Showing posts with label economic crisis. Show all posts
Showing posts with label economic crisis. Show all posts

Tuesday, June 25, 2013

Education: The best protection against an economic crisis

by Dirk Van Damme
Head of the Innovation and Measuring Progress division, Directorate for Education and Skills



The insight that education is valuable both to individuals and to countries is not new. Using continuously improving data and statistical tools, we have come to understand and appreciate the magnitude of education’s impact on employment, income, health and life opportunities in general. From a purely economic point of view, private returns on investment are well beyond 10% per year, and public returns are only slightly below that figure. Fears that increasing participation and greater numbers of graduates – resulting in ever-increasing numbers of highly qualified people in the work force – would result in some kind of inflation, in diminishing returns and burgeoning graduate unemployment could not be confirmed by the data.

When the financial crisis erupted in 2007-08, rapidly turning into a global economic recession and a fiscal crisis in the Euro-zone and other countries, it was very difficult to predict its impact on education. Data for the years 2008 and 2009 showed that in the first years of the crisis, the impact on education remained limited and was confined to countries in severe crisis, such as Ireland, Iceland and Greece. Education is generally protected from shocks to the economic system because of its intrinsic slow pace of change. Individuals and families did not drastically alter their patterns of participation in education; and in the first years of the crisis, governments used stimulus packages and deficit spending to try to soften the blow, leaving education budgets more or less untouched. But we know that things started to change dramatically from 2010 onwards, when unemployment – especially among youth – climbed steeply and governments turned into austerity mode.

Education at a Glance 2013, the OECD’s reference on education indicators and statistics, for the first time provides a comprehensive set of data covering the years 2010 and 2011. The data convey a consistent, but also somewhat surprising picture. A great deal of the economic and social hardship caused by the crisis fell chiefly on less-educated individuals. The unemployment gap between well-educated young people and those who left school early widened during the crisis. On average across OECD countries, 5% of those with a tertiary education were unemployed, against 13% of those without an upper secondary education. Between 2008 and 2011 the unemployment rate for the latter group increased by 4%, while it rose by only 1.5% among the highly educated. The earnings gap widened as well: the average difference in earnings between highly educated and low-educated individuals grew from 75 percentage points to 90 percentage points between 2008 and 2011.

The message is clear: it is a person’s education that determines whether he or she will be extremely or only moderately exposed to the economic and social risks in times of crisis. Those without a minimal level of education, and certainly those of them without a stable job, find themselves without any shelter from the storm. Meanwhile, the relative returns on higher education increase. Some might argue that this is largely due to structural changes in the labour market: highly educated people taking the jobs of the middle-educated individuals, who, in turn, drive low-educated workers into unemployment. The earnings data do not seem to confirm this hypothesis: if tertiary-educated individuals were to take medium-skilled jobs en masse, their relative wage premium would not have increased as much as it did. In addition, the wage premium increases with age, which suggests that the higher level of skills among tertiary-educated workers is compensated in their salaries. In times of crisis and tough competition in the labour market, employers would certainly not be willing to value skills as much as they seem to do if there was no good reason to.

In short, the value of education increases during an economic crisis. Those who lack education, stand to lose a lot; those who have invested in it, can still reap its benefits.

Links:
For more information, and to download a copy of the book, visit the Education at a Glance website at: www.oecd.org/edu/eag.htm

Tuesday, May 28, 2013

Getting our youth back to work

by Andreas Schleicher
Deputy Director and Special Advisor on Education Policy to the OECD's Secretary-General

If there’s one lesson we’ve learned over the past few years, it’s that we cannot simply bail ourselves out of a crisis, we cannot solely stimulate ourselves out of a crisis and we cannot just print money our way out of a crisis. But we can become much better in equipping more people with better skills to collaborate, compete and connect in ways that drive our economies forward.

There is no group for whom this is more important than today’s young people. Between 2008 and 2011, the gap in unemployment rates between higher- and less-educated youth widened dramatically. While young people with advanced skills have weathered the crisis reasonably well, those without foundation skills have suffered. Unemployment among young people without a high school education soared 20% in Estonia and Ireland and 15% in Greece and Spain. The short-term impact on individuals, families and communities beg for urgent policy responses; the longer-term impact, in terms of skills loss, scarring effects and de-motivation, will affect countries’ potential for recovery. Without the right skills, people will languish on the margins of society, technological progress will not translate into economic growth, and countries can’t compete in the global economy.

