Tag Archives: GEMS

GEMS Threaten To Close Down Schools in Dubai

According to The National Newspaper, Sunny Varkey has written a letter to the Knowledge and Human Development Authority mentioning the possibility of shutting down schools if they go ahead with the school fee freeze.

We have refrained from sensationalising the issue by using the verb threaten. Mr. Varkey is certainly stating a concern. He believes that the freeze on the school fees would not allow the schools to function within the quality standards set by GEMS and/or KHDA for that matter. However, there certainly is a very loud “or else” in there.

This move is not in any way a shock to this publication nor to anyone in the circle of education in Dubai. It has been lurking since the first confrontation between GEMS and KHDA which stemmed from the freeze on fee hikes of Dubai Modern School as it moved from an old location to new, purpose built facilities. Sunny Varkey is a seasoned strategist and would not lay down conditions that were not thought through. So why now ?

KHDA is still formulating their reply. Both have been thinking about this turn of events long before it happened. These are the scenarios as we see them:

1-KHDA stays firm on its decision. This will force GEMS to proceed with the timely closures of the schools in question. From Mr. Varkey’s letter, one can derive the possibility of closing down the schools and re-opening them under a new fee structure. This would require new licenses. Those are issued by the KHDA. If they proceed with issuing the new licenses, then the schools would have had a freeze on fees for two years and everything is “back to normal.” If KHDA does not issue these licenses, GEMS would have to accept that their growth in Dubai has now been capped. Abu Dhabi has a substantial need for “Indian Schools,” Could GEMS be thinking of moving the expansion there? What would Dubai need to do to fill the need for the students left behind? There are two years in which plans may be made to have other schools open, maybe even in the same locations, by another group. Pause for thought.

2-KHDA accepts to allow certain schools to raise their fees. What will those exceptions include? Where will the lines be drawn? This is the KHDA’s first major confrontation, backing down will have its repercussions. Holding firm will mean either a victory for two years, or the loss of a major school operator and a large employer.

3-GEMS backs down. This is highly unlikely. As we mentioned before, Mr. Varkey has not built a large company by being prone to quick, emotional decisions. Rather, his history brings forth an image of a very meticulously calculating and strategy-planning individual. He would not launch an ultimatum that he is not willing to uphold.

Since KHDA is planning a response soon, we shall hold some of the analysis until the official rebuttal. This is certainly an issue requiring a close watch.

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It seems that the GEMS – KHDA confrontation is heating up. This is certainly an interesting development that could spur constructive outcomes.
I tend to see the point that both are making. Intervention ? or regulation ? This is going to be covered by the magazine very soon.
Not having an authority intervening in private schooling “business” and letting the market force its rule is certainly desirable. But that can only be achieved when you do not have a flagrant abuse of certain, obviously temporary, market conditions. Had there not been an abuse of fee structuring, there would not have been a need for intervention.

I shall explain this point for clarity.

In the time of Dubai’s stellar boom, practically all schools followed a fee structure that was more in line with highest profit margin than with sustained, long-term growth. Had these schools offered a good balance of education to cost, they would not have raised the need for a governing body to intervene. The high demand for schools, generated by the high rate of population influx into the country, was what permitted those schools to command the fees that they have.

It would not be accurate to say that these schools were not providing some justification for those fees. State-of-the-art facilities, qualified teaching bodies, accreditation, and then some. But it would also be very difficult to completely discard the feeling that the thought was more geared towards what can justify fees rather than the other way around.

The MEE shall closely monitor this situation and its developments. Stay tuned.

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Filed under School Operators, School Reform, UAE