Building tax systems to foster better skills

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Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration and Andreas Schleicher, Director, OECD Directorate of Education and Skills. Today’s post is also being published on the OECD Education and Skills Today blog

Investing in skills is crucial for fostering inclusive economic growth and creating strong societies. In an increasingly connected world, skills are particularly important for citizens to get the most out of new forms of capital, such as big data and robotics. More and more, policy makers are recognising that rapid change in technologies and work practices mean that people will have to continually upgrade their skills throughout their lives.

This new reality raises many questions for governments, firms and individuals, including: who is to pay for all these skills investments? In many OECD countries, student debt is rising, and in many others, public debts are persistently high. How can policy makers decide on the right financing mix for students and governments?

This is where taxes have an important role to play. In a nutshell, delivering educational services will depend on taxes, and good tax income will depend on good educational services.  A new OECD Tax Policy Study, Taxation and Skills,  released today, highlights the role of the tax system in ensuring that the right financial incentives are provided for investments in skills. This means making sure that governments, individuals and firms all share the costs and the benefits of better skills.

In addition to raising the revenue to finance government spending on skills, every OECD country uses the tax system to provide support for skills investments. Provisions such as tax credits, tax deductions and reduced tax rates on student income help governments support skills investments both early on and later in life. Sharing the costs in this way can make investing in skills more affordable, although these tax provisions need to be well-designed.

Besides helping share costs, the tax system divides the returns to skills between governments and students. When investments in skills yield returns, it means that individuals get higher wages, and governments get more tax revenue.

The results published today show that these returns to skills are substantial. In almost every country examined, both students and governments earn a sound return on skills investments. In some countries, however, policies could be improved to better share the returns to skills between individuals, firms and governments. Rising earnings premiums paid to skilled workers across OECD countries means that the returns to skills may grow into the future. This means better wages for individuals, more profits for firms and more sustainable public finances for governments, a win all around.

In spite of these high returns, many workers do not have the right financial incentives to make the necessary investments in their skills to succeed throughout their lives. Unlike physical assets, like property and equipment, human capital cannot be used as collateral for borrowing to finance investments. This impedes access to credit for individuals’ skills investments. Firms may also underinvest in skills because they worry that newly skilled workers may be poached by competitors. Often, individuals and firms do not have access to the right information to make informed choices about how they can invest in their skills.

Designing tax and spending policies to encourage skills investments is crucial. Useful policy approaches can include refundable tax credits for lifelong learning, income-contingent loans for tertiary education, or extra tax deductions for firms that invest in their workers’ skills.

OECD governments are increasingly looking at how policies can be designed to raise productivity, innovation and growth. We hear a lot about how tax systems can encourage investments in physical capital and innovative technologies through R&D tax credits and other measures. The report released today shows the importance of tax policies that are equally geared towards incentivising investments in human capital.

Useful links

OECD Centre for Tax Policy and Administration

OECD Directorate of Education and Skills

Gender equality in West Africa: Actions speak louder than words

Julia Wanjiru, OECD Sahel and West Africa Club (SWAC) Secretariat

Respect of the fundamental rights of women and girls remains a serious, sometimes life-threatening, concern in many developing countries. Several decades of gender debates, special events and development goals dedicated to the empowerment of women, add up to only modest improvements on the ground.

Let’s look at a few examples from West Africa.

Child marriage. Seven West African countries rank among the top 20 countries in the world with the highest rates of child marriage. In Niger, three out of four girls marry before their 18th birthdays, contributing to the fact that Niger has the highest fertility rate in the world (7 children per woman in child-bearing age). Nigeria is among the top 20 countries with the highest absolute numbers of child marriages, with 1.2 million married girls. By depriving its girls of the chance to develop their potential, the region is collectively losing a huge amount of human capital.

Female genital mutilation/cutting (FGM/C). FGM/C remains a widespread practice in West Africa, even though its prevalence varies considerably from one country to the next—ranging from 2% in Niger to 97% in Guinea. Many initiatives are working against this practice and some countries have passed laws to formally forbid female circumcision (Guinea, Guinea-Bissau, etc.). However, law enforcement has trouble cracking down on these deeply rooted traditions and mentalities. According to WHO estimates, more than 3 million additional girls worldwide are cut each year—mostly by elderly women.