What’s often overlooked amid the grim statistics is that a few countries, like Austria, Chile, Germany and Korea saw a sizeable drop in unemployment rates among their low-skilled youth. What this tells us is that, with the right policies and economic environment, we can do something about this and it seems to boil down to three actions: build the skills that foster employability; give young people the opportunity to make their skills available to the labour market; and ensure that those skills are used effectively at work.

To begin, we need to be able to anticipate the evolution of the labour market: we need to know what skills will be needed to reignite our economies. The coexistence of unemployed graduates on the street, while employers say they cannot find the people with the skills they need, shows clearly that more education alone does not automatically translate into better jobs and better lives.

We need to put a premium on skills-oriented learning throughout life instead of on qualifications-focused education that ends when the working life begins. We need to tackle unacceptable rates of school dropout by offering more relevant education and second-chance opportunities, and by offering work experience to young people before they leave education.

OECD’s Learning for Jobs analysis shows that skills development is far more effective if the world of learning and the world of work are integrated. It’s not difficult to understand why. Skills that aren’t used can atrophy. And, compared to purely government-designed curricula taught exclusively in schools, learning in the workplace allows young people to develop “hard” skills on modern equipment and “soft” skills, such as teamwork, communication and negotiation, through real-world experience. Hands-on workplace training can also help to motivate disengaged youth to stay in or re-engage with the education system.

But building skills is the relatively easy part of the plan; far tougher is providing opportunities for young people to use their skills. Employers might need to offer greater flexibility in the workplace. Labour unions may need to reconsider their stance on rebalancing employment protection for permanent and temporary workers. Enterprises need reasonably long trial periods to enable employers giving those youth who lack work experience a chance to prove themselves and facilitate a transition to regular employment. And some countries may need to review the minimum wage for younger workers to make it easier for low-skilled young people to get their first job and discourage early school leaving by lowering the opportunity cost of staying on at school.

Last but not least, if all of this is about more than getting young people temporarily off the street, we need to ensure that talent is used effectively. Skills mismatch is a very real phenomenon that is mirrored in people’s earnings prospects and in their productivity. Knowing which skills are needed in the labour market and which educational pathways will get young people to where they want to be is essential. High-quality career guidance services, complemented with up-to-date information about labour-market prospects, can help young people make sound career choices.

We also need to maintain and expand the most effective active labour-market measures, such as counselling, job-search assistance and temporary hiring subsidies for low-skilled youth; and we need to link income support for young people to their active search for work and their engagement in measures to improve their employability.

But none of this is going to work unless everyone is involved: governments, which can design financial incentives and favourable tax policies; education systems, which can foster entrepreneurship as well as offer vocational training; employers, who can invest in learning; labour unions, which can ensure that investments in training are reflected in better-quality jobs and higher salaries; and individuals, who can take better advantage of learning opportunities and shoulder more of the financial burden. This week OECD will launch an Action Plan for Youth to be presented at the Organisation’s annual Ministerial Meeting in Paris in order to step up government’s efforts to tackle high youth unemployment and strengthen their education systems to better prepare young people for the world of work. It’s time for all of us to take the lessons we learned through the crisis and turn them into a sustainable plan to get our young people back on the path to prosperity.

Links:
OECD Forum 2013: Give youth a chance
skills.oecd: Working with youth
OECD Skills Strategy Spotlight: Apprenticeships and Workplace Learning
OECD Skills Strategy
OECD Survey of Adult Skills (PIAAC)
Photo credit: Young adult looking for work / Shutterstock

Tuesday, September 11, 2012

Investing in people, skills and education for inclusive growth and jobs

by J.D. LaRock
Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education
As the spectre of another economic downturn looms large in many countries and is already a reality in others, new data from the 2012 edition of Education at a Glance: OECD Indicators – released today – provides powerful insights into the link between education, economic progress and social mobility around the world.

