Theirworld

Education and Business

Reading up on business fundamentals or building leadership skills? Drafting a business plan or exploring ways to make an existing enterprise more sustainable or sound? The materials on this page will demonstrate how education is the driver of all future business. 

Investing in education is investing in the skills and talents of the next generation, fueling innovation, expanding opportunity, and promoting economic growth — the foundation for the growth and prosperity of the business community.

Looking for questions to centre your research efforts or interesting issues or problems to explore? These research questions can help provide a path to a focused research and writing process.

  • What is the business case for investing in education?
  • Why should business invest in a public good like education?
  • In what ways can business contribute to education?
  • Can business engagement in education generate a return on investment?
  • Is education just another philanthropic donation that does not engage core business?
  • Why is girls’ education important to business and how can the private sector help to advance it?
  • How can business investment in education help to unlock the skills gap?
  • Will the next generation be able to meet the skills demands of business without private sector investment in education?
  • How can business partner with others to support education?
  • What innovative financing mechanisms exist for business to engage in their support of education?

Looking for clear topic sentences to express your opinion, or thesis statements to serve as the core of your essay? Theirworld’s examples can help to form the base of your argument.

Overall
  • Education is smart for society, and smart for business
  • Education drives future business
  • Business is uniquely positioned to support and create sustainable and scalable solutions to address the world’s pressing education needs
  • The business community can support the transformational efforts to realise the right to education and improve learning for all
  • Business can play a transformative role in elevating education as a political, social and economic priority, and can help ensure the right of every child and youth to receive a quality education
  • Investing in education is investing in the skills and talents of the next generation — the foundation for the future growth and prosperity of the business community
Mutually reinforcing benefits
  • An educated world is good for business. It means a talent pipeline for skilled employees, consumer bases with more disposable income, increased innovation and economic growth
  • Education is the foundation to unlocking additional company priorities, including climate, public health, inclusion, financial literacy and entrepreneurship
  • Quality education underpins innovation, job creation and entrepreneurship
  • Access to a good-quality education is a growth constraint for business that has a direct impact on the bottom line
  • Education provides the skills required for a talented workforce, fuels innovation, expands business opportunities, boosts wages, promotes economic growth, and creates more affluent consumers
  • The private sector has the most to gain or lose from weak education systems
  • Business investment in education delivers social value, boosts employee morale, and increases retention
Skills and jobs
  • If nothing changes, more than half of all young people will not be on track to have the skills they need for work by 2030
  • Employers are increasingly finding it difficult to find workers with the flexible and adaptable skills needed for the Fourth Industrial Revolution
  • Access to relevant education focused on skills for the future of work and life can have a tremendous impact on providing a pathway to employment opportunities for young people
  • The skills needed for work are constantly evolving which means that life-long learning is more important than ever
Business contributions
  • The business community can bring all of its assets to support education, including volunteering, expertise, goods and services, supply chains, corporate social responsibility, ESG investment, philanthropy, human resources policies, and more
  • Innovative partnerships, financing mechanisms and new vehicles for business investment in social sectors are rapidly emerging and increasingly recognised channels for successful engagement in education

Seeking key messages, facts, and opinions to build your evidence base? Find the most up-to-date, pre-sourced data points to help you make a robust case for business engagement in education.

