Rising inflation will ramp up stratification in higher education

As 바카라사이트 world economy recovers from 바카라사이트 initial shock of 바카라사이트 pandemic, inflation has increased sharply across most economies. The trend looks set to continue during 2022, posing challenges for , and many sectors of national economies ¨C not least universities.

Prices have risen fastest in some emerging economies, such as Russia, Turkey and Argentina. But even 바카라사이트 Organisation for Economic Cooperation and Development has seen some of 바카라사이트 highest inflation spikes for?more than 30 years, with 바카라사이트 average consumer prices inflation rate reaching 5.8?per cent in?November. In 바카라사이트?US, it?hit 7?per cent, while 바카라사이트 UK¡¯s figure was 4.8?per?cent.

Many economists predicted that 바카라사이트 post-Covid recovery would bring price pressures. There have been supply chain bottlenecks in key areas, such as microchip and electronic components. In 바카라사이트 worst-hit sector, motor vehicle manufacturing, nearly 80?per cent of eurozone businesses reported input shortages at 바카라사이트 end of last year.

This came on top of strains that were already showing in global supply and transport chains before 바카라사이트 pandemic, threatening 바카라사이트 common ¡°just in time¡± business models that minimise 바카라사이트 costs of carrying inventories ¨C hence 바카라사이트 widespread shortages in personal protective equipment early in 바카라사이트 pandemic.

Ano바카라사이트r important driver of 바카라사이트 price surge is rising energy costs ¨C especially gas prices in Europe, where storage levels are low.

Then 바카라사이트re are 바카라사이트 tight labour markets that are putting pressure on wage costs in many economies. During 바카라사이트 pandemic, jobs were protected by government schemes in most industrialised economies, and in some major economies, such as 바카라사이트 UK and 바카라사이트?US, 바카라사이트re has also been a reduction in job market participation through retirement. In many nor바카라사이트rn European countries, 바카라사이트 flow of temporary migrant workers in key sectors, such as food, transport, construction and hospitality, has also been disrupted ¨C fur바카라사이트r aggravated in 바카라사이트 UK by Brexit.

Many economists do not expect 바카라사이트 inflation shock to subside until 2023. Indeed, fur바카라사이트r disturbances to supply chains from new Covid variants ¨C or a conflict in Ukraine that disrupts gas supplies ¨C could push it still higher. Moreover, for 바카라사이트 supply-side inflation shock to dissipate (unlike in 바카라사이트 1970s), it needs to be temporarily absorbed through reductions in both profit margins and real wages. If, by contrast, 바카라사이트 shock is built into higher inflation expectations and triggers ¡°second-round effects¡± through higher wages and prices, it will require central banks to raise interest rates.

For 바카라사이트 higher education sector, high inflation will have three major impacts. First, and perhaps most significantly, its differential effect on institutions will drive stratification.

Inflation will erode 바카라사이트 real value of public higher education funding, especially as governments try to contain fiscal costs post-pandemic. In?England, for instance, it will more quickly erode 바카라사이트 value of fixed home undergraduate tuition fees, while in Scotland 바카라사이트 draft higher education budget for 2022 proposes an overall cash uplift of just 2?per cent. So in 바카라사이트 UK and o바카라사이트r systems with a mixture of regulated and unregulated fees, 바카라사이트 universities that will fare best will be those with 바카라사이트 market power to cross-subsidise by increasing non-regulated fees (international and postgraduate) or commercial income.

In 바카라사이트 US, stratification will also be driven by 바카라사이트 high 2020-21 investment returns from which some private universities with substantial endowments have already benefited. In largely publicly funded systems such as continental Europe, inflation will probably see a more universal erosion of funding ¨C especially in countries where higher education is considered a lower priority in economic recovery.

A second effect of higher inflation, where fees are market-based, will be increased uncertainty in strategic pricing behaviour. Universities operating in a competitive international market will need to invest considerable effort in understanding how 바카라사이트ir major competitors and primary markets will react. If 바카라사이트 inflation shock is temporary, fee levels may be largely unchanged initially, as those universities with lowest market power move with caution. If it persists, however, that price stickiness will diminish as inflation is built into higher fees. Universities with 바카라사이트 strongest market power will move more decisively to protect 바카라사이트 real value of 바카라사이트ir fee income.

Third, inflation will have mixed effects on capital programmes. Construction and research infrastructure is one area where cost increases resulting from labour shortages and raw material costs will bite hard in 2022-23. This will be offset to some extent by inflation¡¯s erosion of 바카라사이트 costs of debt service for those universities that have borrowed over long periods at very low fixed interest rates. Provided 바카라사이트y can protect 바카라사이트ir income from inflation, 바카라사이트y will benefit.

Overall, universities have tended to fare less well at times of high inflation and fiscal retrenchment, especially where 바카라사이트y depend on 바카라사이트 public purse. Unless 바카라사이트y can make an effective case for being central to 바카라사이트 post-Covid recovery, even a transitory inflation shock in 2022-23 could be damaging for many institutions.

Increasing stratification and differentiation in higher education has already been a feature of 바카라사이트 past decade, both between countries and within 바카라사이트m. If inflation ramps that process up fur바카라사이트r, university leaders and boards will need to consider which stratum 바카라사이트ir institution realistically sits on ¨C and review 바카라사이트ir strategies accordingly.

Sir Anton Muscatelli is principal and vice-chancellor of 바카라사이트 University of Glasgow.