Education pays off

In contrast to the increasing value of education regarding employment and income, most EU member states continue to have too many people with too little or no education. Across the EU, 8 percent of young people lack a general school-leaving certificate. Worse even, an average of 19 percent of the 15-year-old boys and girls are considered functionally illiterate or innumerate. This conclusion is drawn by Jutta Allmendinger and Ellen von den Driesch from WZB Berlin Social Science Center in their large-scale study on social inequalities in Europe. The report maps the extent of social inequalities both within and between the 28 EU countries, looking at educational attainment, employment and income.

Education does pay off in all EU countries. The better qualified a person, the more he or she earns. Educational returns differ especially between persons with high and mid-level qualifications. Across the EU, persons with a university degree earn on average 44 percent more than persons who completed a vocational training program. In Germany, that figure is 65 percent, whereas in Sweden, the difference is only 11 percent.

In explaining how much education pays off, the institutional context counts more than the share of highly educated people. “There is no reason to fear that getting a university degree will no longer pay off if many people are highly educated,” the authors analyze.

Due to the shift from manufacturing to services, a polarization of income by education can be seen in most EU countries. Germany for instance saw a widening of the income gap between 2006 and 2010. Low-educated persons lost income, whereas persons with high qualifications gained.

People’s earnings are not only driven by the level of their certificates, but also by their cognitive competences. The extent of that connection, however, varies widely between countries. In the UK and Poland, the earnings of persons with very high competences are 65 percent higher than those with medium skills. In Sweden, Denmark, Belgium and Finland, the difference is only about 20 percent.

The report also shows that a high-level certificate does not automatically correspond with high-level cognitive competencies. In all countries, there is a substantially higher proportion of 29- to 34-year-olds with a tertiary degree than the proportion of people with high-level competencies. The most extreme case is Cyprus, where over half of the population in this age group has a tertiary qualification (54%) but only 7% of the same age group score at the highest competence level. Only in Finland the proportion is roughly equal (40% to 37%). “This is an alarming sign,” the authors write. “When degrees lose their meaning, this weakens the confidence of the employers but also the mobility on the European labour market.”

For the report, recent studies have been analyzed and brought together.

The report is published as a WZB Discussion Paper and can be downloaded.

Jutta Allmendinger, Ellen von den Driesch: Social Inequalities in Europe: Facing the Challenge, Berlin: WZB Discussion Paper P 2014-005.

The report was supported by the European Commission and will serve as the basis for a review to be published by the Commission early next year.

Press contact
Ellen von den Driesch, President’s project group, fon: +49 30 25491 557, e-mail: ellen.v.d.driesch [at] wzb.eu

Claudia Roth, Press department, fon: +49 30 25491 510, e-mail: claudia.roth [at] wzb.eu