Challenges

Global skills gap
  • There is a talent shortfall. Nearly seven in 10 employers reported talent shortages in 2019, the worst level ever and a jump of 17% from the year before and more than three times higher than a decade ago. (CNBC, 2020)
  • If current trends continue, by 2030 less than 10% of young people in low-income countries will be on track to gain basic secondary level skills. The costs of this education crisis – unemployment, poverty, inequality and instability – could undermine the very fabric of our economies and societies. (Education Commission, 2016)
  • It is estimated that by 2030 more than half of young people worldwide will not have the basic skills or qualifications necessary for the workforce. (Education Commission, 2016)
  • 55% CEOs globally believe that the current skills shortage hinders the ability of their companies to operate effectively. And nearly half are worried that skills availability is significantly impacting quality standards and/or the experience of their customers. (PWC, 2020)
  • The world urgently needs more educated workers. It is estimated that, by 2020, the global economy will have a shortage of 40 million workers with a tertiary education and 45 million workers with a secondary education, while there would be a surplus of 95 million low-skilled workers. (Deloitte & GBCE, 2018)
  • As digital skills become essential for the future of work, the gender gap persists. In the European Union in 2016, only one in six students in information and communications technology (ICT) were female. (ILO, 2020)
  • The skills gap is a global challenge, and a lack of education is the root. In 57 of 108 countries, more than half of the workforce have jobs not matching their level of education — 72% of this skills mismatch attributed to under-education. (UNICEF & WBCSD, 2021)
  • The quality of education and learning must improve dramatically to ensure that young people are better equipped for the workforce. More than 600 million children around the world who are in school are not on track to learn the skills they need to thrive in the future. (Education Commission, 2019)
  • There is a talent shortfall. Nearly seven in 10 employers reported talent shortages in 2019, the worst level ever and a jump of 17% from the year before and more than three times higher than a decade ago. (CNBC, 2020)
  • If current trends continue, by 2030 less than 10% of young people in low-income countries will be on track to gain basic secondary level skills. The costs of this education crisis – unemployment, poverty, inequality and instability – could undermine the very fabric of our economies and societies. (Education Commission, 2016)
  • It is estimated that by 2030 more than half of young people worldwide will not have the basic skills or qualifications necessary for the workforce. (Education Commission, 2016)
  • 55% CEOs globally believe that the current skills shortage hinders the ability of their companies to operate effectively. And nearly half are worried that skills availability is significantly impacting quality standards and/or the experience of their customers. (PWC, 2020)
  • The world urgently needs more educated workers. It is estimated that, by 2020, the global economy will have a shortage of 40 million workers with a tertiary education and 45 million workers with a secondary education, while there would be a surplus of 95 million low-skilled workers. (Deloitte & GBCE, 2018)
  • As digital skills become essential for the future of work, the gender gap persists. In the European Union in 2016, only one in six students in information and communications technology (ICT) were female. (ILO, 2020)
  • The skills gap is a global challenge, and a lack of education is the root. In 57 of 108 countries, more than half of the workforce have jobs not matching their level of education — 72% of this skills mismatch attributed to under-education. (UNICEF & WBCSD, 2021)
  • The quality of education and learning must improve dramatically to ensure that young people are better equipped for the workforce. More than 600 million children around the world who are in school are not on track to learn the skills they need to thrive in the future. (Education Commission, 2019)
Economic cost
  • The global skills mismatch is currently estimated to affect two in five employees in OECD countries, costing the global economy 6% every year in terms of lost labour productivity. (Boston Consulting Group, 2020)
  • There is an economic cost to not investing in education. In India alone, nearly two-thirds of children born each year do not finish secondary school for a plethora of largely preventable reasons. In pure economic terms, this represents an opportunity cost of over US$100 billion to national annual economic output, or about 5% of GDP. (Winthrop et al., 2013)
  • When public education systems are weak, the business community incurs significant costs. Companies bear costs to compensate for poor-quality education and the low skill levels of graduates, including investing in remedial training programmes. In India, for example, in one five-year period information technology companies almost doubled the amount they spent on training employees, from US$1 billion in 2007 to close to US$2 billion in 2011. (Winthrop et al., 2013)
  • Post-pandemic economic recovery depends on strong education systems. Predictions estimated that the current pandemic would wipe out 6.7% of working hours globally in the second quarter of 2020, equivalent to 195 million full-time workers. Some jobs will never return and others will cease to exist. Education prepares young people to enter into a new and changing workforce. (ILO, 2020)
Jobs and training
  • There are 1.3 billion young people today, the largest youth population in human history. Yet one in five youth worldwide are currently not in employment, education, or training (NEET). (ILO, 2020)
  • Young people are more likely to be unemployed. While youth make up one-fifth of the global population, they make up one-third of the global unemployed workforce. (ILO, 2020)
  • Decent work is not available for many young people. Even among employed youth, 30% are living in extreme to moderate poverty with an income below US$3.20 per day, signaling the lack of decent work. (ILO, 2020)
  • Informal work is on the rise. In 2016, three in four young workers worldwide participated in informal employment, ranging from the informal agricultural economy in sub-Saharan Africa and Southeast Asia to the gig economy in wealthier European countries. (ILO, 2020) (Nedelkoska & Quintini, 2018)
  • Youth are particularly vulnerable to automation. In OECD countries, the risk of job displacement is highest for youth because they are more likely to be in occupations with the highest probability of automation
  • Many youth are not satisfied with the education and training they are currently receiving. In a global survey of 531 youth in 2018, 39% reported that their formal school did not prepare them with the skills they needed for the jobs they wanted. (Deloitte & GBCEd, 2018)
  • The global learning crisis is a critical barrier to youth employment. 69% of youth in low-income countries will not attain basic primary level skills by 2030. (Deloitte & GBCEd, 2018)
Fourth Industrial revolution (4IR)
  • Employment in the future is likely to place an increased premium on digital literacy. 84% of multinational and large national companies surveyed reported being ready to digitise work. Yet the percentage of adults with basic spreadsheet skills is 7% in lower-middle-income countries, 20% in upper-middle-income countries, and 40% in high-income countries. (GEM, 2020) (World Economic Forum, 2020)
  • Just a few years ago, technologies associated with the 4IR were projected potentially to displace more than five million jobs by 2020, most of the loss concentrated in low- and middle-skill jobs. (Deloitte & GBCE, 2018) (McKinsey, 2017)
Funding
  • Philanthropy will need to play a significant role to help address the education funding gap. Funding for education from philanthropists, corporations and charitable organisations will need to reach US$20 billion in 2030 if we are to get every child in school and learning. (International Commission for Financing Global Education Opportunity, 2016)
  • Despite talk of philanthropic contributions to education increasing, they remain insignificant. Just 13% of Fortune Global 500 companies’ total corporate social responsibility budget went to education in 2015, with only 30% of that allocated to primary and secondary education. (Varkey Foundation et al., 2015)
  • Education anchors investments in all sectors, but corporate giving to global health is 16 times what it is to education. US foundations decreased their share of funding for education by 3% between 2005 and 2015, while increasing their financing for health by 5%. (GBCE, 2013) (International Commission for Financing Global Education Opportunity, 2017)