For example, as detailed in the book’s new indicator on education and economic growth, more than half of the GDP growth in OECD countries over the past decade is related to labour-income growth among workers with higher education.  Indeed, even as GDP across all OECD countries shrank by 3.8% during the global recession year of 2009, growth in labour income among people with higher education contributed nearly 0.4% to the GDP of these countries overall. In contrast, the contraction of labour income that year among people with a medium level of education reduced the GDP by 0.8%, while shrinking incomes among people with lower levels of education trimmed another 0.5% off GDP.

In light of the substantial role education can play in promoting economic growth, countries’ success in assuring that younger people achieve a higher level of education than their parents – what is known as intergenerational mobility in education – is especially important. The new indicator on educational mobility in this year’s Education at a Glance shows that many countries are making good progress in this regard.  On average across all OECD countries, 37% of 25-34 year-old non-students have surpassed their parents’ level of education, while only 13% have achieved a lower level.  Half of younger adults in OECD countries have achieved the same level of education as their parents: 13%, a low level of education; 21%, a medium level, and 16%, a high level.

Meanwhile, as detailed in the new indicator on early childhood education, many OECD countries are working hard to expand schooling opportunities for their youngest children. For example, among OECD countries with data for both years, 81% of four-year-olds were enrolled in early childhood programmes in 2010, up from 77% in 2005.  What’s more, enrolments among three-year-olds rose from 64% to 69% during this same period. Since participation in early childhood education is linked to better performance later on in school, these developments bode well for a future in which improving young people’s skills will be more important than ever.

At the same time, this year’s Education at a Glance also shows that many OECD countries need to address the growing problem of youth who are not in employment, education or training. After several years of decline, the so-called “NEET” population began to rise in 2009 and spiked to nearly 16.0% in 2010 – a sign of the particular hardship young people have borne as a result of the global recession. As such, OECD countries would do well to examine measures that can productively engage people in this crucial age group, such as vocational education and training programmes and opportunities for non-formal education and training.

As always, the 2012 edition of Education at a Glance contains a rich array of indicators on educational attainment, graduation and completion, education financing, enrolment trends and the globalisation of higher education, and schools and teachers. In addition to the data discussed above, this year’s edition contains a number of other new indicators, including information on how the career aspirations of boys and girls compare to the fields young men and women study in higher education ; the factors that influence immigrant students’ performance in school ; who makes key decisions in education systems ; and the pathways and gateways to gain access to secondary and tertiary education.

For more information, and to download a copy of the book, visit the Education at a Glance website at: www.oecd.org/edu/eag2012
Browse and share the book
Education at a Glance Highlights
Watch the video interview with Andreas Schleicher
Photo credit: Digital Vision/Inmagine

Friday, June 29, 2012

Higher education: a good long-term investment?

by J.D. LaRock
Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education


As any student can attest, pursuing a higher education requires an investment in time, effort – and in a number of OECD countries, significant financial resources.  But the economic costs of higher education go beyond tuition fees.  Because people with higher education tend to have higher earnings, they’re likely to pay more in income taxes and social welfare contributions.  There’s also the “opportunity cost” of foregone earnings when people enter university instead of the labour market.

Given these long-term economic costs, do the long-term economic benefits of having a higher education make it worthwhile?  As the latest issue of the OECD’s brief series Education Indicators in Focus details, analyses based on the most recent year of available data – 2007 for most countries – suggest that the return on investment is very good.

For example, the long-term economic advantage of having a tertiary degree instead of an upper secondary degree, minus the associated costs, is over USD 175 000 for a man and just over USD 110 000 for a woman, on average across OECD countries. The payoff is particularly strong for men in Italy, Korea, Portugal and the United States, where obtaining a higher education degree generates a long-term benefit of more than  USD 300 000 for the average man, compared to a man with an upper secondary education only.

Meanwhile, the advantage for women is strongest in Ireland, Korea, Portugal, Slovenia, the United Kingdom, and the United States, where having a tertiary education yields an average long-term benefit of USD 150 000 or more, compared to a woman with an upper secondary education.

