Education alone won’t drive growth: here’s what can

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“More education!” is the least controversial statement you’ll read today. It is also wrong – at least when it comes to economic growth.

Don’t get me wrong, education gives people an immense range of options, and boosts their earnings. But as the head of Harvard’s Center of International Development, Ricardo Hausmann, has pointed out, what most people mean when they talk about education is either more schooling or better test scores. Neither is enough to drive growth on its own.

Since 1960, countries like Tunisia or Mexico have increased the years their average worker spends in school, from 2.8 to 8.3 years by 2010. They hoped to reach the level of countries like France, who were five times richer than them in 1960.

What happened? They grew…but only by 1.7 times. And even that growth came along with 50 years’ worth of technological advances.

How much of that growth could really be attributed to schooling?

In TT we are educating more people than ever. They are largely exported, while growth has remained barely stagnant, hovering at one per cent at best.

So what form must education take to actually deliver growth?

It turns out that productivity-boosting knowledge resides in our firms. Hausmann himself noted this, when then Finance Minister Winston Dookeran brought him to TT.

Indeed, experience is critical for productivity – one reason less than 15 per cent of positions are open to entry-level jobbers. We can unlock this knowledge in the service of growth.

The most straightforward way is for businesses to rotate their employees into different roles to give them different skills. There is often tremendous knowledge within a firm that may be locked in different roles or departments. Having a forklift driver shadow a dispatcher for just a week or two could give her valuable skills that she can use to make practical improvements and increase her own chances of promotion.

Sales teams are an immediate place to train workers from other departments. That’s because the feedback on productivity is directly visible in dollars and cents. Additional hands can result in new orders or business. Nothing pleases owners or managers more than that. After all, if a business is going to disrupt its operations (albeit temporarily), it needs some surety of return. That is easiest when simple numbers can be used to measure productivity in each part of the business.

This same principle can be extended to support young workers at the start of their careers, when just a little boost of experience and knowledge can be transformative.

It is no charity. Companies benefit from the talent, despite a local perception that paid workplace internships are just distractions. As the World Economic Forum has shown, Germany and Switzerland both have deep apprenticeship programmes with their biggest manufacturers, and have demonstrated them as a powerful engine for employment and economic growth.

Our firms can redefine schooling to prepare children for a world of fulfilling, productive work. It has been four years since EY and IBM did away with degree requirements, having concluded that they were of limited value in assessing applicants. Many more companies are doing the same. Many in the business community have struggled with well-credentialled but practically useless new graduates (including myself) and are starting to acknowledge that degrees are no guarantee of competence.

Megan Doepker, consultant at the Make School, says: “If less emphasis were placed by schools and employers on paper credentials that do little to affect actual job preparedness, job-seekers would be encouraged to improve their qualifications in other ways, such as through online courses, credentialled certificate programmes, self-teaching and entrepreneurship.”

All this is not the same as saying that traditional education is useless. It remains enriching, and its sole purpose is not vocational. But traditional education must be more plugged in to the world of practical experience.

Post-secondary campuses can quickly begin by integrating paid internships or apprentices into their programmes. It is critical that each student have relevant, hands-on work experience related to their field of study before they graduate.

Automation and artificial intelligence are forcing a sense of urgency upon us. We must change the way we learn and work. And change is within our grasp. The Central Bank reported that production per man-hour rose by seven per cent as of the first quarter of 2019, despite energy-sector declines.

We can seize this momentum to unlock our knowledge in the service of growth. Full marks all round.

Kiran Mathur Mohammed is a social entrepreneur, economist and businessman. He is a former banker, and a graduate of the University of Edinburgh