. universities do not own the buildingsand facilities they occupy, and they negotiate theirusage of buildings with state-owned authorities.Most university buildings are 'owned' by theGovernment's Senaatti company, which isresponsible for about 85% of buildings. Otherbuilding organisations are responsible for theremaining 15%. Government permission isrequired before universities negotiate new rentalagreements, which take into account rentadjustments and the size of the overall capacity ofthe state budget. This requirement to match rentalcosts and growth to the capacity of the overall statebudget effectively limits unwarranted growth inrental costs.

The new Polytechnics Act took effect on 1August 2003. According to the Act internaladministration of polytechnics is managed by theboard and the rector. The board is composed ofrepresentatives of the polytechnic leadership, full-time teachers, other personnel, students, and localbusiness and employers. The rector is appointed bythe maintaining organisation.

The maintaining organisation decides onstrategic development of the polytechnics andadopts the action and economic plan and budget.The autonomy of the polytechnic vis-à-vis themaintaining organisation is largely determined bythe decisions taken by the maintaining organisationconcerning financing and key objectives.

8.4 Improving institutionalmanagement

In passing an amendment to the Universities Act in2004, Parliament called upon the Ministry ofEducation to explore means of improvinguniversity management and managementprocedures. The amendment requires that theuniversity rector has proven management skills.Information-based guidance, which is part of theperformance steering of universities, has stresseduniversity management for several years. TheMinistry of Education seeks to step up strategicmanagement in universities and calls uponuniversities to improve their strategic operations bymeans of extensive strategic planning.

University financing involves performancesteering, which means that targets are set for alluniversity activities and that university funding isbased on these targets and their attainment. Inaddition to financing based on target outcomes, thefinancing model includes funding based on goodperformance and good quality, i.e. quality awards.Steering based on target outcomes and the strongstress on the level and achievement of targets haveplayed a decisive role in stepping up universityoperations.

In the early nineties, the Ministry of Educationrequested that all universities undergo overallevaluations of their operations and activities by1997. In the performance negotiations theMinistry monitors the development measures takenas a result of the evaluations. The Ministry has alsorequested that the university management take themeasures to be taken as a result of evaluationfindings on their agenda. The need to increase theuniversities' competence in financial management

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and to improve cost calculation in universitymanagement has been intermittently raised by stateauditors, as well as in university performancenegotiations and agreements. A special project fordeveloping university cost calculation was launchedin 2003 and is still going on.

8.5 Linkages amongtertiary institutions andtransfer of students

With a view to improving inter-institutionalcontacts, some fields of education have developedinter-university networks. These enable students tomove between universities and participate ineducation at other universities (health sciences,social sciences, psychology). These collaborativenetworks have obtained special funds for producingvirtual learning materials and developing courses.Economics and Business Administration has beeninitiated in new universities (Rovaniemi, Kuopio,Joensuu, Pori, Mikkeli) by means of a network ledby a parent university. In the new universitycentres, the aim is that the students can choosecourses from all the university centre partners. Allthe 112 graduate schools have been established tocater for students from several universities. Underthe new Universities Act, the polytechnic degreeprovides eligibility for university Master'sprogrammes.

On the whole, students move from oneuniversity to another through entranceexaminations. The possibility for a student totransfer from a programme to another within oneuniversity varies from university to university, but isgenerally difficult. Some universities require above-average study attainments for such transfers, butcommonly also an entrance examination even whenthe student is already enrolled in some university.The entrance examination system may sometimeslead to a situation in which students use universitystudies in some field as a stepping stone to anotherfield, for example studies in chemistry as a means ofgaining entry to medical studies. Universities do notoften provide clear written information to students

about the possibility to transfer from oneprogramme to another, but this information can beobtained through personal guidance counselling.Generally, universities and faculties do not take avery positive view of programme changes becau-se they want to hold on to their good students.There are no data available about transfers fromone programme to another or one university toanother.

Students graduating in polytechnics have theeligibility to continues their studies in universi-ties and vice versa. It is up to individual institu-tions to decide how much credits they will giveof earlier studies.

8.6 Linkages betweentertiary institutions andother forms of education

All universities offer adult education in the form ofopen university and extension education. Successfulcompletion of a sufficient number of credits in openuniversity instruction entitles the student to gainentry to degree studies. The aim is to give adults anopportunity to study for the lower university degreein the widest possible selection of fields. Open uni-versity studies are counted towards the degree.

Since 2003 the Ministry of Labour has been ableto arrange and finance university education forunemployed persons who have discontinued theirstudies at a late stage in their studies in order toenable them to graduate. All universities offerextension education against fees, which employerscan purchase and offer to their employees. TheMinistry of Education sees that extension educationmust be profitable for the universities since theyoperate on the free education market alongsideother training organisations.

