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Only two Japanese universities, the University of Tokyo and Kyoto University, are in the World University Rankings, which is published each year in Times Higher Education, a British newspaper supplement. In the 2015 rankings, the positions of the two Japanese universities fell sharply. The University of Tokyo slipped from 23rd to 43rd place, while Kyoto University dropped from 59th to 88th place. The principle of competition should be introduced at universities to make them stronger, and they should aim to become the world’s number one in fields in which Japan is strong.

1. Reform University Governance—Strengthen the Powers of University Presidents and Boards, Abolish Elections for Presidents, and Reduce the Role of Faculty Meetings

A big reason for the slow progress with university reform in Japan is the governance structure of universities here. Reforms such as the following are therefore required: (1) make university boards, the highest decision-making organs of universities, function more effectively and have them supervise the appointment of the university president and the management of the university by the president, (2) abolish elections for presidents, as they have a negative effect, and give the board effective control over the appointment of the president, (3) give the president control of personnel and the budget and eliminate interference by faculty meetings, and (4) abolish elections for deans in order to give control over personnel to the president.

2. Introduce the Principle of Competition and Promote Metabolism at Universities by Abolishing General Administrative Subsidies and Launching an Education Voucher Scheme

To make universities more competitive internationally, it is necessary to expose them to competition. To that end, approaching from the student side, i.e. the side of the customers of universities, will be effective. We would therefore like to propose that general administrative subsidies, which account for 90% of the 1.5 trillion yen in subsidies provided to universities, be abolished and that this funding be replaced with a scheme under which vouchers are distributed to students.

A voucher scheme involves the public sector distributing coupons that can only be used for certain purposes to households, and with an education voucher scheme, the coupons can only be used to pay tuition fees. Many other countries, including some U.S. states, some Canadian provinces, and the U.K., have introduced education vouchers for elementary education. If this scheme were introduced for Japanese universities, competition between universities would be encouraged, and this would improve the quality of the education provided as universities would work hard to attract as many customers, i.e. students, as possible.

Japan is almost at the point where everyone who wants to go to university will be able to do so. It is therefore essential to establish a mechanism whereby a process of renewal, in which uncompetitive universities either close, are absorbed by, or merge with other colleges, occurs. This would lead to the limited human and physical resources available being concentrated in highly competitive universities, which would also make them more competitive internationally. To that end, systems such as the special merger subsidies paid to encourage municipalities to merge with each other could serve as a reference for promoting the integration and merger of universities.

3. Introduce an Annual Salary System for the Remuneration of Faculty Members, Researchers, and Staff

At present, the salaries of national university faculty members are determined in much the same way as those of public servants, with faculty members at all national universities being paid according to the same scale. Because of this uniform pay structure, it is difficult for universities to attract top-flight personnel, or no internal competition occurs within the university, either. Under an annual salary system, the more top-flight personnel are hired the higher total personnel expenses become, but the market value of the university rises and more students enroll, so this is a price worth paying.

4. Strengthen the Financial Foundation of Universities through the Active Management of Endowment Funds

The endowment funds of U.S. universities invest huge sums of money. The endowment fund of Harvard University, for example, is worth $30.4 billion, while that of Yale amounts to $19.3 billion. Every university hires a fund manager from the frontline of the finance industry to actively invest the funds. Japanese university endowment funds, meanwhile, are small. That of the University of Tokyo is worth 27.9 billion yen while that of Keio University amounts to 43.8 billion yen. Japan’s universities also need to expand their endowment funds and invest them actively in order to strengthen their finances.

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