As the chart above shows, OECD analyses also find that the long-term payoff on the amount of taxpayer funds used to support people in higher education generates a strong return.  Taxpayer costs include funds used to lower the direct costs of higher education to individuals, as well as support for grant and loan programs.  They also include indirect costs, such as foregone tax revenues and social contributions to the government while people are in university.

On average, OECD countries directly invest more than USD 30 000 in public sector funds to support an individual pursuing higher education.  However, they’ll recoup this investment – and then some – through greater tax revenues from these higher-educated people, as well as savings from the lower level of social transfers these people typically receive.

On average, OECD countries will receive a net return of USD 91 000 on the public costs to support a man in tertiary education – more than three times the amount of the public investment. In Belgium, Germany, Hungary, Slovenia and the United States, this return is especially high, topping USD 150 000.  The net return on the public costs to support a woman in higher education is somewhat lower – USD 55 000, on average – but are still positive in almost every OECD country.

Of course, the fallout from the global economic crisis will likely change this cost-benefit equation – but whether it will make it better or worse overall is unclear. For example, the higher unemployment rates spurred by the crisis are likely to have reduced the opportunity cost of foregoing work in order to attend university.  However, they also may have reduced some of the benefits of having a higher education, because unemployment rates rose among tertiary-educated people during the crisis.

Likewise, the continued global expansion of higher education could have different effects.  As the supply of highly-educated individuals grows, the relative economic benefits of having a tertiary education may go down over time.  However, if economies continue to become more knowledge-based – increasing the demand for highly-educated people even more – the economic benefits of higher education could continue to expand.

For more information
On the OECD’s education indicators, visit:
Education at a Glance 2011: OECD Indicators www.oecd.org/edu/eag2011
On the OECD’s Indicators of Education Systems (INES) programme, visit:
INES Programme overview brochure
See also: IMHE General Conference 2012 "Attaining and Sustaining Mass Higher Education", Paris, 17-19 September 2012


Chart Source: Education at a Glance 2011: OECD Indicators, Indicator A9 (www.oecd.org/edu/eag2011).
Note: Data for Australia, Belgium and Turkey refer to 2005. Data for Italy, the Netherlands, Poland,
Portugal and the United Kingdom refer to 2006. All other data refer to 2007.
Countries are ranked in descending order of the net present value.

Tuesday, June 19, 2012

The role of unions in developing a skilled workforce

by Randi Weingarten
President, American Federation of Teachers

As we slowly recover from the worst economic recession since the 1920s, labour markets around the world remain turbulent. We are facing more social and economic inequality with wages stagnating and many people dropping out of the workforce entirely.

How can the American Federation of Teachers and other trade unions around the world help?

First, unions should be viewed as part of the solution, not as something to overcome. Labour-management collaboration is essential to developing skilled workers and, in turn, to creating better jobs and higher salaries. Workers need to be represented at the bargaining table and—regardless of the trade or profession—unions can be an important partner. That is the key to developing a flexible, smart workforce ready and equipped to be full partners with management.

If our workforce is going to thrive in the 21st century, we need to begin by changing much about our approach to education—from inside the classroom and larger school environment, to how we care for children, to how labour and management work together across the world.

In every country, a flourishing economy requires a strong education foundation as well as the ability to innovate and to communicate. It also requires teachers who are prepared and supported on every level and who are invested in helping students succeed in school and in life.

In Singapore, for example, where I spent time with teachers and students earlier this year, schools are focused on growth and achievement. However, as I observed numerous diverse groups of children deeply engaged in learning, I saw nothing that could be construed as “teaching to the test”—something that educators in the United States continue to contend with. In Singapore and in other countries with high-performing education systems, schools have listened to their teachers and collaborated with them to ensure the best education practices are implemented.