8.7 Diversity between thetertiary education system

Polytechnics aspire to offer postgraduate (Master's)degrees alongside their polytechnic degree (B.A./

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Sc.) programmes. There is a pilot geared to assessthe feasibility of polytechnic postgraduate degreeswith a view to a decision on a permanent system tobe taken during 2005. It now looks that thepostgraduate polytechnic degree will be madepermanent and the question is whether to empowerall the polytechnics to offer masters programmes.This would require considerable financial input,which would mean a significant additionalinvestment in the polytechnic sector.

Polytechnics are actively planning the further de-velopment of their R&D. Their representativeshave expressed wish that polytechnics obtain a sha-re of the funding allocated to scientific research.Some polytechnic rectors speak openly aboutpolytechnic doctorates. For the moment new post-graduate degrees, which correspond to Masterdegrees in universities have been official response tothis debate. Post- graduate studies are directed towardsworking life problems and they are not in theirnature academic in traditional meaning of the term.

8.8 Credit transfer

In its policy, the Ministry of Education hasencouraged universities to count studies completedelsewhere fully towards the degrees they offer. Tothis end, the Finnish universities have concluded anagreement which guarantees students the right tostudy in other universities and include these studiesin their degree programmes to the extent approvedby their own university. Universities take a verycritical view of credit transfer from polytechnics.The Ministry of Education has required thatknowledge acquired elsewhere must also berecognised and counted towards the studyrequirements. The Ministry calls upon universitiesto introduce personal study plans, which alsoprovide for the transfer of credits acquired elsewherewith a view to preventing overlapping in studies,but in a way which ensures that the student fulfilsthe knowledge requirements set for the degree.

There is no centralised data about credit transferand about the use of prior learning in selections andin credit transfer. In some fields, students get

additional points in admissions for prior studies orfor work experience. The fact that entranceexaminations require prior knowledge has also ledto a situation in which students first pursue studieselsewhere in order to gain entry to university or ina related faculties to gain knowledge and skillsneeded to gain admission to their preferred field.School guidance counsellors provide informationabout higher education studies. There is a nationalselection guide which presents the provision of allthe universities and outline career prospects in differentfields of education. All the universities actively rec-ruit students, publish information materials inten-ded for use in upper secondary schools and arrangeopen-doors and other events in order to presenttheir provision to upper secondary students.

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CHAPTER 9.Assuring the qualityof tertiary education

9.1 Finnish approach

The idea of systematic evaluation of Finnish HEIswas first presented in 1985 by a Ministry ofEducation committee deliberating universityperformance assessment (KOTA committee).According to the committee, evaluation was neededand, when professionally done, could helpuniversities to respond to existing and anticipatedneeds, improve performance and tackle theirweaknesses. The report recommended that twokinds of evaluations be conducted: institutionalreviews and national disciplinary evaluations ofresearch and teaching. The national university database KOTA was established for the purpose. Itmade quantitative data on the resources andperformance of universities publicly available(www.csc.fi/kota/kota.html). Further, in 1986, thegovernment called upon universities to put in placetheir own evaluation systems.

External evaluation or external quality assurancecovers research, degree programmes, institutions,and specific themes, such as admissions andstudent guidance counselling. As quantitativeinformation on the performance of HEIs is available

in KOTA and AMKOTA, the approach in externalevaluation is mainly qualitative. Following theBerlin Communiqué, a new approach – audit of thequality assurance systems of Finnish HEIs – is beingplanned.

Finnish higher education institutions are obligedby legislation to evaluate their own activities andperformance on a regular basis. They are alsoobliged to take part in external evaluations andpublish the results of the evaluations.

It is mainly up to the institutions themselves todecide which evaluations they participate in.Participation in the thematic reviews initiated bythe Finnish higher education evaluation council arealso based on voluntary participation. This has leadto a situation where adequate systematic andcomparable information on the quality of Finnishuniversities and polytechnics does not exist.

The operating environment of Finnish highereducation institutions has rapidly changed, and ininternational cooperation the institutions' legalstatus is not seen as an adequate proof of their highquality. The need to have evidence of good qualityfor international partners, students and employerscall for a change in Finnish evaluation policy.


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There is no doubt that the Finnish qualityassurance system fulfils all the European criteriaboth in standards and in methodology. But as thepolitical aim is to increase the competitiveness ofFinnish higher education, there is a need to createa kind of quality assurance system which wouldincrease the visibility of Finnish higher education ininternational setting. Thus a welcome idea for theFinnish system is the forthcoming recommendationby the European Union to allow institutions tochoose any accredited international qualityassurance agency to evaluate them. The relationshipbetween a national quality assurance system and amore international approach needs to be consideredwhen amending the present legislation onevaluation.