Educational gaps. Huge strides have been made in getting more girls into schools, but when it comes to assessing educational outcomes, the results are much less impressive. The net school attendance rate for girls from 2011-2014 was about 50% for the poorest performing countries like Chad, Mali and Niger. These countries also have the lowest literacy rates for girls (15% in Niger and 34% in Mali—far below sub-Saharan Africa’s 2015 average of 69%). The gender gap is progressively closing, but no country in sub-Saharan Africa is projected to achieve gender parity in primary and secondary education.[1] The most persistent barriers to girls’ education are: early marriage and early motherhood, traditional seclusion practices, the favouring of boys when it comes to family investment in education and the gendered division of household labour.

Ensuring equal opportunities for women and men, girls and boys in Africa will take time, massive educational efforts and profound changes to existing ways of thinking. Those changes might be supported by more exposure to external influences; the diaspora and media sources like TV series and movies can help accelerate these changes.

The legal frameworks, policies and strategies are hard to find, but they do exist. Since the mid-2000s, almost every West African country has created a national gender policy or strategy. Regional organisations like ECOWAS, UEMOA, CILSS and the African Union have all adopted gender policies and they are increasingly mainstreaming gender issues in different policy sectors. But, in practice, gender is still considered mostly as an afterthought and gender policies are often not implemented effectively. Ministries in charge of gender issues have usually very large portfolios— ranging from youth, sports, CSO, employment and drug control. They are often understaffed, under-funded and not taken seriously. Budgets allocated to gender-specific issues within sectoral policies remain tiny; disaggregated gender data is missing. To make some decisive progress, strong political will must come from the very top level, including from key ministries such as economic affairs, budget and strategic planning.

The weak implementation of gender-focused policies is, however, not just a funding problem. There are many other obstacles and risk factors: strong individual and institutional resistance to gender initiatives, deep-rooted cultural issues and traditions, general under-representation of women in the public sphere, illiteracy, etc.

Much of the gender debate seems to take place in a bubble, with gender experts mostly preaching to the choir. We cannot make headway on gender equality by having discussions that are mostly made up of women and gender experts. Moreover, women’s affairs are often associated with charities and are promoted for example, by African first ladies and many other famous female ambassadors—sometimes very successfully but a large number of initiatives are also instrumentalised for political ends. How many of their male counterparts are active in promoting gender equality? As long as the gender debate remains solely a women’s issue, it won’t move far.

It should not be forgotten, that gender is not just a matter of achieving equal opportunities for women and men. Gender equality is an economic development issue. Here again, the message is not new, but it still has not been sufficiently brought to the attention of all policy-makers. How can a country voluntarily deprive itself of the human potential of half of its population? The economic cost is enormous.

To reduce gender inequality more effectively and achieve sustainable development, we need to get more men on board. We also need to invest more in the education of girls and boys. Everywhere in the world, education has been a key driver of gender equality. An educated girl is better equipped to defend her interests and choose the life she wants. Education can also raise boys’ awareness of gender issues and make them less prone to seeing gender equity as a loss of privileges for themselves. Men could become true allies in building a society based on equal rights and opportunities.

But education alone is not enough. How many educated women and men still face pressure from their communities to conform? Girls’ education, beyond a certain level, is still seen by many as a “waste of time.” A 30-year old unmarried woman is not a “respected woman,” no matter how successful she might be in her professional life; she is seen as having failed to fulfil her “true mission” to be a wife and mother.

In order to change these deeply rooted prejudices, more effort must be made to target opinion leaders and traditional chiefs who set the agendas within their communities. The chiefs could play a much more active role in helping their communities move away from gender stereotypes, or at least, to not deepen them.  For example, Muhammadu Sanusi II, the Emir of Kano in northern Nigeria (population around 15 million), just announced a proposal to outlaw forced marriage, make domestic violence illegal, and impose minimum financial conditions upon men who want to marry a second wife. The proposed law does not exactly promote gender equality, but Kano state is taking a concrete step forward in a way that will make a difference in the lives of millions of women and children.

This year, International Women’s Day will again be marked by declarations of good intentions and statements—including mine. What should count, though, is not the number of commitments we make, but the true progress we achieve on the ground. At the end of the day, African girls and women will need to tell their own stories, fight for their own rights and work to achieve equal representation. If men were ready to help them, things would move much faster.

