Tax incentives needed to promote recurrent education

Beppu, Oita Pref. – There are no countries in the world that do not wish for eternal prosperity. Nothing can ensure such prosperity except education of their people. Many people may take that to mean school education for children and youth. However, what will be far more important going forward will be recurrent education, that is, educating adult members of society.

In an age of the internet of things and artificial intelligence, the speed of change is quite rapid. Even the latest knowledge quickly become obsolete. In other words, expert knowledge that is instantly useful for society will become useless in practically no time at all. Studying hard at universities and graduate schools may no longer keep you employed for your whole lifetime.

European and North American countries are often said to be advanced in adult education. For example in Finland, where six out of every 10 people in the working population change jobs — including those who get hired in fields completely different from their previous jobs — half of these people reportedly acquire specialized knowledge in the new fields or a degree pertaining to such knowledge. In a “100-year life” driven by AI, we need to build a society where people freely go back and forth between businesses and university/graduate school — for example, periodically going back to school to study after working for 10 years, give or take.

The idea of such free exchanges between society and higher education is nothing new. Al-Azhar University in Cairo, one of the world’s oldest universities established in the late 10th century, is known for its three-point credo — one can join the university at any time, take classes at any time and graduate at any time. If there is anything people cannot understand, they can join the university and take classes they want to take. They are free to leave the institution once they have gained enough knowledge, and can come back again whenever they want to study more. Isn’t this an ultimate ideal of recurrent education?

Humankind already had an ideal form of university more than 1,000 years ago. But to build a society in which universities are run under such credo, we need to explore a work style that allows company employees to go on leave whenever they want to study. The work style of the Japanese people must be fundamentally reformed, and businesses urged to actively invest in education for their employees.

Japanese firms are believed to have abundant retained earnings — reaching more than ¥500 trillion, almost matching the nation’s gross domestic product. Since businesses are organizations that pursue profits, however, they will not easily invest their money unless there is an incentive. To give them an incentive to boost investment in education of their employees, we could allow them to deduct the amount they pay to send their workers to universities or graduate schools, both domestic and overseas, as well as the sum they pay to commission those institutions to educate their staff, from their tax payments, without limit?

This policy should kill three birds with one stone. First, it will make it easier for the companies to invest in the education of their employees. From the medium- and long-term viewpoint, it will help upgrade the academic background of the employees, which will make them more competitive. Some business executives complain that employees sent to graduate schools on company expenses for acquisition of MBA degrees quickly leave the firms. But if the number of MBA degree holders increases in Japan, some of them will newly join the companies — even though others may quit to find other jobs. That will be a plus for the nation as a whole on a net basis.

Company employees will get more opportunities to learn — which should make them more motivated to work. That will also help the workers to design their own career path in the 100-year life.

For universities, an increase in adult students will secure them greater diversity and improvement in studying environment. To begin with, Japanese universities have very few adults studying at the institutions and too little diversity among the students. Students aged 25 or older account for less than 2 percent of the total fresh university entrants in Japan, compared with an average of more than 20 percent among the world’s advanced countries.

Also, universities will no longer need to be so sensitive about the sharp decline in the population of 18-year-olds — since they can count on adult students to keep up their enrollments. But the current term of study at university — four years for undergraduate studies, two years for a master’s course and three years for a doctoral course — will be too long to meet the diverse needs of recurrent education businesses would want for their employees. The recurrent education that employers expect for their workers will likely last for two to three months, or one to two years at most. To enable universities to meet such diverse needs of society and businesses for recurrent education, regulations on how classes are taught and on the standards for giving credits to students will need to be relaxed.

These reforms will also bring yet another benefit. For a long while, it has been pointed out that Japanese youth have become introverted and are not interested in studying abroad. In 1995, the number of Japanese studying in the United States topped 50,000. At that time, Chinese students at U.S. institutions numbered 40,000. Today, the 370,000 Chinese students at U.S. universities far outnumber the roughly 20,000 Japanese students.

This poses a problem in terms of national security — because friendly relations and trust between nations will ultimately depend on grassroots ties, or individual friendship between the people of those countries. That should make the case for introduction of radical tax benefits to promote recurrent education as a major pillar of a far-sighted grand policy vision for Japan.

Haruaki Deguchi is the president of Ritsumeikan Asia Pacific University in Beppu, Oita Prefecture. A lecturer and author of more than 40 books, he founded Lifenet Insurance in 2008 after a career spanning nearly 35 years at Nippon Life Insurance Co.

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