9.2 National qualityassurance agencies

The main responsibility for the quality of tertiaryeducation rests with the universities andpolytechnics themselves. The Finnish HigherEducation Evaluation Council (FINHEEC) wasestablished in 1995 by a decree (1320/95 and 465/98) and started to operate in 1996. FINHEEC isan independent expert body funded through theMinistry of Education. FINHEEC deals with bothtertiary education sectors. According to the decreeFINHEEC

- assists HEIs and the Ministry of Education inmatters relating to evaluation

- evaluates polytechnics for accreditation foroperation on a permanent basis

- organises evaluations relating to the operationsof HEIs and to higher education policy

- takes initiatives concerning tertiary educationevaluation and policy

- participates in international evaluationcooperation

- promotes research on tertiary educationevaluation

- evaluates and accredits professional non-degreecourses offered by HEIs.

The Academy of Finland is responsible for researchevaluation.

In addition, there are some professionalorganisations (especially in the field of businessstudies) which monitor the learning experiences ofgraduates, mainly concerning institutions andprogrammes in that field.

9.3 Methods used toassess research qualityand teaching quality

FINHEEC emphasises enhancement in itsevaluations; accountability has a minor role. Thefocus on improvement rather than control ispossible because of state regulation of tertiaryeducation and the KOTA and AMKOTA databases.The evaluation of education mainly follows a modelcomprising a coordinating body (FINHEEC), self-evaluation, external peer review and site visits, anda published report. In the peer review, it iscommon, but not obligatory, to use internationalteams. In addition to the four-step model, bothnational and international benchmarking is used.International benchmarking was used in the evalu-ations of polytechnic libraries and institutionaladministration. National benchmarking wasapplied to the development of language instructionand work-based learning (FINHEEC reports12:1999; 14:1999; 6:2001; 7:2001).

Generally Finnish tertiary education evaluationhas no direct link with funding, but the evaluationsconducted with a view to designating centres ofexcellence in both tertiary education sectors serve asone indicator in performance-based funding.

Research evaluation serves competitive researchfunding. Research evaluation is the responsibility ofthe Academy of Finland. The Academy designatescentres of excellence in research. This policypredates a similar policy applied to high-qualityunits in teaching. The aim of the centre-of-excellen-

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ce scheme is to enhance the quality of Finnishresearch, its international competitiveness andvisibility, and the attraction and appreciation ofresearch. The centre-of-excellence programmes areopen to all disciplines. One key objective is topromote interdisciplinary research. The model usedin research evaluation is mainly based oninternational peer reviews.

9.4 The role of studentsand graduates in qualityassessment

Students have an important role in the internalquality assurance of Finnish HEIs. In universities,this is due to their established position inuniversity administration. The formal position ofpolytechnic students in the administration of theirinstitutions is under consideration; concerns havebeen aired that they cannot make their voice heard.

FINHEEC involves students in all evaluationsand in each phase. The 12 Council membersinclude a representative of both university andpolytechnic student unions. In addition, studentsare represented in various planning and steeringgroups and external panels. In tertiary educationevaluation, a better term for 'peer review team'would perhaps be 'external panel'. The Nordicquality assurance agencies conducted a joint projecton student involvement in tertiary education inorder to emphasise the importance of students' rolein quality assurance.

Graduates (alumni) participate in qualityassurance less frequently than students, but someinstitutions have established or are developinggraduate feedback systems.

9.5 Mechanisms to ensureinternational comparability

From the outset, FINHEEC has invitedinternational members to its external panels. First itwas as much about learning as about internationalcomparison and exchange of ideas. International

peers also increase legitimacy. FINHEECencourages HEIs to benchmark their activitiesinternationally, and offers both financial andprofessional support for the purpose.

The system of Finnish tertiary education degreesis undergoing an extensive restructuring within theBologna process. The international comparability ofFinnish tertiary education is an important conside-ration in the audit of the quality assurance systemsof all Finnish HEIs.

FINHEEC is an active member in the EuropeanNetwork for Quality Assurance in HigherEducation (ENQA).

9.6 Key audiences for qualityassurance information

Since the focus of Finnish tertiary education evaluationis on quality enhancement, the primary users ofevaluation findings have been HEI management andacademic staff. The recommendations are addressed tothe institutions or programmes under review.Thematic evaluations especially cater for policymakers, and research evaluations obviously for thefunding organisations. The growing role of studentand staff mobility has meant that potential exchangestudents and teachers are becoming important targetgroups in the dissemination of information about thequality of the Finnish tertiary education system.

