Dropout - huge costs

The economic costs generated by dropping out of school in Romania have reached an estimated value of approximately 15.7 billion euros over the last 11 years, equivalent to approximately 5.23% of the country's annual GDP, according to a report by the University of Bucharest for AmCham Romania. The report provides an economic perspective on a worrying social phenomenon, highlighting the significant impact of school dropout on the economy and society.

• Economic impact

The report points out that Romania has one of the highest early school leaving rates in the European Union, with a value of 16.6% in 2023. Annually, approximately 23,000 students leave school, which leads to long-term economic losses. It is estimated that a high school dropout earns on average euro190,000 less over their lifetime than a high school graduate. The total economic costs of school dropout for the analyzed period (2005-2024) are estimated at 107 billion euros, which represents 35.67% of Romania's GDP. The annual expenditure on school dropouts is euro2.3 billion, approximately 0.77% of annual GDP. According to the report: "Taking into account the differences in the length of working life, the average lifetime earnings of a person who dropped out of school are 353,736 euros, compared to those of a high school graduate, which are 544,210 euros. This translates into at a significant lifetime economic disadvantage of euro190,473.The lifetime costs of all school leavers in the analyzed period (i.e. 2005-2013 to 2016-2024) total euro107 billion, which represents approximately 35 .67% of Romania's annual GDP (estimated at 300 billion euros).The annual expenses with dropouts from the 12 cohorts analyzed are approximately 2.3 billion euros, i.e. approximately 0.77% of Romania's annual GDP. The costs incurred with the dropouts from the 12 analyzed cohorts, during the last 11 years, are approximately 15.7 billion euros, i.e. approximately 5.23% of Romania's annual GDP".

• Rural-urban discrepancies

Dropout is much more prevalent in rural areas, where the rate reaches 27.5%, compared to only 3.3% in the big cities. This difference highlights the significant disparities in access to education between rural and urban areas. Elisabeta Moraru, member of the Board of Directors of AmCham Romania, said: "Human capital and education are central priorities for AmCham. After last year we looked at the economic cost of the labor shortage, this year we continued the series of analyzes AmCham and we tackled one of Romania's most important challenges - school dropout. Together with our partners from the University of Bucharest, we tried to see how much it costs us as an economy and society that we have the highest early school leaving rate in The European Union - 16.6% in 2023. (...) This is not just a figure - it is a story of missed opportunities, of unfulfilled potential".

• Perspectives and solutions

Professor Dragoş Iliescu from the University of Bucharest, the coordinator of the report, emphasizes that the phenomenon of school dropout must be viewed from the perspective of an "investment-profit ratio", in order to clearly understand the economic and social implications. The report pleads for the allocation of more consistent budgets in education and the implementation of measures to reduce school dropout, emphasizing the need for public policies better founded on quantitative data. This analysis highlights the urgent need to address the school dropout phenomenon not only as a social problem, but also as a major economic challenge for Romania's future.