Additionally, the OECD can work with education unions to collaborate on important skills-developing issues, including:
  • Global teaching standards—These include guidelines to ensure high-functioning, well-prepared, continuously improving teachers in every classroom. However, teachers cannot do this alone. They should be given the continuous support and respect they deserve –which, in large part, means treating education as a shared responsibility.
  • Educational  equality—We can address issues of educational inequality worldwide through expanding and enhancing the successful efforts of countries in which every child receives a good education regardless of economic status. We also need to level the playing field for poor children by ensuring the availability of early childhood education and wrap-around services. We can address these issues before they become significant obstacles to learning.
  • Curriculum—Ensuring a well-rounded, robust curriculum that prepares students for the future is essential to advancing workforce preparation. A child’s studies should focus on accessing and sorting information to solve complex problems and develop higher-level thinking skills, as opposed to finding answers to simple questions learned by rote. Businesses can help prepare students through mentoring and internships, while at school we can offer more project-based learning to ensure the mastery of skills sets.
  • Models of collaboration—The OECD and unions can disseminate examples of labour and management working together to solve problems. Sharing best practices and successful partnerships can help lead to greater and more effective co-operation.
Education by itself will not address the jobs crisis, nor can education by itself address inequality. But without education, the fight for jobs and fair societies cannot be won. We’re excited to take part in the process.

Links:
Trade Union Advisory Committee to the OECD (TUAC)
American Federation of Teachers
See also: OECD Skills Strategy
Visit our interactive portal on skills: http://skills.oecd.org
More blogs with Randi Weingarten:
‘An obligation to systematise success’
‘Internationalist, not isolationist’
Photo credit: Child hands on top of each other / Shutterstock

Wednesday, May 23, 2012

Better skills and better policies lead to better lives for women

by Michelle Bachelet
United Nations Under-Secretary-General and Executive Director of UN Women
The global economic crisis, with high levels of unemployment, especially among youth, and rising inequality, with large wage gaps between high- and low-skilled workers, has added urgency to the need for better skills. This is especially important for women, who already face barriers to participating fully in the economy. Investing in their skills from early childhood, through compulsory education, and throughout their working life can transform women’s lives and drive economies. Equally important are better policies to promote equal rights and opportunities and women’s full participation in public life.

Investment in skills is particularly important during these tough economic times.  Skilled workers play a crucial role in generating future jobs and economic growth. Women’s entry into the labour market has been an important driver of European economic growth in the past decade. Research finds that closing the female-male employment gap would have positive economic implications for developed economies, boosting US GDP by as much as 9% and euro area GDP by as much as 13%. A 2011 report by the International Labor Organization and the Asia Development Bank revealed that a gender equality gap in employment rates for women cost Asia USD 47 billion annually – 45% of women remained outside the workplace compared to 19% of men.

It is time to remove the barriers to women’s full participation in the economy. The OECD has found that the main reason 25-39-year-old women cite for choosing to work part-time is their care responsibilities. The same reason is given when inactive women are asked why they don’t participate in the labour market at all.  Globally, women are still responsible for 60% to 80% of household chores and childcare. Worldwide, women account for 58% of unpaid work.

Although 552 million women joined the global labor force between 1980 and 2008, and research shows that reducing the gender employment gap improves economic growth, millions of women remain marginalised from the formal economy. In Egypt, Jordan, Libya, Morocco and Tunisia, only about one-quarter of adult women were in the labour force in 2010, compared with 70% to 80% participation rates among adult men.

An agenda for equality is needed that includes better skills and better policies so that women can exercise their economic, social, cultural and civil rights and economies can be healthier and more inclusive. Policies are urgently needed to help women and men reconcile work and family responsibilities, through the provision of childcare and maternity and paternity leave, and flexible working hours. Tax and pension systems also need to be revisited and revised to encourage equality.

When it comes to promoting women’s economic empowerment, we are not starting from scratch. There are many important initiatives taking place in all regions, including in low- and middle-income countries, to ensure economic justice and security for women. These include flexible childcare that enables women to participate in the labour force, fair pensions to ensure that older women do not live in poverty, cash transfers to enable families to send their girls to school, and training that gives women skills in entrepreneurship and new technologies. Our challenge is to make the equality agenda universal. In 2013, UN Women will use our flagship report, Progress of the World’s Women, to present evidence on the policies that work, to enable countries to learn from one another and drive the change we want to see.

