Research shows degrees may have little effect on economic performance

As thousands of tertiary students across the country embark on the new academic year, research from the University of Stellenbosch Business School has found that the certificates and degrees they aim to earn may have little impact on SA’s economic performance.

In contrast, the study found that school-leavers with grades 8-11 have the most significant “concretely positive” effect on economic growth.

It found that those with matric, post-school certificates or degrees are “not significant drivers of national economic output”.

University of Stellenbosch Business School graduate researcher Pieter Bruwer made these findings in his MBA research dissertation entitled “Exploring the relationship between education, unemployment and economic growth in SA”.

Despite spending a greater proportion of the national budget on education than many developed countries, and minimum education levels and matric pass rates steadily increasing since the advent of democracy, SA consistently falls in the bottom end of international rankings of education quality.

Though finance minister Enoch Godongwana announced increases to the basic and higher education allocations in the 2022/23 budget, Bruwer said simply throwing money at SA’s education problems does not work.

“The challenge for SA is not in the size of the budget allocation, but rather in the impact that results from the expenditure,” Bruwer said.

Bruwer said the lack of impact of tertiary qualifications on economic growth highlighted that education policy aimed at closing the gap between skills supply and demand was not working in practice.

Through statistical analysis of 25 years of postapartheid data on education levels, unemployment rates and GDP, and correlating the links between them, Bruwer aimed to calculate the impact of education on the economy.

Bruwer found that substantial progress in raising the minimum level of education of the South African population since 1994 has increased the employment prospects of individuals with matric certificates or matric plus a degree, but these groups of better-educated people have not contributed significantly to raising economic output.

He concluded that “higher education appears to have no significant economic value” — while improving an individual’s employability, there is no positive link between increased numbers of people holding post-school qualifications and national unemployment or increased economic growth.

“Matric or a degree has individual value, increasing the person’s chances of employment but, as a group, the holders of these qualifications add little economic value,” he said.

The research found that those with a Grade 12 certificate do not add more to economic growth than those who have left school after passing at least Grade 8 and up to Grade 11, though those with matric are more likely to be employed than those without.

However, Bruwer said that lowered matric pass requirements since 2007 meant that an improved pass rate did not necessarily equate to improved cognitive abilities and skills of matriculants.

“Literacy and maths skills are cemented in the grade 8-11 phase, and grade 12 is just a milestone of completion, not a sign of increased knowledge or skills.”

“Matric as a milestone of the secondary school system does not convert to economic value to society. It does give value to the individual in increased employability, but at the same time matriculants are competing for similar, unskilled work with people of lower levels of education,” he said.

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