Finnish HEIs have a statutory duty to evaluatetheir activities and to publish the salient findings.The findings of external evaluations conducted orcommissioned by FINHEEC are always published– either as printed reports in the FINHEEC seriesor on the FINHEEC web site. The findings andrecommendations of evaluations carried out by theEuropean Foundation for ManagementDevelopment (EQUIS) and by the EuropeanUniversity Association which have been accepted byFINHEEC as part of the national scheme are alsopublished by FINHEEC either as printed ore-reports. Each evaluation project starts with alaunching seminar and ends in a concludingseminar. The concluding seminars are open to allthose interested.

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9.7 The relationship betweeninputs and outputs

Due to the current demographic trends, the age oftertiary education entrants, the duration of (degree)studies, and graduation rates are topical issues intertiary education policy and in public discussion.The median age of those graduating frompolytechnic degree is 25 years and from universities(master degree) 27,3 years in 2003. As is indicated

Main explanation may been economic depressionin 2002, which worsened employment andstudents wanted to delay their graduation.

institutions in 2000–2003

2000 2001 2002 2003

Polytechnic degree 24,7 24,8 24,9 25

University degree 27,1 27 27,1 27,3

There is great variation in the duration of studiesbetween disciplines: from 10–11 years inArchitecture to under 5 years in Health Care. Inpolytechnics, the median time of degree studies isfour years for young students, and 2–3.5 years foradult students in 2002.

HEIs have taken measures to improve studentguidance and counselling in order to lower dropoutrates. Some improvement can be seen, especially inthe university sector. From 1994 to 2003, themedian duration of Master's degree studies hasdecreased by six months – from 6.5 to 6 years.According to a recent amendment to theUniversities Act, the maximum duration ofuniversity Master's degree should not exceed fiveyears, except for some special reasons.

9.8 Expansion and quality

The median study time in Finnish universities is sixyears and in polytechnics four years (three for adultstudents). The graduation rate in universities is

75% and in polytechnics 91%. The longest studytime in polytechnics is in Technology,Communication and Transport and in NaturalResources and the Environment (4.4 years). Thelong study times in universities have beenconsidered a serious problem for some time now,but no effective cure has been found yet.

The establishment of the polytechnic sector wasthe largest expansion in Finnish tertiary educationto date. Since it involved upgrading the formervocational colleges to the tertiary level, it alsobrought more research, independent study andinterdisciplinary content into the programmes,which meant longer study time in some fields, suchas Business. Students also needed more guidancecounselling. An important factor for improvedquality was that teachers' qualifications were raised.The principal lecturers are required to have at leasta licentiate, and an increasing number have adoctorate.

Universities have also taken measures to improvethe quality of teaching, for instance by means ofteachers' pedagogical training. The most importantreform to this end as the establishment of graduateschools, which has stepped up postgraduateeducation. Doctoral studies have in fact been themost rapidly growing area of university education.

in Table 16 the age has increased from year 2000.

Table 16. Median age of graduation from tertiary

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Figure 17. Duration of Studies in Universities by Field

Figure 16. Duration of Studies in Polytechnics by Field

82

CHAPTER 10. Internationalisationof tertiary education

10.1 Two generations ofinternationalisation strategies

The internationalisation of education became animportant education policy goal in Finland in thelate 1980s. The impetus was of course the changesin Finland's international position at the time,especially involvement in the European integrationprocess.

Participation in the integration process called fora great increase in international activity at all levelsand form of education, and especially in tertiaryeducation. There was a rapid increase in the needfor expertise when Finland's rather closed societyand economy was opening up to internationalcooperation and competition, which required aprofound transformation of established practices.

The essence of the first internationalisationstrategy was to set quantitative goals for studentexchanges: approximately one in three universitystudents should study part of their degree studiesabroad every year. International interaction wasseen as a means to enhance the quality andrelevance of education and to enlarge theeducational opportunities of Finnish students.Reciprocity in student exchanges was anunderstood, albeit not clearly articulated, goal.


83

a common immigration and refugee policy. Therehave already been efforts to bring the status ofcitizens of third countries closer to that of EUcitizens by, for example, facilitating their entry tothe internal labour market.

The conclusions drawn in the internationalisationstrategy of 2001 were clear: Finland muststrengthen its international competitiveness intertiary education and research, which are seen tounderpin its overall economic competitiveness. Theinternationalisation of tertiary education is a meansof responding to the demands of globalisation. Tosucceed, Finland must take an active part inbuilding up European higher education andresearch and develop its own capacity for operatingon the international education market.

