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Stats back Blair's economic vision

We are all now used to being told that better education is the route to economic success. If Tony Blair's third way has a defining principle then it is probably that raising standards in schools is the key to prosperity. British pupils are fed up of being told by their teachers that their futures depend on knuckling down and making the most of their education.

But is education really that vital for economic success? According to Education at a Glance 2001, published by the Organisation for Economic Co-operation and Development, it is. "More education brings large rewards for individuals, in terms of employment prospects and earnings," the report says. This is true across the OECD, whose members are mostly developed countries, but the effect is particularly strong in the UK.

While UK graduates are more likely to be part of the labour force than their foreign counterparts, those without an upper-secondary qualification (five or more A*-C grades at GCSE) are more likely to be excluded from the job market. A third of people without such a qualification are outside the UK labour force compared to an average of 24 per cent of people throughout the OECD.

Not only are individuals who get good qualifications more likely to be in work and earn more, but they also get etter access to further education and training. In the UK, 25 to 64-year-olds receive only 22 hours of job-related training per year on average, while graduates get 99 hours.

While the effect of education on the life chances of individuals is well-established, greater controversy has surrounded its effect on overall economic performance.

In recent years the OECD had failed to measure the economic effects of better education because of a lack of data. But it is confident that it has now managed to prove that rising levels of education lead to economic growth.

It claims that, in the 1990s, improvements in education accounted for almost half a percentage point of UK economic growth per capita per year. That is much more than traditional economic factors such as the variability of inflation (0.01 percentage points), the size of the public sector (0.03) and the amount of national income that is invested (0.08).

But some are still sceptical that such a powerful link exists between education and economic growth. Professor Alison Wolf, head of the mathematical sciences group at the Institute of Education said: "I will be very surprised if they have proved this link. There is a vast literature that shows how complicated this relationship is."

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