Education is intrinsically linked to labour markets and economic growth, influencing economic returns for people and the gross domestic product of a country. Better education levels contribute to healthier and more agile labour markets.
Universal secondary education could lift 420 million people out of poverty worldwide, according to Unesco. Apart from economic returns, it steers countries towards peace and stability, essential for economic prosperity, creating a virtuous circle.
Education is the smartest investment a country can make. The more a country invests in its education system, the greater its economic performance overall. Countries where more pupils attend school see faster economic growth than countries with fewer educated workers. Studies by the World Economic Forum show that investing in education is essential to protect economies from sudden shocks and rapidly changing labour markets.
Salaries are also directly affected by education. People with better jobs and higher salaries pay more taxes, increasing national economic growth. A study by Unesco found that for every $1 spent on education, between $10 to $15 was generated in economic growth. Each additional year of education increases a person’s income by 10 per cent while one additional year of schooling can increase a woman’s earnings by up to 20 per cent, according to the study.
Despite this mounting evidence, education remains in a chronic crisis, aggravated by dwindling resources. The Covid-19 pandemic worsened the sector’s woes, with more than 1.6 billion affected by school closures worldwide, causing significant learning losses and putting this generation at risk of losing $21 trillion, in potential lifetime earnings, according to the World Bank.
Today, more than 250 million children and youths are out of school, and 70 per cent of 10-year-olds in low and middle-income economies can’t read or understand a basic text.
This generation and the coming ones will grow up in a digitalised society. Over the next decade, an estimated 70 per cent of new value created in the economy will come from digitally enabled business models. Over the next five years, half of workers’ competencies are likely to be disrupted by Artificial Intelligence and between 2030 and 2060, half of today’s work activities could be automated, according to a McKinsey report.
The Mena region, home to the highest youth unemployment in the world, needs to create more than 33.3 million new jobs by 2030. But skill mismatches have pushed youth unemployment to 25 per cent, with female youth unemployment reaching 40 per cent.
Today’s education systems, particularly in lower income countries, are mostly ill-designed for tomorrow’s market. This bodes ill for business and economic development, particularly at this critical juncture where AI is rapidly changing the way we do business.
Tomorrow’s labour will not be created overnight; it is nurtured in classrooms today. As AI and other technological innovations speed forward, there is an indisputable need for education systems that prepare young people for a digitalised world.
It is therefore crucial that education keeps up with a change in demand for certain skills. There should be a focus on human-centric skills that are hard to replace, such as critical and analytical thinking, problem-solving, collaborative and adaptability skills and other socio-emotional skills.
As technologies and competency needs evolve, so too should education systems. This would produce a skilled workforce that can develop businesses and drive economic growth.
A quality education broadens children’s perspectives and skillsets to thrive in an ever-changing labour market. It also builds the workforce that today and tomorrow’s businesses need to develop and contribute to economic advancement and prosperity that leave no one behind.
This requires adequate financing for education. But since 2020, in nearly half of all lower-income countries, education budgets have dropped by an average of 14 per cent. There has also been a decline in foreign aid to education.
Development assistance to education dropped to under 10 per cent of total aid in the first year of the pandemic from nearly 12 per cent a decade earlier, according to recent data by the Organisation for Economic Co-operation and Development (OECD). While trimming education spending might relieve budgets in the short-term, it is depriving economies of long-term prosperity.
Multilateralism is essential to channel adequate funding to education in lower-income countries. Sharing the firm belief of the Global Partnership for Education that education is an essential pathway to prosperity, the UAE was the first Gulf donor to join our partnership, in 2018, with a $100 million pledge.
So far, the UAE has contributed $200 million, helping millions of children across the world gain schooling. Dubai Cares, the first UAE foundation to contribute to the GPE, pledged $2.5 million in 2021, doubling its previous contributions. Since then, our engagement in the Gulf has been growing to include Saudi Arabia and Saudi-based entities such as the Islamic Development Bank (IsDB) and the Arab Co-ordination Group (ACG).
We have strived to address the education funding crisis through innovation, with our Gulf partners. The Smart Education Financing Initiative (SmartEd) is one such collaboration that allowed GPE, IsDB and ACG to generate a half billion dollars to help millions of children get quality education.
By providing $4 for every $1 drawn from the GPE Multiplier, SmartEd has helped governments tackle the learning crises in their countries by mobilising more funding on better terms and ensuring that these resources are invested in effective and sustainable education programmes.
It is no coincidence that we have celebrated SmartEd’s success in Saudia Arabia, a country that has made great strides in transforming its education system to prepare its children for the jobs of the future.
Financing quality education is not a luxury; it is a market necessity and collective responsibility to build a prosperous and equitable future. Together with our partners, we will continue to innovate education financing so that in a rapidly changing labour market, every child can access the quality education they need to learn, grow and thrive.