The need to strengthen the internationalactivities of HEIs is justified by both the newchallenges arising from the international operatingenvironment and the need for domesticdevelopment.

"By 2010, Finland will be a well-known andinfluential part of the European education andresearch area, and a successful player in theglobal contest for skills. The higher educationcommunity will be international and the demandsof internationalisation will be taken into accountin the content of education. Finland will have acommunity of 10,000–15,000 foreign degreestudents (around 4% of all higher educationstudents) and the annual volume of studentexchanges will be around 28,000. At least 15%of graduate school students will be foreigners.The numbers of students with immigrantbackgrounds will have increased considerably.The numbers of foreign teachers, experts andresearchers working at Finnish HEIs will bedouble what they were in 2001. Finnishbusinesses will already be benefiting from thelabour input of foreigners who have studied inFinland". An International Strategy for HigherEducation. Ministry of Education. 2001

One of the primary means for internationalcooperation was Finnish Centre for InternationalMobility and Exchange Programmes CIMO, whichwas established in 1991. CIMO was composed ofcentral government units responsible for student,trainee and expert exchanges and administeringgrants of different kinds at three ministries. Fromthe outset, CIMO has been responsible formarketing Finland as an 'education country'.

Oriented towards EU education programmes,Finland, like most EU/EEA countries, invested inEuropean student and teacher exchanges andnetworks during the 1990s.

However, the situation has changed for a numberof reasons. These changes were seen to be significantenough to warrant a "second-generation"internationalisation strategy for tertiary educationin 2001.

One of the changes in the operating environmentwas a transition in the tertiary education scene from"learning from each other" to a more competitiveapproach. But the picture was not black and white:On the one hand, there is ever keener competitionfor talented students, teachers and researchers andfor external, often international, funding. Thisdevelopment has lead to the emergence of an inter-national education market - a concept that hardlyexisted at the time of the first internationalisationstrategy. On the other hand, a concerted effort hasbeen made to strengthen European competitivenessvis-à-vis the United States and Asia. This approachcalls for more networking and pooling of resourcesand less intra-European competition.

The rationale behind the new internationalisationstrategy was both labour market needs in theageing Finland and growing cultural and ethnicdiversity in Finland, which was expected tocontinue and intensify. According to severalestimates, immigration to Finland will continue togrow steadily in the coming years. At present,major immigrant flows to Finland come from theformer Soviet Union. Unforeseeable changes in thepolitical, social, or economic systems of countries orregions could lead to uncontrolled flows ofmigration, for which Finland must be prepared.

The European Union has set a goal to formulate

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10.2 Instruments for realisingthe policy goals

The political commitment to the internationalisation ofFinnish tertiary education has been recorded in theDevelopment Plan for Education and Research2003–2008. Qualitative and quantitative goals areaccordingly for each institution in the three-yearperformance agreements.

The Ministry of Education monitors theachievement of the quantitative goals annually, andthe best-performing universities and polytechnicsare rewarded. To boost the development of studentand researcher exchanges and the recruitment offoreign degree students, the Ministry grantsfunding to HEIs for the development of English-language degree programmes. The Ministry has alsoallocated extra funding to CIMO for stepping upits marketing of Finnish tertiary education at theglobal level.

The 2001 internationalisation strategy also callsfor national action, notably concerning the degreestructure, quality assurance, funding and highereducation legislation.

Both university and polytechnic legislation hasbeen amended to implement the Bolognaobjectives. The quality assurance systems will bedeveloped to include a national element.

In addition to traditional student exchanges andthe recruitment of degree students to Finland, theMinistry of Education has called upon theinstitutions to be active in building joint degreeprogrammes with foreign institutions. To establishclear ground rules for this fairly new form ofinternational cooperation, the Ministry issuedguidelines for good practice. The Ministry hasactively promoted the piloting of joint degreesbetween Russian and Finnish universities and at theNordic level, and has undertaken a feasibility studywith a view to establishing a Finno-Russian Cross-Border University.

10.3 Major policy issuesarising from the impactof internationalisation

It is clear that the emerging internationaleducational market and the progressiveliberalisation of cross-border education services willhave implications for the competitiveness of allnational education systems. Finland is facing manychallenges: a small linguistic area of two nationallanguages, limited experience of market-driveneducation, collegiate decision-making traditions inthe institutions, and an almost exclusively publicly-funded tertiary education system – with little or noprospect of substantial increases in governmentfunding in the future.

