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Andreas Schleicher
Special Advisor to the OECD Secretary General and Co-ordinator of the OECD Skills Strategy
Andreas  Schleicher

Investing in the future

Authors: Andreas Schleicher Andreas Schleicher

18 September 2012

No group or country, no matter how well-educated,  has been totally immune from the effects of a worldwide economic downturn. But new data from Education at a Glance  also reveals the remarkable importance of having a good education for individuals, the economy, and society as a whole. More educational opportunities has helped people to keep or change their jobs during the recession. For instance, between the start of the downturn in 2008 and 2010, overall unemployment rates jumped from an already high 8.8% to 12.5% for people without an upper secondary education, and from 4.9% to 7.6% for people with an upper secondary education, on average across OECD countries. By contrast, unemployment rates for people with higher education remained much lower, rising from 3.3% to 4.7% during this same period. While the rate of change between the two groups may be similar, its impact on labour markets has been hugely different. For all OECD countries together, the unemployment rate in 2010 was roughly one-third less for men with higher education than for men with upper secondary education; for women with higher education, it was two-fifths less.

All this has driven the rapid expansion of educational opportunities. Over the past decade across OECD countries, the percentage of adults who have attained higher education has grown at a rapid clip, from 22% in 2000 to 31% in 2010. Yet despite this burgeoning supply of well-educated individuals – as well as the faltering market conditions from 2008 forward – most people with higher education have continued to reap very good economic benefits. The gaps in earnings between people with higher education and those with lower levels of education not only remained substantial during the global recession, but grew even wider. In 2008, a man with higher education could expect to earn 58% more than his counterpart with no more than an upper secondary education, on average across OECD countries. By 2010, this premium increased to 67%. Similarly, in 2008, women with higher education had an average earnings premium of 54% compared to their upper secondary-educated peers. By 2010, this premium grew to 59%. This is no longer just a phenomenon of the industrialised world. Indeed, the country with the greatest earnings premium on higher education is now Brazil, where that advantage is about three times as high as on average across OECD countries. All this shows that the increase in knowledge workers has not (yet) led to a decline in their pay, which is what we saw at the low end of the skills spectrum.

Importantly, taxpayers are increasingly aware of the economic and social returns on the public funds that are used to help people pursue higher education. On average, OECD countries receive a net return of over USD 100 000 in increased income tax payments and other savings for each man they support in higher education – four times the amount of public investment. And the public and private benefits of education go beyond the purely economic. The data show that higher levels of education are associated with a longer life expectancy, increased voting rates, and more supportive attitudes towards equal rights for ethnic minorities.

But in an era when advanced education is becoming a necessity, many OECD countries need to do better to increase access to higher education for young people from disadvantaged circumstances. On average across OECD countries, young people from families with low levels of education are less than half as likely to be in higher education, compared to the proportion of such families in the population. In addition, students and families have been bearing an increasing share of the costs of more education in many OECD countries. While this general approach is reasonable in that individuals receive many of the benefits of education, it has sometimes led to scenarios in which individuals face large financial barriers in pursuing more education. These barriers may impede countries’ own goals of increasing educational attainment in their populations. Few countries, the UK leading the field, have yet found sustainable and equitable approaches to financing higher education.

Last but not least, and despite compelling evidence of the economic and social benefits of education, at a time of shrinking budgets, only education systems that are shown to be effective and efficient will make the grade, and countries must find new ways to generate greater value for money from educational investments. It is worrying that the significant increase in spending per student in schools over the past decade has, in many countries, not been matched with improvements in the quality of learning outcomes. The data underline the scale of the effort that is needed for education to re-invent itself in ways that other professions have already done to provide better value for money. The future will measure the success of education systems no longer by how much countries spend on education or by how many individuals complete a degree, but by the educational outcomes achieved and by their impact on economic and social progress. Citizens and employers now expect education systems to: be responsive by ensuring that education and training providers adapt efficiently to changing demand; deliver quality and efficiency in learning provision so that the right skills are acquired at the right time, right place and in the most effective mode; provide the flexibility needed to allow people to study and train in what they want, when they want and how they want; reduce barriers to entry such as institutional rigidities, up-front fees and age restrictions and to ensure a sufficient variety of entry and re-entry pathways; and, last but not least, to develop efficient and sustainable approaches to the financing of learning with a rational basis for who should pay for what, when, where and how much.

The knowledge society is here to stay, and requires a capable, highly qualified and innovative labour force. Managing the growth and development of educational systems in ways that improve access, enhance quality, increase performance and boost value for money is not easy. Countries must establish which policy choices and mixes promote efficient learning in their specific contexts. International comparisons can offer valuable insights, as they allow countries to see their own education systems in relation to the quality, equity, and efficiency of educational services achieved elsewhere in the world. Sharing of policy experience can also show how different education systems address similar problems. In a global economy, it is no longer improvement by national standards alone, but the best performing education systems internationally that provide the benchmark for success. Success will go to those individuals and nations which are swift to adapt. The task of governments will be to ensure that countries rise to this challenge.