Useful links

Maps & Facts:

Women in parliament: Senegal ranks 7th worldwide but West African women remain under-represented

Au Sahel, au-delà de la Journée des droits des femmes, des fillettes interdites d’enfance  [Girls robbed of their childhood in the Sahel] Laurent Bossard, Director, SWAC Secretariat in Le Monde

International Women’s Day at the OECD:

Friday, 14-17h, Seminar on gender equality before the law

OECD work on gender

[1] UNESCO (2015): Gender and EFA 2000-2015: achievements and challenges, http://unesdoc.unesco.org/images/0023/002348/234809E.pdf

How does big data impact education?

mathematical-equations-and-charts-on-blackboard_xlMarc Fuster Rabella ,  OECD Centre for Educational Research and Innovation. Today’s post is also being published by OECD Better Life Initiative partner Sodexo.

Big data refers to the high volume of varied information that our societies produce today. The amount of data generated is so vast that it is even difficult to capture, manage and process it through conventional means. Big data increasingly influence our lives as better forms of data processing appear and storage capacity improves. Individuals’ interaction in social media, for example, serves companies to better understand consumer demand and find new ways to reach their targeted public. Similarly, city planners use urban mobility data to better address public transportation needs. Big data is changing the way decisions are made everywhere, and education is no exception.

Education systems produce a huge amount of information about our students and schools. This includes data such as students’ attendance and attainment, their performance and socioeconomic background, as well as schools’ population composition and instruction time. These and other kinds of information are important for the administration of education systems, but it can be also very helpful for analysing system’s functioning and supporting its improvement.

Access to data can help students define their learning goals and strategies. It can give families information to help make decisions and support their children’s educational paths and improve, teachers and schools ability to better adapt teaching methods to suit students’ specific context and needs. It can aid researchers in identifying what works best and new ways for data to further improvement, as well as give decision makers the evidence to design policies that better support their districts and schools.

However, the single fact of having the information is not enough to take advantage of it. An OECD case study shows that self-evaluation processes for development and improvement in some Polish schools were hindered by an excessive emphasis on in-between schools comparisons and competition. The absence of a culture of evaluation led these schools to narrow their focus on students’ test results. Given that the quality of schools is not determined by these results alone, their efforts were not able to bring about improvement.

As the Polish case exemplifies, the process of collection, analysis and use of data comes with its own challenges. The combination of descriptive data, research findings and practitioner knowledge is what creates robust knowledge environments for decision making. Results from standardised tests, for example, only provide a snapshot of performance at a particular moment in time. It is when these are combined with other kinds of information that we can actually use this information to improve our practices where it matters the most: the classroom. The Knewton platform is a good example of how such a combination can play a crucial role in finding tailored solutions to students’ individual learning needs.

Teachers, schools and other stakeholders involved in decision making need to transform available data into knowledge, which is to say, they need to assimilate this information and understand how to use it. But this is easier said than done. Creating robust knowledge environments that effectively support decision making requires building capacity for stakeholders across the system. Big data can surely support educational change, but knowing which information to use, why and how is as fundamental as its availability.

Useful links

The Simple, the Complicated, and the Complex: Educational Reform through the Lens of Complexity Theory

Governing Education in a Complex World

Education Governance in Action: Lessons from Case Studies

Governing Education in a Complex World

NAECTracey Burns, Project Leader, OECD Directorate for Education and Skills

The famous slogan “KISS” urges listeners to “Keep it simple, stupid!” However, modern policy making is increasingly discovering that not keeping it simple – in fact, embracing the complex – is essential to understanding contemporary systems and making reform work.

Modern societies are made up of a growing number of diverse stakeholders who collaborate through formal and informal channels. The rapid advancement and reach of information and communication technologies has enabled them to play a much more immediate role in decision-making while at the same time the delivery of public services has become more decentralised.

This complexity brings a series of dynamics that the traditional policy cycle is not able to capture. This is not startling news: numerous critics have described the inadequacy of the traditional policy cycle in agriculture, medicine, and education for the last 30 years. What has changed, however, is a growing understanding across a much broader set of actors that we can no longer continue to operate using traditional linear models of reform.

