2.3.2 Educational attainment Although education is often quoted as “the great equaliser”, in highly unequal societies, wealthier parents tend to spend more of their private income on education for their children than poorer parents. More financial resources mean that the wealthy can afford to spend more on education and other human capital investments than poor people, which widens the income attainment gap. In turn, high levels of income inequality mean that poorer people have fewer educational opportunities, and therefore fewer chances of earning higher incomes and achieving upward social mobility. As a result, they invest less in the education of their children, further reinforcing the attainment gap and intergenerational inequality. In South Africa, only half of children who start school complete all 12 years of education, which the National Planning Commission (NPC) justifiably describes as “wasting significant human potential and harming the life-chances of many young people”.17 In describing South Africa’s higher education landscape, the NPC goes further: “The South African post-school system is not well designed to meet the skills development needs of either the youth or the economy… Though some institutions perform well and have the academic expertise and infrastructure to be internationally competitive, many lack adequate capacity, are under-resourced and inefficient… The data on the quality of university education is disturbing… The need to improve quality is demonstrated by the reports of graduates who are unable to find employment.”17 Despite the variable quality of education in South Africa, it is still an important mediator of inequality across generations.44 As mentioned before, in order to fully leverage the youth dividend, one needs to ensure that they are equipped with the requisite skills and opportunities for employment to maximise their productive potential. Figure 8 shows estimates by Taylor Salisbury (2016) that illustrate the differences in average lifecycle earnings by level of education in South Africa.45 It shows that for those with no schooling or some lower secondary education, earnings remain relatively flat on average and peak at about double early career earnings.45 For those with complete upper secondary education, their starting monthly earnings are already much higher and increase by three-five times by the time they reach their peak.45
Figure 8: Average earnings by age and level of education completed (five -year moving average)
The returns to education in South Africa are high, approximately 18.7% for each additional year of schooling. Those with the most education (complete matric or more) see their earnings increase by higher magnitudes throughout their lives compared to those with less schooling (incomplete secondary education or less). Source: Salisbury, 2016
14
INEQUALITY AND DEMOGRAPHY
