Yes, education matters - and it pays to have matric, literally
Before dismissing the value of education, consider how vastly the earnings picture changes with each qualification
There is no shortage of education sceptics these days. Does education really matter? Look at the number of unemployed graduates. After all, the matric certificate is pretty worthless given the low passing standards. Why bother?
Those questions make sense to cash-strapped parents. Believe it or not, there are elite schools in South Africa whose tuition fees are higher than those of universities. And students now graduate with a huge debt burden, given the spiraling costs of higher education.
Is private spending on education really worthwhile given these high costs and the possibility that the degreed student might not even get a job?
Well, my favourite economist for plain speaking, Mike Schussler, recently shared with me a batch of new statistics on the value of education in South Africa. The results will shock you.
It turns out that the greatest difference in earnings across years of schooling is between those pupils with only a Grade 11 and those with a Grade 12 qualification. In fact, your salary nearly doubles if you have the matric certificate compared with what a Grade 11 will earn.
It is strange, but clearly matriculation signals something powerful in the market that brings considerable benefit to the person who successfully completes high school. This is a huge motivation to get more pupils to finish high school, given that slightly more than half of those who started in Grade 2 will eventually drop out of school, especially at or around Grade 10.
From a policy point of view this is a priority: ensure more children complete grade school. The straightforward economic benefits to individuals and, by extension, their families, are not inconsequential.The earnings picture gets even better for those who complete a first (bachelor’s) degree. According to Schussler, your salary increases by a factor of more than 135% compared with a person with matric alone: “Assuming one completes a degree in about three-and-a-half years, each year of tertiary education equates to around six years of schooling in real-life earnings.”
So, education is a real return on investment, says my guru economist.
Taking the long view, the return on that investment is 373% higher than for a person with matriculation alone. And the further you study, the better off you will be in terms of earnings. In fact, a student with a master’s or doctoral degree has a return of 482% on that investment compared with somebody with matric alone.
This positive story raises several other questions, such as does the quality of the education matter? Of course it does. What kind of job you find or the level of appointment in a particular job surely depends on how well you passed and which university you attended.
Those are also important signals in the job market. Even so, it would seem from this data that just finishing school or attaining a first degree still makes a massive difference in earnings, regardless of quality factors.
Then how does one explain unemployed graduates?
Well, in a developing country with a slow growth economy after a global recession there will always be graduates without jobs. And there never really is a perfect match between degrees obtained and jobs available. Yet, the fact is that graduate unemployment is only 7.4% whereas for those with matric alone, unemployment stands at 27.9%.Incidentally, a professor friend who teaches political economy is often asked about “the educated unemployed” in Africa; to which his stock response is: Would you rather have “uneducated unemployed?”
There is a final question that parents and students often wonder about: What specific field of study pays best? Well, the top earners are graduates in the mathematics sciences and, in particular, the actuarial sciences. This is bad news for a country where the overwhelming majority of high school pupils choose dummy maths (also known as mathematical literacy) without a chance of entering professions where real maths is required.
Also at the top end of the earnings spectrum are psychology, law and, yes, agriculture. Those earning very little by comparison are in the fields of hospitality, tourism and the military sciences, three spots below education and training.
On this note, an important warning: you should never choose a career based simply on potential earnings. You also choose what to study because of what is important to you as a human being. For me, being a teacher became the single most important career decision because of the difference I could make in the lives of many, many students and their families.
No amount of money could ever give me the satisfaction of knowing that I make a difference in the lives of real people.