SOUTH AFRICA: High returns from post-school education

South Africans who obtain a degree earn on average between 2.5 and four times more than people who do not complete schooling, the first major study on the returns of post-school education has revealed. Degree-holders are also three times more likely to get a job - in a country where more than one in four people are unemployed.

The primary message from the research is for South Africa to improve post-secondary school education participation because there is a dramatic reduction in young people not in employment, education or training - 2.8 million people between the ages of 18 and 24 years - as the level of education improves.

"The 'worst' thing that can happen to a student is to drop out of school between grades 10 and 12," the research found.

The study by Nicola Branson, Murray Leibrandt and Tia Linda Zuze of the South African Labour and Development Research Unit, show hugely positive returns from tertiary education that increased between 2000 and 2007.

The findings are outlined in a report, Responding to the Educational Needs of Post-School Youth, published by the Centre for Higher Education in Cape Town and edited by its Director Professor Nico Cloete.

Drawing on figures from sources including Statistics South Africa and the Department of Education, the study looked at level of education categorised as degree, certificate- diploma, school-leaving certificate ('matric') and incomplete schooling. It assessed the effect education level had on employment and on earnings, against having incomplete schooling.

The study found that people with a matric were between 30% and 60% more likely to have a job than those who had not finished school. In 2000, people with a tertiary education were twice as likely to be formally employed than individuals with less than matric. "By 2007 this had increased to around three times."

The study found that people who successfully complete school earn on average between 40% and 70% more than those with less schooling. The return from obtaining a diploma or certificate is between 170% and 220%.

"The average individual with a degree is rewarded with between 250% and 400% higher earnings than counterparts who did not complete matric. There is thus an incremental increase in rate of return for higher education levels," said the report. The two provinces with the highest returns were the Western Cape and Gauteng.

In 2007, for example, 25-year-old non-unionised African employees in the Western Cape who had a matric earned on average R1,900 (US$253) a month while those with a certificate or diploma earned R3,600 and those with a degree earned R6,300. There are substantial gender differences: in 2007, a woman in this group with a diploma earned R980 a month less than a male and a woman with a degree earned R1,700 less.

Further, while the return for a qualification remained fairly stable over time for a person with a matric, a diploma or certificate, it increased over time for a graduate. In 2000, a graduate earned a salary 320% higher than an individual with less than a matric - and by 2007 this difference had increased to more than 370%.

The report said that earlier research at the University of Cape Town had greatly overstated graduate unemployment at 100,000 people. This had led, among other things, to the National Treasury restricting the expansion of higher education.

In fact, the graduate unemployment statistics for 2007 were 15,745 people comprising just over 11,100 jobless people with degrees, nearly 2,500 with postgraduate diplomas, some 1,700 with honours degrees, and 420 with masters or PhDs.

"Of concern is that graduate unemployment doubled between 2001 and 2007," the report stated. But a key finding was that obtaining a post-school qualification "dramatically improves a student's opportunity to become employed or self-employed".

Still, the study concluded, the increasing returns from post-school education in terms of finding a job and higher education showed the growing importance of studying further.

At a seminar on the Post-School Youth report, hosted by CHET in Johannesburg last month, participants pointed out there were significant racial discrepancies in educational returns. Many white and Indian graduates access jobs through social networks and environments, and so the returns from university are higher for some than for others; there is also a socio-economic bias against African graduates in terms of earnings and the ability to find work in the area in which they studied.

These factors are a missing element in the study. Nico Cloete described the 'returns' study "a first shot at this area". There were discrepancies in information across databases, he added, and the next job was to clean up the data and probe the statistics further.