Links:
UN Women
For the OECD Skills Strategy go to: http://skills.oecd.org
See also OECD work on:

OECD Work on Gender via www.oecd.org/gender

Gender equality and women's empowerment
Early Childhood Education and Care
OECD Forum 2012
Photo credit: Girl with balloons /Shutterstock

Tuesday, May 22, 2012

Business in-a-box: a global skills solution

by John Hope Bryant 
Founder, Chairman and CEO of Operation HOPE and Bryant Group Companies, Chairman, Subcommittee on the Underserved and Community Empowerment for the U.S. President's Advisory Council on Financial Capability, bestselling Inc. Magazine/CEO READ business author for Love Leadership: The New Way to Lead in a Fear-Based World (Jossey-Bass)

OECD has just launched their OECD Skills Strategy, which I fully support. I call it the global-common-sense-plan-for-educational-relevancy.The OECD Skills Strategy seeks to powerfully re-connect the power of education with youth aspirations globally, maybe for the first time in a generation.  Quoting my friend Jim Clifton, Chairman and CEO of Gallup, in his breakthrough book The Coming Jobs War, "this is the playoff game for the rest of our lives."

The roots of the crisis now gripping Greece, and Europe in general, is not social it's economics and jobs. The main complaint of the Occupy Movement is is economic in nature. The youth led riots in the suburbs of both Paris and London were rooted in economics and jobs, or the powerful lack thereof. The crisis that sparked what many call the Arab Spring, with Mohammad setting himself ablaze in Tunisia, was rooted in local economics and his job. His financial dignity. Specifically, Mohammad had his cart business taken from him, which represented for him his human and financial dignity, the way he fed his children and kept a roof over his family's head.  His job, and thus his aspirations in life, was a large part of his identity.

A young HOPE Fellow at Operation HOPE told me recently that "you cannot have social justice unless you first have economic justice." I agree, and thus the movement today has to be more about silver rights empowerment than simply civil rights justice. Or quoting my friend Richard Cordray, head of the new U.S. Consumer Financial Protection Bureau, "as John Hope Bryant told me, and I believe, if we had more consumer empowerment we would need less consumer protection."

What every young person in school around the world wants is essentially the same thing; they want a shot at "a good job," or an authentic opportunity to exercise their economic energy in a way to connects their aspiration with real and sustainable opportunity.

What if we could reconnect the power of aspiration with the power of education in our children's lives? What if a child in elementary school could start a business for $50-100 (U.S.?)? A middle school student could do the same with up to $200, or up to $500 for a high school student?  What if they could get a financial literacy course and a course in dignity, connected with a primer course in entrepreneurship?

They could select from 25 businesses that can be started for $500 or less, pitch their idea for this business in front of a live audience of business role models from their community, get a Business-In-a-Box Youth Entrepreneurship Grant, a business role model, and even a bank account--how would that change their lives? How would that bring the power of aspiration and imagination, and hope back to their educational experience? We think it changes everything. HOPE Business in-a-box, formally launched this Fall in schools across America, will channel and transform a youth’s natural aspiration and state of hope into practical and life changing action steps.  Action steps that they can move on themselves, with a little help from HOPE and our influential friends.

Now imagine this as a global solution, to the sustained youth jobs desert in developed countries today, as well as the jobs crisis from Africa, to Asia, to Latin America, to the 100 million jobs estimated to be needed soon in the Middle East, just for the youth population there. Imagine what could happen if you could double the level of financial literacy in a specific school house, and then double the level of economic energy in that same school house, and then triple or quadruple the level of business role models in that same school house, over a 5-year period of time (it will happen much sooner than that by the way).  You simply change everything in that school, with those youth.  You crush the high school dropout rate crisis in developed countries, because all youth want is a "good job" or economic opportunity.  You also set your nation up for sustained future success, because you are defining your future based on the only real asset you have  the future aspirations of your youth, and their very real connection with local GDP growth in your town, township, city, state and country.

For America, that means the 30 million young people, grades 4-12th, aged 8-18, are the farm club and bench strength for the playoff game of the rest of our lives.  How we field and play that game will decide everything pin 2025.  We are starting now.

