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'Education is the key to higher earnings'

EDUCATION LINK: Research has shown that education has a strong impact on income levels

RESEARCH OVER many years has shown that there is a consistent link between educational achievement and employment/unemployment rates.

Bluntly speaking, the higher the educational level, the lower the level of unemployment and the higher the employment rate. These, in turn, have a strong link to differences in income levels between people. (Income levels also have pronounced implications for how long people live and how healthily).

That link persists across different ethnicities and class. However, does it explain differences between ethnic groups? If one looks at the UK labour market with regards to ethnic origin, there are clear differences in outcomes for different groups.

Figures from the Office for National Statistics show that employment levels were highest amongst the category ‘white ethnic’ for those aged 16-64. The lowest employment rate was amongst ‘black and other ethnic groups’. (There is some question in my mind about whether skin colour denotes a particular ethnicity – it does not do this in my view as there are ethnic differences within those identified in this way - but for the purpose of this exercise it relates to those of Caribbean and African origins).

Not surprisingly, the flip side of this was as expected: the level of unemployment amongst the latter was the highest and the rate of employment the lowest. This outcome is not good for them, or for society, and it results in a waste of talent for the country as a whole. Moreover, it implies UK firms are not being as efficient and productive as they could be, as they are not utilising all of the resources available to them. This inefficiency will result in poorer levels of productivity compared with other countries and so lower living standards than otherwise for the UK as a whole. Which is something that no one would want to see.

The chart shows a nuanced picture within the BAME community, but the trend was for the unemployment rate to be higher and the employment to be lower for the ‘black and other ethnic’ segment, at least at the aggregate level. (The picture was more mixed when looking within the BAME group – some were doing better than others). But worryingly for the future, the BAME community as a whole also had the largest proportion of young people between the ages of 16-24 to be unemployed, nearly 40 per cent in some categories.

DIFFERENCE

So the question is, do differences in educational attainment solely account for these severe outcomes and, if not, are there other factors at work?

First, school level results do appear to show that there is a poorer performance by some BAME pupils but a better one by others.

All ethnic groups have seen an improvement in educational standards which is good news all round.

But the gap between the best performing and the worst remains very broad. It may be that exclusion rates play a role in this? Certainly, it also seems to be the case that exclusion rates are highest for BAME students, especially black groups.


SOURCE: Centre on Dynamics of Ethnicity

This exclusion plays a role later on, of embedding poorer numeracy and literacy rates, resulting in a greater proportion of those from that background being less able to hold down, and obtain, valuable apprenticeships and extra training. Also, it may be a factor in why some BAME young people tend to have studied later, and through specialist courses, rather than traditional GCSEs and A levels. Evidence from studies of these differences seems to support this hypothesis.

At the university level, the good news is that there has been a substantial increase in BAME student participation in higher education.

The proportion of this group with a degree has risen, as it has for all groups - see the chart below. Only two groups from the BAME community now lag behind the majority population.

Looking at the evidence of subjects studied at the university level seems to show that BAME students are taking ‘hard’ subjects, like science and business administration and technology. The chart shows, however, that there are some significant differences within the BAME groups in this area.

The difference in subjects studies suggests that there could be differences in employment prospects as well, as some subjects have better job opportunities than others, especially at a time when skills in cutting edge technologies are at a premium.

Moreover, it is clear that BAME young people suffer regarding job opportunities by not doing enough on the job training and apprenticeships. This lack of take-up contributes to the divergence in income levels.

In conclusion, education accounts for the bulk of the differences in employment rates between people from BAME communities and the majority population but it does not account for all of it.

Social class is a factor that plays some role, as does a higher proportion of underperforming schools in deprived areas with low expectations of pupils and high exclusion rates.

Tackling those issues is a start. But sustained and persistent demand for more on the job training and apprenticeships are critically required. However, even accounting for these factors, there are still some residual issues about inequality and identity that need to be addressed head on.

■ Trevor Williams is Visiting Professor at the University of Derby and Chair of the IEA’s Shadow Monetary Policy Committee.

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