Building the knowledge economy

by Justine Doody
Freelance Journalist and Editor, SGI News

Across the world, countries and citizens are taking steps to build and participate in the growing knowledge economy. As low skilled jobs disappear, replaced with smart systems or outsourced to less developed economies, governments are realising that the best way to ensure economic growth and higher employment is to invest in human capital. This means creating education opportunities for as many people as possible.

The OECD has found that throughout the global economic downturn, education level has been a predictor of job security. Between 2008 and 2010, unemployment in OECD countries rose from 8.8 per cent to 12.5 per cent for people with no upper secondary education, and from 4.9 per cent to 7.8 per cent for people with an upper secondary education. For those with tertiary education, unemployment increased from 3.3 per cent to only 4.7 per cent. Even in a time of economic crisis, OECD countries still needed highly skilled employees.

The Sustainable Governance Indicators (SGI) 2011 study of the Bertelsmann Foundation measured education in OECD countries. The top performing countries were Finland, Canada and New Zealand, while among the lowest were Mexico, Turkey and Slovakia. In Finland, SGI found, between 60 and 70 per cent of each annual cohort enter third level education. Canada has the highest proportion in the OECD of population aged 20 to 64 that has completed post-secondary education. Reforms in New Zealand have led to a sharp increase in tertiary education participation, among majority and minority groups. OECD figures from 2012 also show that New Zealand invests the highest percentage of public expenditure of all OECD countries in tertiary education.

In Mexico, according to SGI, things are improving, but slowly. University education is increasing, but it is still open to only a few; OECD data shows that just 17 per cent of 25 to 64 year olds have achieved a tertiary education. Turkey has serious problems in terms of access to and quality of education, and only 29 per cent of 25 to 64 year olds have a secondary education. Slovakia sees regional differences in access to third level, and has the lowest enrolment rate in third level in the OECD.

Education, health, social inclusion: it’s all connected

Not surprisingly, the top countries in education scored highly in most of the indicators measured by SGI, while the bottom countries scored low on many indicators. One of the indicators with a close correlation to education performance was social inclusion. Finland, Canada and New Zealand ranked highly on this indicator, while Mexico, Turkey and Slovakia were among the countries with the worst levels of poverty, inequality and social exclusion.

Completing more years of education has been linked to economic success, better health outcomes and greater social inclusion. Within the European Union, research shows that 24 per cent of families with a low-educated head are in poverty, compared to 13 per cent of families whose head has a secondary education, and 6 per cent of families whose head has completed third level education.

However, across the OECD, young people from families with limited education are far more likely to leave the education system before attaining a third level qualification. So, low rates of social inclusion and poor education participation feed off each other. Failing to educate people equitably and effectively exacerbates inequality, while failing to improve social inclusion means less advantaged people are less likely to obtain higher levels of education.

Early childhood education is important

Higher education is key to achieving higher income and economic security. But to ensure access to higher education, it is essential to intervene early in the student’s academic career. Children from disadvantaged social groups tend to perform better in schools that include students from different socioeconomic backgrounds. But too often, different social groups are separated, or are not provided with the same opportunities.

In Slovakia, for instance, SGI data shows that the Roma population has particularly low rates of participation in formal education. In Mexico, a private system that exists alongside the public system makes sure that those with higher incomes have access to better quality education. And in Turkey, a lack of social security benefits for parents means that girls from low-income families tend to leave education around the fifth grade. Even in the better performing countries, disparities persist. New Zealand’s Maori and Pacific Islander populations still face difficulties in accessing education, as do Canada’s Aboriginal groups.

Best in class: Finland

Finland has successfully implemented one route to ensuring students stay in education, helping to keep up its rates of students entering third level. It offers special interventions for students who are having difficulties: about 40 per cent of students in Finnish secondary education are given some form of extra attention. Each school has a “special teacher”, who can identify struggling students and provide educational support. As a result, just 1 per cent of Finnish 15-year-olds do not have basic reading skills, as compared to an OECD average of 7 per cent.

Finland is helped in its efforts to ensure equitable education by its homogenous society and healthy economy. Even so, countries with more diverse socioeconomic compositions could still benefit from following its example of early and intensive intervention. As countries work to create competitive advantage by building skilled workforces, making early investments in students could be an excellent investment in countries’ future potential for economic success.
Photo credit: Body of Knowledge sculpture, Frankfurt /Shutterstock

What will the global talent pool look like in 2020?

by Pedro Garcia de León, Corinne Heckmann, and Gara Rojas González 
Innovation and Measuring Progress Division, Directorate for Education

The “global talent pool” can be described in a lot of different ways.  But in an era in which having a higher (tertiary) education is increasingly a minimum requirement for successful entry into the labour force, one way to quantify it is to look at the number of people around the world who are obtaining a higher education degree.

As the latest issue of the OECD’s series Education Indicators in Focus details, by that measure, the global talent pool is exploding across OECD and G20 countries. What’s more, it’s likely to grow far larger by the year 2020.

In the last decade alone, the number of younger adults with higher education degrees has grown at a remarkably fast clip. This is particularly true for non-OECD G20 countries like Argentina, Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa, where the number of 25-34 year-olds with a higher education degree increased from 39 million in 2000 to an estimated 64 million in 2010. By contrast, the number of younger adults with higher education degrees in OECD countries increased from 51 million to an estimated 66 million during the same period.

In addition, the rapid expansion of higher education in non-OECD G20 countries has significantly altered the distribution of the talent pool among countries. A decade ago, one in six 25-34 year-olds with a higher education degree was from the United States, and a similar proportion was from China. Twelve percent came from the Russian Federation, and about 10% each were from Japan and India. But by 2010, China was at the head of the pack, according to OECD estimates, accounting for 18% of 25-34 year-olds with a tertiary education.  The United States followed with 14%, the Russian Federation and India each had 11%, and Japan had 7%. 

These trends are likely to intensify further in the years ahead. According to OECD projections, there will be more than 200 million 25-34 year-olds with higher education degrees across all OECD and G20 countries by the year 2020 – and 40% of them will be from China and India alone. By contrast, the United States and the European Union countries are expected to account for just over a quarter of young people with tertiary degrees in OECD and G20 countries. 

In fact, these figures may underestimate the future growth of the global talent pool, because a number of countries – notably China, the European Union countries, and the U.S. – are pursuing initiatives to increase higher education attainment rates even further. 

The explosive growth of the  talent pool raises a key question: With all of these highly-educated people emerging around the world, will the global labour market be able to absorb the increased supply?  
Evidence from science and technology occupations – key “knowledge economy” jobs – suggests that it can. Between 1998 and 2008, employment in science and technology occupations increased at a faster rate than total employment in all OECD and G20 countries with available data. The average annual growth rate was uniformly positive, ranging from 0.3% in China to 5.9% in Iceland. 

This consistently upward trend signals that the demand for employees in this knowledge economy sector hasn’t reached its ceiling. Applied to the overall labour market, the implication is that individuals from increasingly better-educated populations will continue to have good employment outcomes, as long as national economies continue to become more knowledge-based.  

As such, countries may be well-advised to pursue efforts to build their knowledge economies, in order to avoid skills mismatches and lower returns on education among their higher-educated populations in the future.

For more information
On this topic, visit:
Education Indicators in Focus: www.oecd.org/education/indicators 
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 (link)
See also: IMHE General Conference 2012 "Attaining and Sustaining Mass Higher Education", Paris, 17-19 September 2012
Chart source: OECD Database, UNESCO and National Statistics websites for Argentina,
China, India, Indonesia, Saudi Arabia and South Africa.