To fix edu­ca­tion, the eco­nomy will need fix­ing first

John Burn-Mur­doch john.burn-mur­doch@ft.com

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One of the best illus­tra­tions of the import­ance of eco­nomic growth for a soci­ety is that when it is weak for long enough, you start to hear com­plaints about spe­cific things going wrong in spe­cific domains, which ulti­mately all turn out to be down­stream of eco­nomic stag­na­tion.

In the UK, this is hap­pen­ing more fre­quently with edu­ca­tion. The stand­ard explan­a­tion for the declin­ing gradu­ate wage premium is that higher edu­ca­tion expan­ded too fast and too far, and too many people now go to uni­versity. But sim­ilar expan­sions else­where have not pro­duced the same out­come. Instead, the evid­ence points primar­ily to prob­lems in the eco­nomy, not the edu­ca­tion sys­tem: weak pro­ductiv­ity growth and an unusu­ally low num­ber of genu­inely gradu­ate-worthy well­paid pro­fes­sional and mana­gerial jobs.

In much the same way, the stand­ard explan­a­tion for why Bri­tain’s non­gradu­ates feel like dis­tant second­class cit­izens to their degree-hold­ing coun­ter­parts is that they have been failed by an edu­ca­tion sys­tem that does not provide tech­nical and voca­tional routes to a suc­cess­ful and respec­ted career. But here, too, eco­nomic factors look more likely to be the real cul­prit.

One use­ful ref­er­ence point is Ger­many, where school pupils spe­cial­ise early into either aca­demic or more tech­nical routes, and those who choose the lat­ter can be con­fid­ent they will find rel­at­ively high-pay­ing jobs. The coun­try’s edu­ca­tion sys­tem is a darling of those who believe achiev­ing “par­ity of esteem” for people who do not go to uni­versity is simply a mat­ter of reforms to school­ing.

But I’m not sure it’s that simple. The status con­ferred by a par­tic­u­lar qual­i­fic­a­tion is a func­tion of the job and salary it brings, not the piece of paper it’s writ­ten on. What really dif­fer­en­ti­ates Ger­many from the UK, then, is its lar­ger, higher-value and higher-pay­ing man­u­fac­tur­ing sec­tor (Ger­man fact­ory work­ers earn 50 per cent more than their Brit­ish coun­ter­parts). Bri­tain can tinker with its voca­tional routes all it likes, but without good jobs, the defi­cits in esteem, employ­ment and earn­ings will remain.

Ger­many is also as much of a cau­tion­ary tale as a model to fol­low. With China’s boom­ing elec­tric vehicles industry rap­idly eat­ing into its auto­mot­ive exports, I sus­pect the Ger­mans may have their own moment of mis­dir­ec­ted angst over voca­tional edu­ca­tion a dec­ade or so from now as the good blue-col­lar jobs dwindle.

In this sense, the most dur­able way for gov­ern­ments to ensure that both uni­versity stu­dents and their less aca­demic coun­ter­parts can move through the edu­ca­tion sys­tem con­fid­ent of good fin­an­cial out­comes for them­selves is to have a dynamic eco­nomy and robust pro­ductiv­ity growth.

One of Eng­land’s few policy suc­cess stor­ies of the past two dec­ades has been in schools, where res­ults have been stead­ily climb­ing up the inter­na­tional rank­ings. Across the Atlantic we have seen the oppos­ite: mediocre per­form­ance for US schools, with the bot­tom por­tion of stu­dents faring espe­cially badly. The same is true of adult skills, where much has rightly been made of the OECD’s find­ing that 30 per cent of US adults have lit­er­acy skills typ­ical of a 10-year-old.

So, with Bri­tain’s edu­ca­tion sys­tem and skills out­per­form­ing Amer­ica’s, have wages fol­lowed suit? I think you know the answer. Exor­bit­antly paid US tech work­ers cap­ture the head­lines, but its dynamic eco­nomy has delivered broad-based wage growth. Sim­ilar to Ger­many, fact­ory work­ers in the US earn 60 per cent more than in the UK after adjust­ing for dif­fer­ences in liv­ing costs. Plumb­ers and elec­tri­cians earn 90 per cent more, and retail work­ers earn double.

The same pro­por­tion of US work­ers who score stun­ningly low on lit­er­acy earn an aver­age of almost $30 per hour, and two-thirds of them are in work. Their UK coun­ter­parts make the equi­val­ent of $20 and fewer than half are employed. This all looks more like the fruits of years of stronger growth than voca­tional edu­ca­tion policy.

None of this is to say get­ting edu­ca­tion right does not mat­ter. There is a strong case to be made that earlier reforms to the UK’s voca­tional route took things in the wrong dir­ec­tion. But if we really want to deliver bet­ter out­comes, we must stop think­ing of par­tic­u­lar qual­i­fic­a­tions or forms of edu­ca­tion as things that pro­duce par­tic­u­lar eco­nomic out­comes and deliver respect. Rather, we should view edu­ca­tion as cre­at­ing poten­tial that a strong eco­nomy unleashes (and a weak one dis­ap­points).