More work is needed to find out why rising standards of teaching and learning in Welsh schools are not producing better GCSE pass rates, says Estyn's chief inspector.
Susan Lewis, head of the inspection agency Estyn, said upward trends in the performance of schools inspected since 1998-9 are not being reflected in the overall pass rate for five or more GCSEs or equivalent at grades A*-G.
But the Assembly government says current strategies to tackle performance at both key stages 3 and 4 will take time to bed down.
In 2005, 85 per cent of candidates gained five GCSE passes - just two percentage points higher than in 1999. Yet the amount of good work seen in Welsh schools by inspectors has risen by 16 percentage points since 1998-99.
The performance of schools at KS4 in 2004-5 was mostly graded 2, meaning good with no important shortcomings. And, since 1999, the number of schools said to be outstanding (grade 1) has more than doubled.
The A*-G pass rate, however, still lags well behind a target set by the Assembly government of 95 per cent by 2004. In England, 89 per cent of teenagers passed at least five or more GCSEs or their equivalents last summer.
Wales has also started to lag behind again on the percentage achieving five or more A*-C passes. In 2004-5, this was 54 per cent in Wales, but 56 per cent across the border.
Ms Lewis praised the quality of teaching in schools inspected last year but called for closer analysis of pupil attainment at GCSE.
In her annual report published last week, Ms Lewis said there had been a considerable improvement in grades given to schools over the past six years. But she cast doubt on whether the "ambitious" targets set by the Assembly government would be met at KS4 in 2007.
"If there is one area I feel needs working on in schools, it's in raising the number of passes at A*- G at GCSE," she said.
Dr Heledd Hayes, education officer for the National Union of Teachers Cymru, said that new work on improving teenagers' performance should not be overshadowed by the foundation phase for early years. Pass rates at GCSE had improved, she added.
The problem of a significant minority of young people leaving school with few or no qualifications has been a long-standing one in the UK.
In Wales, the learning pathways reforms of the 14-19 curriculum are intended to give teenagers a wider choice of vocational and work-based as well as academic courses. The pilot Welsh baccalaureate offers a broader programme of study including key skills, language programmes, and a research project.
Meanwhile ACCAC, the Welsh qualifications, curriculum and assessment authority, is reviewing the secondary curriculum with a view to making GCSEs more skills-based.
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