The worst threat for a systematicinternationalisation policy will probably be a failureon the part of the authorities to recognise thecompetitive position in which tertiary educationfinds itself and complaisance. The threat is two-fold: first, Finland will not be able to attractenough foreign students and researchers; second, itsown students and researchers will go abroad tostudy and work.

General attitudes undermine all major efforts bythe HEIs to market Finnish education abroad andto promote internationalisation, particularly as thenumber of applicants to HEIs exceeds three-foldthe intake and as HEIs cannot charge tuition fees tointernational degree students.

Another threat relates to the operations of theHEIs themselves. It would appear that theinstitutions think that they have reached the limitsof their internationalisation. Although the numberof outgoing exchange students has not beengrowing as expected, the number of incomingstudents has continued to grow. The institutionsfeel that they cannot ensure the quality of theirinternational operations with their presentresources.

Apart from the general level of appropriations,scarce resources may also be due to the fact thatHEIs overlook international activities in their internalresource allocation. This may be because they do notyet appreciate the true value and nature of

85

international operations. Internationalisation hasnot been integrated into all tertiary educationoperations, i.e. teaching, research and supportservices.

Equal opportunity is high on the agenda ofFinnish policy-makers. Traditionally it has beenseen that equity is best realised by means oftuition-free education. The same principle isapplied to international activities. Unless there is achange in the near future, HEIs cannot possiblymeet the Government's ambitious quantitativegoals for internationalisation. The policy of fee-freeeducation is not well suited for the new EUinitiatives for attracting students from othercontinents to study in Europe. Recently an ad-doccommittee has made a proposal for introducing feesfor foreign students.

Finnish institutions have been very cautious inentering the international education marketbecause of lack of resources and certain ambiguitiesin Finnish legislation on this point. Someinstitutions have seen it important to establish aglobal presence. Proposed amendments in budgetlegislation will make it easier for universities to setup limited companies or buy shares in companies,which should also be charged with commercialisingeducation and research services.

This will open new vistas for universities'international activities, although questions relatingto WTO-GATS will have to be clarified first.

In yet another respect, the threat concernsgrowing competition on the home front: arespected, renowned foreign HEI operating inFinland would offer a viable alternative for Finnishand foreign students and teachers, and couldundermine the standards of Finnish highereducation.

If Finnish universities and polytechnics areunable to offer competitive, globally recognised andvalued degrees and attractive research environments,brain drain will be a real problem. This is a genuineconcern in the new two-tier degree structure: ifinstitutions and authorities are not alert, they mayfind themselves in a situation in which a growingnumber of Finnish students choose to takeBachelor's degree at home and go abroad for their

Master's. If such a trend reaches mass proportions,it could well have serious consequences for thequality of tertiary education in Finland.

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11 Conclusions

The roots of the Finnish university system go backfour centuries to the Turku Academy (established in1640). From its beginning in a small Swedish-language university, highest learning has spread allover the country and today the higher educationsystem comprises 20 universities and 29polytechnics. Finnish society has always had highexpectations of the highest scientific and scholarlyresearch and education.

The tertiary education system covers the wholecountry. There is one HEI per 100,000inhabitants. Fifty-three municipalities have auniversity (or campus) and 88 municipalities have apolytechnic (or campus). Part of the explanation forthe extensive geographic distribution of higher edu-cation institutions is the presence of the 'open uni-versity'. In the Finnish system, open university stu-dies can be pursued in a variety of units belongingto parts of the network of educational institutions.A total of 196 municipalities have an open univer-sity unit (196), in all, 62% of Finnish municipali-ties are "university and polytechnic towns".

However, when looking at the second mission ofthe tertiary education system, research, the patternis significantly less diffuse. Basic research isconducted in universities in major cities, and thepolytechnics are only beginning to launch theirR&D activities, which could be described as appliedresearch. There are only few major centres ofresearch in Finland.


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in these terms are social sciences and thehumanities. No governmental measures to helpsolve this problem have been effective so far.

The Finnish tertiary education system is goingthrough a period of reform at the moment. Adegree reform in the 1970s introduced uniform,long degree programmes, in which the Master'sdegree was the first degree, but in the 1980s and1990s the intermediate (Bachelor's) degree wasreintroduced in some fields. This year, as a result ofthe Bologna Process, universities across the boardare adopting the two-cycle degree system. At thesame time, polytechnics are introducing higherdegrees. Whereas the university Master'sprogrammes are intended for young people aboutthe enter the labour market, the polytechnicdegrees are targeted at polytechnic graduatesalready active in the work force.