This is not just a theoretical discussion: ignoring the dynamic nature of the governance process makes reform less effective. In education for instance, even very similar schools can react quite differently to the same intervention. A case study of the Netherlands demonstrated how some weak schools benefitted from being labelled as in need of improvement, coming together as a school community to set off a virtuous cycle to improve performance. In contrast other schools struggled when faced with the same label, with some descending into vicious cycles where teachers felt unmotivated, parents moved their children to another school, and overall performance declined. A simple model of reform and governance cannot account for this complexity.

How can complexity be identified? A seminal 2002 paper by Glouberman and Zimmerman distinguishes between three types of problems: the simple, the complicated, and the complex. A simple problem is, for example, baking a cake. For a first time baker, this is not easy, but with a recipe and the ingredients you can be relatively sure that you will succeed. Expertise here is helpful, but not required.

In contrast, a complicated problem would be sending a rocket to the moon. Here, formulas are essential and high level expertise is not only helpful, but necessary. However, rockets are similar to each other in critical ways, and once you have solved the original complicated problem, you can be reasonably certain that you’ll be able to do it again.

Both simple and complicated problems can be contrasted with a complex problem, such as raising a child. As every parent knows, there is no recipe or formula that will ensure success. Bringing up one child provides useful experience, but it is no guarantee of success with another. This is because each child is unique and sometimes unpredictable. Solutions that may work in one case may only partially work, or not work at all, in another.

Returning to the failing school example, it was the unpredictability of the dynamics inherent in the response of the schools and their communities that rendered the problem complex as opposed to merely complicated. Acknowledging the complexity inherent in modern governance is thus an essential first step to effective reform. Successful modern governance:

  • Focuses on processes, not structures. Almost all governance structures can be successful under the right conditions. The number of levels, and the power at each level, is not what makes or breaks a good system. Rather, it is the strength of the alignment across the system, the involvement of actors, and the processes underlying governance and reform.
  • Is flexible and able to adapt to change and unexpected events. Strengthening a system’s ability to learn from feedback is a fundamental part of this process, and is also a necessary step to quality assurance and accountability.
  • Works through building capacity, stakeholder involvement and open dialogue. However it is not rudderless: involvement of a broader range of stakeholders only works when there is a strategic vision and set of processes to harness their ideas and input.
  • Requires a whole of system approach. This requires aligning policies, roles and responsibilities to improve efficiency and reduce potential overlap or conflict (e.g. between accountability and trust, or innovation and risk-avoidance).
  • Harnesses evidence and research to inform policy and reform. A strong knowledge system combines descriptive system data, research findings and practitioner knowledge. The key is knowing what to use, why and how.

Creating the open, dynamic and strategic governance systems necessary for governing complex systems is not easy. Modern governance must be able to juggle the dynamism and complexity at the same time as it steers a clear course towards established goals. And with limited financial resources it must do this as efficiently as possible. Although a challenging task, it is a necessary one.

Useful links

The Simple, the Complicated, and the Complex: Educational Reform through the Lens of Complexity Theory

Governing Education in a Complex World

Education Governance in Action: Lessons from Case Studies

The OECD is organising a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

More work? More play? What’s really best for high school students?

Learning to smoke, and other useful skills
Learning to smoke, and other useful skills

Laura Capponi, student at the Lycée EIB Etoile, Paris, France

I am a student in a French high school, where I have always studied. The French educational system is different to many other countries because of the length of the day, which typically runs from 8 a.m. to 4 p.m., with a half day on Wednesday. Students do not usually attend school on Saturday or Sunday. In comparison, school hours are usually from 7.30am to 2pm or 2.30pm in the United States, from 9 a.m. to 3:30 p.m. in Australia or from 9 a.m. to 2:45 p.m. in Finland.

I chose to compare France and the United States as my American friend, living there, could describe her schedule from the students’ point of view.

Students of my age, 14/15 years old, would attend school an average of 8 hours (including lunch) in France with a required 1048 hours of compulsory instruction per year, compared to a 14/15-year-old American student who would attend school an average of 6 hours a day for approximately the same number of hours per year. The main difference between these two systems is the number of hours per day and the amount of holidays. This leaves American students more leisure time and therefore more time to develop other interests such as art, sport or other extracurricular activities. On the other hand, French students spend most of their day in school, leaving little time for anything else.