Links:
For more information on:
John Hope Bryant
Operation HOPE Business-in-a-box 
The OECD Skills Strategy: http://skills.oecd.org

Monday, May 21, 2012

Everybody into the talent pool

by Marilyn Achiron 
Editor, Directorate for Education

The OECD has just formulated a Skills Strategy to help countries make the most of their peoples’ talents.

How does one even begin to consider an issue as complex as skills? We found that visualising the supply of skills as a talent pool helps. The idea is to create a larger and larger pool of people who have fully developed their skills, encourage those people to supply their skills to the labour market, and then ensure that those skills are used effectively on the job. This new animated video will show you what we mean. 


Links:
To download the report:  Better Skills, Better Jobs, Better Lives: The OECD Skills Strategy   – and much find out more about skills and skills policies around the world – visit our interactive skills web portal: http://skills.oecd.org

Follow the launch of the Skills Strategy and join the debates on @OECD_Edu  #OECDSkills

Thursday, January 26, 2012

Higher education: an insurance policy against global downturns

by J.D. LaRock
Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education
During the first two years of the economic crisis, unemployment
was higher among adults with less education, on average across the OECD zone.
With all the economic turmoil of the past several years, have you ever wished you could buy an insurance policy to protect against the effects of a global recession?  Well, such a insurance policy already exists – and it’s called higher education.  During the first two years of the global economic crisis, in country after country, people with a tertiary (higher) education were much less likely to be unemployed, much more likely to be participating in the labour force, and more likely to have higher earnings, compared to their less-educated counterparts.

These and other findings are discussed in the first issue of the OECD’s new education brief series, Education Indicators in Focus.

As the crisis ramped up in 2008 and continued in 2009, unemployment rates increased across the board in OECD countries. However, the impact was much greater for adults without an upper secondary education. Among this group, unemployment rates rose from an already high 8.7% to 11.5%, and jumped five percentage points or more in Estonia, Ireland, Spain and the United States.  Adults with an upper secondary or equivalent level of education fared somewhat better: among this group, unemployment rates rose from 4.9% to 6.8% between 2008 and 2009 across the OECD zone.  However, in Estonia, Ireland, Spain and Turkey, jobless rates reached 10% or more for this group of people – a mark generally regarded as troublingly high territory for unemployment.

By contrast, people with a tertiary education were the best protected against unemployment during the thick of the global recession. Overall, unemployment rates in OECD countries ticked up just 1.1 percentage points for this group between 2008 and 2009, from 3.3% to 4.4%.  Moreover, 2009 unemployment rates remained at 5% or less for tertiary-educated people in 24 out of 34 OECD countries, and surpassed 8% in only two – Spain and Turkey.

Employment figures tell a similar story: during the crisis year of 2009, people with higher education not only had less trouble finding a job, but also had an easier time keeping the job they had.  Across all OECD countries, 83.6% of adults with a tertiary education were employed in 2009, compared to 74.2% of adults with an upper secondary or equivalent education, and just 56.0% of adults without an upper secondary education.  While a number of factors contribute to the level of adults’ participation in the labour force, higher employment rates for people with more education point to a better match between the skills these individuals possess and the skills the labour market demands, even during periods of economic crisis.

What’s more, the sizeable earnings premium that university-educated people typically enjoy in the labour market held strong during the crisis years of 2008 and 2009.  In 2008, among 14 OECD countries with comparable data, the typical employee with higher education earned 56% more than the typical employee with an upper secondary or equivalent education.  Even in the face of the economic crisis, this premium increased slightly to 57% in 2009. By contrast, the typical employee without an upper secondary education earned 23% less than a corresponding worker with an upper secondary education in 2008 – and this earnings penalty remained the same in 2009.

Having a higher education isn’t fail-safe protection from the consequences of a global economic downturn.  But like any good insurance policy, it can help people recover when bad things happen to them.  And with the economic outlook for 2012 looking as uncertain as it does, that’s no small comfort.

For more information
Education Indicators in Focus
Education at a Glance 2011: OECD Indicators www.oecd.org/edu/eag2011
OECD’s Indicators of Education Systems (INES) programme (Brochure PDF 2.3 KB)

Chart source: Education at a Glance 2011: OECD Indicators, Indicator A7.