Cape Town – South African youth who stay in school for longer have much better salary prospects than those with limited schooling, said Analyico – a company that provides earnings analysis in South Africa.
“Based on our research, for South Africa to overcome the large earnings inequality staying in school for longer will have a significant impact on reducing the polarisation of our labour market. Education has a prominent role to play in reducing income inequality and depolarising a currently deeply divided society,” said company spokesperson Jaén Beelders.
However, completing high school does not translate into individuals finding themselves in a better position in the labour market. There is an important distinction to be made with regards to the quality of education, since the poorest South Africans only have access to “free-schooling” and these schools generally do not perform as well as more affluent schools, Beelders said.
Studies in South Africa have shown that the wealthiest 20% of South Africans in Grade 6 have far better reading tests scores than the least wealthy 20%, indicating that the quality of education must be considered to determine earnings capacity upon leaving school, Beelders said.
“The current education system, instead of fighting earnings inequality, is reproducing the patterns of poverty and inequality that we are observing currently in South Africa.”
Furthermore, the estimated drop-out rate of 44.6%, which is assumed to be largely in the more impoverished areas in South Africa, young people entering the labour market are finding themselves in unskilled occupations. Consequently, they must compete with more experienced individuals in this sector decreasing their chances of employment.
If young South Africans drop out of school, it can be observed to have a significant detrimental impact on their potential future earnings capacity. It can further be observed that student who leave school early often experience sustained periods of unemployment and this in turn further reduces their potential earnings capacity relative to their more educated peers.
This results in a spiral of poverty and inequality in the South African context for youngsters, Beelders said.
The company did research on young South Africans’ earnings potential based on educational outcomes.
The following analysis was conducted with Statistics South Africa data, using the Analytico Earnings Analysis ModelTM with a total sample size of 717 364 individuals with educational outcomes of Grade 8 to Bachelors level. It was based on median gross income per month in October 2016 terms.
Analytico said the figures below are what one could reasonably expect to earn on entering the labour market given the grouped qualifications:
- No schooling: R 1 704
- Some Primary (Grade 1 – 7 incomplete) education: R 1 867
- Completed Primary School (Grade 7): R 1 946
- Some Secondary Education (Grade 8 – Grade 12 incomplete): R 2 660
- Grade 12: R4 977
- Grade 12 with Certificate: R 8 326
- Grade 12 with Diploma: R 13 378
- Bachelor’s degree: R 21 527
Beelders emphasised that the analysis does not account for tenure, specific occupations, professional designations, decision-making bands or the differentiation between full-time or part-time employed individuals.
“This information should not be regarded as a substitute for more detailed earnings research,” he said.