How do these countries rank in the PISA report by the OECD, which has tested high-school students since 2000, and what does this say about the different systems? Studies show that developing extracurricular interests is beneficial to a child’s education. However France, where students typically spend a lot more time in school, ranks ahead of the United States by 14 points. The top country in this ranking is China. A high-school day in China often starts as early as 7am and ends a 5pm or later. According to a Chinese Youth and Children Research Center (CYCRC) survey, the majority of Chinese students spend more time at school than their parents do at work and have little to no time at all to play or to enjoy any extracurricular activities, their time being taken up by homework. This system is more similar to the French one, which would suggest that spending more time in school during the day is more adapted to the students.

However, the survey also shows that Chinese children do not enjoy as much playtime as they would like. They do not meet the requirement of 9 hours of sleep, and only 4 in 10 of the survey’s participants claim they have any friends to play with.

Study pressure has led to an increase in stress, psychological problems and even tragedy. Recently, a 16-year-old girl from Chengdu, Sichuan Province, committed suicide after failing to pass the entrance exam for a respected senior high school. The level of competition in China to be accepted into college is extremely high.

“But tests only tell you so much about Chinese students’ smarts”, says Xiaodong Lin, a professor of cognitive studies at Columbia University’s Teachers College. “When they come to university in the US, Chinese students tend to struggle with analytical writing, critical thinking, and communication with peers and professors,” Lin wrote in the People’s Daily, the official newspaper of China’s Communist Party.

“While Chinese education has focused more on mastery of knowledge, the American education seems to emphasise how to learn, even though we may not do as a good job as we wish,” she wrote.

While Chinese students tend to work very hard and succeed in school, American students are taught to be independent thinkers, challenge others’ opinions and be confident in their judgement, which could be considered more useful later in their lives. However they are often over-confident, and want to be “the boss instead of the soldier”.

Looking at the PISA study results, it seems that the highest-ranking countries were the ones which had longer school days, though some countries show that this is not the case. For example, the school system in Finland is different in many ways to China’s yet they have constantly ranked in the top countries of the study.

There are no mandated standardised tests in Finland, apart from one exam at the end of the students’ senior year of high school. There are no rankings, no comparisons between students, schools or regions. Homework is minimal and teachers, instead of spending more time in the classroom, use this time to build curriculums and assess their students. In this way, each student receives the amount of attention he needs.

Finland’s performance in PISA shows that increasing the length of school days and the amount of homework are not the only factors which increase scores in the test. It is also a balance between the Chinese and American systems which gives every student an opportunity to score well without extra work and pressure.

Useful links

Are the Chinese cheating in PISA or are we cheating ourselves?

Every child has special needs: “secrets” of Finnish education

OECD work on education

Gender inequality: Breaking the “grass” ceiling in emerging economies

employment outlook

Alastair Wood and Paolo Falco, OECD Directorate for Employment, Labour and Social Affairs

The Euro 2016 football tournament is over. Well done to everyone involved and especially to the champions Portugal. Now we can take a breather and look forward to the women’s tournament next year. Football is known for bringing people together all over the world, but although women’s football is garnering more media attention, and participation levels are rising, it is also an area where gender gaps in participation and pay are still very large: In 2012 for example, the famous Brazilian footballer, Neymar da Silva Santos Júnior had his monthly salary increased to around 1.5 million Reals at his then club Santos, a sum that would have covered the cost of the whole women’s team for an entire year. And ask Steph Houghton, the top female English player, what she thinks about earning almost 10 times less a year (£35,000) than what the top male earner, Wayne Rooney, takes home in a week (around £300,000).

Beyond the spendthrift and extravagant world of men’s football, gender inequality is also a sad reality for too many workers in the everyday labour market. Recent OECD data shows the average gender pay gap is currently around 16% in OECD countries, but the problem is not just confined to advanced economies. Looking at 16 emerging economies that cover over half the world’s population, our latest OECD Employment Outlook shows that the average gender pay gap rises to 19%. In other words, for every dollar a man makes, a woman in emerging economies only makes about 80 cents. Of course, one reason is that in the emerging world women are even more under-represented in better-paid jobs – men are more likely to be employed in the goods-producing sector and construction, while women are considerably more likely to be employed in the (less well-paid) social and personal service sector. Women are also considerably less likely than men to be in top executive positions.

