They're practicing this around here:
http://en.wikipedia.org/wiki/Social_promotion
Quote:
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Social promotion is the practice of promoting a student (usually a general education student, rather than a special education student) to the next grade only at the end of the current school year, regardless of when or whether they learned the necessary material, in order to keep them with their peers by age, that being the intended social grouping. It is sometimes referred to as promotion based on seat time, or the amount of time the child spent sitting in school.
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My wife teaches 7th grade science. Basically, the school can recommend that a student repeat a grade. The ultimate decision comes from the parents. In her area (low income minority neighborhood), almost all parents choose against repeating a grade. What she's stuck with is a bunch of mouthy kids that can barely read.