Education policies can spur recovery, study shows

BRUSSELS - National governments need to invest in education as the economies move out of recession because the demand for highly trained workers will be higher, OECD's annual study on education shows.

Going to university pays dividends through higher salaries, better health and less vulnerability to unemployment, the Organisation for Economic Co-operation and Development (OECD) says in its latest comparative study of education systems in 30 developed countries, mostly European, but also of those from Australia, New Zealand, Japan, Korea, US, Canada and Mexico.

"As we emerge from the global economic crisis, demand for university education will be higher than ever," OECD secretary general Angel Gurría said. "To the extent that institutions are able to respond, investments in human capital will contribute to recovery."

The study calculates that on average, the net public profit from providing a male student with a university education is €35,000, nearly double the amount originally invested.

It also estimates that a male student who completes his degree can expect an earnings premium of over €130,000 on average across the countries surveyed, in comparison to someone who only completes secondary school.

Female students can expect premiums of under €100,000, "reflecting the disparity in most countries between male and female earnings," the study shows.

The highest earnings advantages are in the US, where a male graduate can expect to earn more than €250,000 extra over his lifetime and a female graduate over €150,000. Italy comes in second for men, with an average lifetime advantage of just over €222,000 and Portugal for women, with an average advantage of nearly €150,000.

Although the study is based on data collected up to 2007, prior to the full flowering of the financial and economic crisis, "it does provide indicators about how investments in human capital can contribute to economic recovery."

"As far-reaching as the labour market impacts of the crisis are, the potential social consequences may last even longer," the study warns.

Education and health may feature prominently on the public agenda in the debate about spending priorities and "particular pressures will be faced in those systems which rely on work-based training."

Companies struggling to cut costs and avoid lay-offs may find it increasingly hard to place trainees, the study forecasts.

In Denmark, Germany, Hungary, Ireland, Switzerland and Estonia, around 75 percent of upper secondary students are enrolled in programmes that involve school- and work-based elements.

Other countries, such as Iceland and the Netherlands, expect young people to spend almost four years between the ages of 15 and 29 in programmes combining education and employment.

"Sustained policy responses will be needed involving both education and employment authorities to avoid declining opportunities for work," the study recommends.

Low skilled population worse off

Unemployment amongst university graduates remains low at an average of 3.5 percent among the EU countries surveyed, with Estonia coming in at a high of 11 percent. In contrast, over 40 percent of people with less than an upper secondary school are unemployed.

"Opportunities for continuing education and training are often designed to make up for deficiencies in initial education, but the reality is that participation among individuals with strong initial qualifications is significantly higher than among the least qualified, such that these opportunities often do not reach those who need them most," the study notes.

Moreover, the gaps in educational participation between younger and older adults are widening, with older, less qualified adults likely to become more vulnerable to "chronic long-term economic inactivity."

See more on European education in EUobserver's special focus section