I went to such a school.

> They now have different classmates they don't have a connection with, they enter the new class having as their identity "the person who failed the previous year", and they'll probably have to sit bored in the classes of other subjects they did pass.

Which is why they, and their parents, work really hard not to fail.

I'm good friends with someone who was left behind on, of all things, history. I spoke to him recently about the experience. Having to be with kids younger than him was really bad for a while. But overall, the experience forced him to work hard. He didn't become a top student, but he's doing well in life and he credits it as part of the reason.

Keep in mind - there is usually a "make-up" exam if they're at risk of being left behind. In my school, they'd know they failed in early June. And the makeup exams were in late August or early September. They had a whole summer to get their act together and pass the makeup.

They did have exceptions: Failing on the languages and some other humanities was somewhat OK.