The degree structure reform makes it necessary toconsider the higher education landscape as a whole:is there a market for two-tier structure in bothsectors in all fields of study, or should the divisionof labour between universities and polytechnics bereconsidered in some, especially small fields. Thedual structure has helped to diversify Finnish highereducation, but given that a considerable expansionof higher education provision has taken place inboth sectors, there could be a need to considerwhether a dual system requires a dual institutionalpresence in all parts of the country, especially inareas where the share of young people is declining.

We do not yet know how the two-cycle modelwill work in practice. No clear professional contenthas yet been planned for the university first-cycledegrees and students are admitted to study up tothe Master's degree cycle. This raises questionsabout the value the labour market will see in thefirst cycle degree. The worst case scenario is that itwill only have a curiosity value and will not offer anessentially better chance of succeeding in the labourmarket than mere year 12 completion.

Polytechnic degrees have also been developed inthe Bologna spirit. In March 2005, the governmentsubmitted its proposal for developing the polytechnicdegree structure to comprise polytechnic degreesand Master's degrees. The two-cycle structure

Finnish society has great confidence in its highereducation institutions. According to recentresearch, nearly 80% of Finns think that scientificand scholarly research is conducted efficiently andcompetently. Similarly, they believe that HEIs areable to solve economic, social, and welfare- andhealth-related problems. As a corollary of thisconfidence, Finns expect a great deal from theirHEIs. The national government, citizens, andbusiness and industry expect HEIs to produceeconomically significant innovations, to educateexperts and to strengthen the educational andcultural underpinning of the country.

So far, HEIs have been fairly successful inresponding to these expectations. Over the past fivedecades, Finland has become a country of hightechnology and high civilisation. The tertiaryeducation system is the mainstay of the nationalinnovation system. Nearly half of the younger agegroups study for a tertiary education degree, andthe aim is to raise this figure to 70%.

The polytechnics, which were created during the1990s, have carved a place for themselves in theFinnish tertiary education system, which now isgenuinely dual-sector. Compared with universities,polytechnics are more practically oriented and havecloser relationships with business and industry. Thepostgraduate polytechnic degrees will consolidatethis dualism and create a genuine a furthereducation track for polytechnic graduates.

A special characteristic of Finnish education isthat tuition fees are not charged for degree studies.In addition, students may get a maximum of US600 dollars a month for living expenses. Internationalcomparisons show that Finland does not spend ex-cessively on tertiary education. According toOECD data, Finland spends some US 6,000 dollarsper student annually, which is below the OECDaverage of US 6,360 dollars. The Finnish figure issubstantially smaller than the corresponding US fi-gure of US 10,240 dollars per student.

Yet, a higher rates of study efficiency is desirable.Only half of university students graduate in sevenor fewer years and 25% never graduate. Theseproblems are mainly concentrated in the Helsinkimetropolitan area. The least efficient fields of study

88

would enable some polytechnic graduates to upgra-de their knowledge after a period of work experien-ce by taking a polytechnic Master's degree. The po-lytechnic Master's degree would provide the sameeligibility for public posts as the universityMaster's. In principle the character of polytechnicMaster's degrees differs fundamentally from theuniversity Master's degrees as they are intended toserve those already active in the work force.

The polytechnic Master's degrees gainedpermanent status in autumn 2005. They aredifferent from university master's degrees. Theirduration will be one-and half years ( 60–90 ECTScredits). The degree can be taken flexibly alongsidework and without leaving the labour market. Thisprovides a significantly quicker and more economicalternative for polytechnic graduates than forstudents in a university Master's programme.. Theminimum entry requirement to Master's degreeprogrammes in polytechnics will be a polytechnicdegree and three years of work experience.

One possible trend in the future might be thatthe university Master's programmes will becomemore closely linked to research training, whereasthe polytechnic Master's will build on workexperience gained in the labour market. Thedevelopment of both university and polytechnicMaster's programmes will entail greater input intoteaching and into new teaching methods.

The realization of polytechnic Master's degreeswill finalise the building of the structure of theFinnish dual system. The structure follows Finland'smainstream educational policy, to build up a tran-sparent and functional educational structure for ter-tiary education. For the moment the duality of theFinnish tertiary educational system is stable butthere are indications of increasing intra-institutionaldifferentiation. The academic drift phenomenon isquite visible as far as the Master's programmes areconcerned but it is by no means the leading force inthe development of tertiary education.

According to the government, the Finnishtertiary education system is geographicallycomprehensive and there is no special need tofurther expand it. On the other hand, morecooperation between units is needed, and there is

the possibility that some units could be closeddown. Only a few multi-faculty universities canclaim to have an international standing in research.

Regional co-operation between universities andpolytechnics has increased considerably. Someargue that these developments should go further,for instance through consortia between institutionsin each sector. Growth in international competitionand assuring future prospects for diminishingcohorts of younger age groups has increased theintensity of this discussion.

