I have a suspicion that you'd wind up with a lot of places that would care even less and with people making it to 18 without ever having advanced at all without some sort of stick ("being held back"), probably impacting the most vulnerable even more.
That might be a possibility, but from what I've read, retention (the stick) does more harm than good. One of those harms is that students get held back by struggling with one skill, like math, when they are progressing on other skills at a normal pace.
A system like this would address that issue, and could prevent education resources from being applied redundantly.