Investing in education pays

Malta’s economic prosperity in recent years is due to a number of factors, but principal among them is that the size and quality of our labour force has progressed greatly. Recently published research by the Central Bank of Malta documents in great detail the steady progress in educational attainment that has driven this rise in Malta’s main resource.

The share of the population that have successfully completed studies at university level has trebled, from 10% in 2005 to 28% in 2020. In 2017 Malta, in fact, reached its national target (agreed at EU level) with respect to the percentage of persons aged between 30 and 34 years having a tertiary level of education, as more than a third of this population bracket achieved this qualification.

At the other end of the spectrum, Malta has managed to halve the rate of early school leavers from 33% in 2005 to less than 17% in 2020. This remains below the EU’s benchmark, of 10%, but the momentum achieved is heartening.

The Central Bank study documents how the median gross hourly earnings for those with university education was 40% higher than those persons who only achieved secondary level education. Compared with those with just a basic level of education, the wage differential rises to 65%. This shows how important for social progress is the drive to improve educational outcomes.

Education not only provides better income. It also gives better employment opportunities. A recent Eurostat article indicates that new graduates in Malta have the best employment rate in the EU, over 92%, as against less than 55% for new graduates in Greece.

New graduates in Malta have the best employment rate in the EU.

The Central Bank of Malta study also indicates that while the employment rate of those with a medium and high level of education increased even during the pandemic, that of those with a low level of education declined. The increase in unemployment rate immediately after the pandemic mostly appears to have affected those with a basic level of education.

All of this makes for fine reading, but how was this steady progress in educational attainment achieved? Here the study published by the Central Bank of Malta does not mince its words. To quote directly, it states “the improvement in educational attainment in recent years follows the increased focus on education and significant investment that was directed towards the sector”. Between 2012 and 2019, Malta had the second highest growth rate amongst EU countries in government expenditure on education. Government’s investment in education rose by a staggering 70%.

After 2013, in just 6 years, the number of teachers and academic staff rose by 1,500, or by nearly a quarter. Besides, other educational personnel, mostly teaching aides, rose by 3,000, or by more than half. As a result, Malta now has amongst the lowest student-teacher ratios in the EU. This means that students are given more individual attention, resulting in better educational outcomes. At the upper-secondary and tertiary level, Malta has the lowest student-teacher ratios in the EU.

This investment has yielded very quick returns. In 2004 Malta had the lowest female participation rate in the EU. Now our female employment rate exceeds EU average. According to the Central Bank study “as more women joined the labour market, potential earnings from education increased, incentivising more women to invest in their education which led to a higher share of the population having a tertiary level of education”. In a nutshell, it led to a virtuous cycle, where government investment in education raised female employment, which led to higher demand for education, which led to higher earnings. In fact, the Central Bank study notes that “Maltese nationals are increasingly occupying higher-end jobs and as of 2019 over 40% were employed as managers, professionals or technicians.” This is a third higher than in 2005.

Without the massive investment in education by Government, it is unlikely that our economy could have progressed so quickly. The upgrading of our economy also meant that the pandemic shock to our economy could be withstood more easily than previous economic shocks, even though it was much larger in scope.

It will be crucial that in future years, Government continues to invest more in education, so that its benefits spread even wider in our society.

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