Education & Employment
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Those dropouts were sensible. Why did we all other idiots go to school, college, management institute, engineering college and so on? Partly for higher earnings. An average illiterate person earned about Rs 1,200 a month. A secondary school graduate earned almost three times as much – Rs 3,500 a month. A graduate earned almost five times as much — some 6,000 a month. The figure must look low to my graduate readers, some of whom are drawing seven-figure salaries. But they are the lucky ones; most graduates earn much less. Still, the returns to education are extremely high — higher than on equity or real estate.
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There is another reason for getting educated — you earn more simply by living longer. The income of a primary school graduate does not go up much with age; if he got Rs 1,500 a month when he started, he might end up with Rs 2,000 when he retires. A graduate in his twenties may not start on much more — maybe Rs 2,000. But by the time he approaches retirement, he will be earning something like Rs 7,000. Since most people acquire wives and children as they get older, it is convenient to earn more with age.
Unemployment amongst the educated is also not so dire. In the 21-25 age group, only 1.3 per cent of illiterates are unemployed. The unemployment rate for primary school graduates in that age group is 2.2 per cent. For secondary school graduates, it is 11.2 per cent; and for university graduates, 31.7 per cent. Almost a third of graduates are unemployed in their early years.
By the time they reach ages 45-50, however, the picture is completely changed. In that age group, unemployment is 0.3 per cent amongst illiterates, 0.4 per cent amongst primary school graduates, 1.3 per cent amongst secondary school graduates and 0.4 per cent amongst university graduates. By their forties, almost all find some job or other, whatever their education.
If there are jobs for graduates in their forties, why cannot graduates in their 20s take them? Of course they can; it is just that they do not. Instead, they wait around for a better job. The reason why more educated people have higher unemployment is that they can stay unemployed waiting for a good job; they have got parents or fathers-in-law to support them while they wait.
The converse is also true. Poor people take or keep their children out of school because they cannot afford to educate them; they need their children’s earnings. And even if they could afford to educate their children, the returns on primary school education are not spectacular; against Rs 1,500 for an illiterate, a primary school graduate may get Rs 2,000. And the market for him is much smaller. Whereas an unskilled labourer can get work almost anywhere, a primary school graduate may be able to work in a shop or a godown; such jobs are not easy to come by everywhere. And he would get such a job only if he learnt something in primary school. According to the NGO, Pratham, 43 per cent of schoolchildren can read a story, 17 per cent can read a paragraph, 15 cent can read a word, 14 per cent can read a letter — and 11 per cent can read nothing at all. And 31 per cent can divide, 24 per cent can subtract, 27 per cent can recognise a number —and 19 per cent can do nothing. Government schools are so bad that for many children, going to school would be complete waste of time. That is why I am not impressed by Sarva Shiksha Abhiyan and such grandiose government schemes.
The author is Consultant Editor of Businessworld. [email protected]
(Businessworld Issue 05 - 11 February 2007)