But that’s not the entire story. Even when they do succeed in securing similar jobs with the same level of education, women are still paid significantly less than men. Another finding in our study indicates that often the majority of working women in emerging economies are self-employed, but they own smaller and less profitable businesses than men. This is the result of inequalities in access to credit and of gender gaps in financial literacy and business-related knowledge.

Perhaps unsurprisingly, the share of young people not in employment, education or training (NEET) is higher among women than men, partly reflecting motherhood at a young age in some emerging economies, and culturally-induced behaviour in general. This is also the case for the OECD as a whole, but the gender difference in this share is far more pronounced in emerging economies (17.9 percentage points, almost four times larger than the OECD average of 4.7 percentage points). Reducing gender gaps in labour market outcomes (participation, earnings, NEET rate, etc.) have rightly been the focus of global efforts in the last few years. G20 commitments such as reducing the gap in labour force participation rates between men and women by 25% by the year 2025 will hopefully bring millions more women into the labour market, and there are similar efforts to increase participation of women in STEM-related jobs (science, technology, engineering and mathematics) that aim to give us generations of well-paid female engineers, mathematicians and scientists.

Indeed, there are already signs of progress, but change is slow and uneven. In Chile and Costa Rica for example, the gender participation gap has narrowed by over 20 percentage points since the mid-1990s, while the largest gaps persist in both Egypt and India, where labour participation rates are over 50 percentage points higher for men compared to women. And if you are a girl and you want to become a top manager, then you may want to move to Latin America: in Chile, Colombia, Brazil, Mexico, and Costa Rica, women account for a higher share of top management and executive positions than the OECD average of 32%. Investment in education and increased efforts to encourage women to undertake careers in STEM fields may be partly responsible for this advancement.

Another piece of good news is that gender gaps in educational attainment have also been shrinking in recent decades: enrolment rates in primary and secondary education are today almost identical for boys and girls, and in many countries women are now attending tertiary education more frequently than men. Unfortunately this is not true for all socio-economic groups as girls from poorer families are still much less likely to be enrolled in school at all levels of education.

So what can we do to reduce gender gaps further? Are we condemned to passively accept that the (r)evolution towards global gender equality will be a slow-moving progression as the decades pass us by, especially in emerging countries? Definitely not. Our study helps policy makers identify actions that can have the biggest impact in helping to close the gender gap. Here are a few examples.

  • Tell your girls they can be rocket scientists: Removing gender bias at a young age and encouraging more women to take up STEM-related jobs would help to end stereotypes about appropriate areas of work for boys and girls, and inspire women to enter into better paid jobs.
  • Give mums a real choice to go back to work: Subsidising childcare and creating real incentives for fathers to take parental leave are two important measures of the available options to support mothers’ careers.
  • Ensure women have an equal chance to access credit and be fairly treated at work: Gender discrimination by credit providers and by businesses when hiring and paying their staff, and specifically against pregnant women, should be addressed in formal legislation. Inheritance laws that favour men should be changed and governments should specifically target women when enhancing financial education.

Reverting to football, it is interesting to note that all four countries that reached the semi-finals in the last women’s European football tournament had smaller gender pay gaps than the OECD average, and 3 out of 4 had better-than-average female rates of participation in the labour market. Football is hardly representative of the real world, but the gender gap, just like football, is a truly global phenomenon and has been engrained in societies throughout the world. As emerging economies develop economically, let’s try to help them also develop effective policies for “locking in” more gender equality in their society. Beyond the moral and social imperative, it will help them emerge economically stronger – women are the biggest untapped potential for economic growth. Closing gender gaps would therefore help both emerging and developed economies score a goal for economic growth while also promoting more inclusive societies.

Useful links

OECD work on gender equality

Time to think about the schools of tomorrow

Trends shaping educationToday’s schools are very different from those your grandparents went to. That’s not too surprising – education constantly evolves in response to social, economic and cultural shifts. So what about the schools of tomorrow – what will they teach, who will their students be and how will they learn? To start thinking about the answers to some of these questions, try taking this quiz drawn from the latest edition of the OECD’s Trends Shaping Education.

You may now begin.