In the debate on the size and direction of tertiaryeducation, two lines of thinking have competedwith each other. The first argument is that allexisting institutions should be of equal and highquality. The opposing "world class universities"argument states that for a small country likeFinland, it is vitally important that resources beconcentrated into fewer world-class units. To date,official thinking has been in favour of the firstargument, but there are also voices that favour thelatter argument.

The scale of the higher education system hasbeen strongly criticized, especially by the businesscommunity. It is argued that there are too manyuniversities and polytechnics in a small country likeFinland. One recent proposal (from a workinggroup from the Prime Minister's Office) has been tosubordinate polytechnics into the state administration.According to the argument, this would help with arationalisation of the system, as polytechnics arecurrently the responsibility of local municipalitiesor private institutions. This proposal came as asurprise for many because only ten years ago, seve-ral of the former colleges were state institutions. Fi-nal policy on this issue is yet to be decided.

A real pressure for institutional rationalizationwill be based on diminishing age cohorts in someparts of the country. In particular, the northern andeastern parts of Finland have lost population and inthe future there will be no rationale to maintain theexisting network of institutions. In some regions thesupply of study places will exceed demand for them.

New statutes and regulations have sought toincrease university autonomy. The capacity forFinnish universities to operate as independent

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economic units is still limited when compared withuniversities in many other countries. An appropriatebalance between basic and competitive fundingshould be found, the general aim being to increa-singly link the provision of funds to special projectsand achievements in quality of research and teach-ing. The new Polytechnics Act stresses theautonomy of polytechnics, which de facto isrestricted by the power of the organisations runningthem. In future, the development of autonomy willhinge on the stance taken in Finland with regard tothe right of HEIs to charge tuition fees.

Rectors of all universities would like to have moreautonomy. One suggestion is that universities bepermitted to apply for and accept commercialloans. Two universities, (the University of Helsinkiand the Åbo Academy (in Turku)) differ from therest, because they have relatively wealthy privatefoundations, which own many of the buildings andfacilities used by these universities. This providesthem with an additional level of autonomy. Rectorsof the other 18 universities would like to have thesame flexibility.

It is also the case that vocational higher educationinstitutions, the polytechnics, are subject to adifferent type of 'control', whereby they areeffectively 'owned' by foundations, limitedcompanies or municipal authorities, althoughprimarily funded by the Government. Universitieswould like to have the same level of independence.

Some universities would like more independenceto decide on the salaries they pay to their staff.Currently the State Employer Authority sets nation-wide salaries via a process of negotiation with staffunions, which includes establishing the basic salarylevels. However, each university is responsible forthe final implementation of the established salaryprinciples and ultimately decides on the actualsalaries paid to all university staff.

The major concern expressed by universities isthat as state-funded authorities, they are requiredto abide by the same, sometimes strict, rules whichall state organisations are required to follow. Someof these accountabilities are seen as beinginappropriate to universities. However, the recentlypromulgated Finnish constitution stresses the im-

portance of accountability as to how the taxpayer'smoney is used.

The government argues that the current level ofuniversity autonomy is already high and that thisought not be an obstacle to either high quality inresearch or education for the exploitation ofknowledge. The level of accountability and transparencywhich universities are subject to have been criti-cised, but they must be confirmed at a high, reliab-le level before the existing autonomous link bet-ween the university and the state could be changed.

The government has also stressed that managerialprofessionalism and the strategic skills of university/boards should be improved as a precursor togreater economic autonomy. At the present time,each university rector is nominated by huge generalinternal meetings of representatives, some of whichhave more than one hundred members. This makesthe nomination process difficult and to date, nosystematic comparison of candidates' skills andcompetencies has taken place. Recently the Governmentproposed that rectors should be selected by theuniversity senate/board. This was not accepted bythe parliament. One reason was the active lobbyingagainst the proposal by rectors themselves.

The Government agrees that the composition ofuniversity senate/board, and the way rector isselected, should be changed to improve theprofessionalism of university management andstrategic leadership.

The Finnish tertiary education system is stillnational to a high degree. There are few foreignstudents and only a handful of genuinelyinternational units. The Ministry of Education hasset ambitious targets for increased internationalexchanges. One key point in this policy is toincrease internationalization within Finnish highereducation institutions. Not all of these targets hasyet to be been attained. Finnish higher educationinstitutions have much to gain from participationin the global education market. For the time being,national legislation may been seen as hinderingthis. In a competitive market the present qualityassurance system needs to reconsidered so thatwilling Finnish institutions could benefit frominternational evaluations.

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