Too much choice in Sweden?

| August 18, 2014 | 0 Comments

A bankrupt private education company has soured a globally admired education model for Swedes.

When JB Education, owned by Danish firm Axcel, abruptly closed its doors recently, owing more than US$150 billion, 11 000 Swedish students had nowhere to go to school. Moreover, 1 000 teachers and administrators were unemployed.

The move also caused controversy among politicians, who are still reeling from the news that according to the Organisation for Economic Co-operation and Development (OECD), the once staunchly socialist and stable Sweden faces the fastest-growing inequality of any OECD nation.

About one-quarter of Swedish students attend schools based on a US charter school model – publically funded but privately run. These 20-year old institutions are often owned by private Swedish equity firms, and have expanded as far afield as India.

Across the political spectrum and ahead of the September 2014 national election, Swedish politicians are voicing the need to investigate private education firms, accusing them of unethical practices such as leaving assessment to students and inadequate recordkeeping, all in the name of profit. Axcel is not the only culprit. One in four private secondary schools in Sweden is apparently lossmaking and faces a high insolvency risk – 25% above the average for Swedish corporations.

Key cited causal factors include a decline in demand due to decreasing demographics and a system whose regulations have unravelled since 2008. School firms lure teachers with the promise of performance-based bonuses and then put staff under impossible pressure to award high grades to market schools, says Eva-Lis Siren, head of Lararforbundet, Sweden’s biggest teachers’ union.

Jan Bjorklund, Sweden’s minister for schools, is set to propose legislation in 2015 aimed directly at sorting the dodgy private schooling firms from those that are well run.

The legislation will force for-profit firms to run schools for a minimum period, likely to be 10 years – an unattractive prospect for private equity players, who tend to have five- to seven-year investment horizons. Other quality controls will also be on the cards.

A poll of Swedish citizens this year indicated that over 50% are broadly in favour of forbidding profits in tax-financed areas such as education.

Category: Autumn 2014

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