Messages

Smart investment
  • Supporting education in emerging markets will have high payoffs. By 2030, not only will emerging market economies contribute 65% of global GDP but they will also be home to the majority of the world’s working-age population. (Winthrop et al., 2013)
  • CEOs say lack of investment in education is costing them money. In a global survey of more than 1,000 CEOs, almost 30% said that talent constraints kept them from pursuing market opportunities. Labour costs are increasing; in the same survey 43% of CEOs said talent-related expenses, including turnover, have a negative impact on their firm’s growth and profitability. (Winthrop et al., 2013)
  • A small investment in education yields huge outcomes for employers. Data shows that US$1 invested in education today can return US$53 in value to the employer at the start of a person’s working years. (UNICEF, 2020)
  • Investment in education can yield high returns. Each dollar invested in education can yield more than US$5 in additional gross earnings in low-income countries and US$2.50 in lower-middle-income countries. (Education Cannot Wait, 2019)
  • When businesses invest in youth education, they are investing in their skilled labour of the future. A study has found that in India, every US$1 invested in education and training results in a US$53 return in value to the employer. (Winthrop et al., 2013)
  • Education in sub-Saharan Africa is a smart business investment. By 2060, the populations of Africa’s two most populous nations, Nigeria, and Ethiopia, will have tripled and doubled, respectively. Companies investing in the education of emerging markets like these will not only create the skilled workforce needed to address the global talent gap, but also capture the economic benefit of the resulting newly empowered consumer base. (Brookings, 2013)
Addressing the skills gap
  • Investment in education is urgent to meet future skills demand. It is estimated that 42% of core skills required for existing jobs will have changed by 2022. By 2030, more than half of youth worldwide will not have the necessary skills for what the workplace of the future requires. (Education Commission, 2016) (World Economic Forum, 2020)
  • Investment in STEM education and jobs will boost recovery. Cities with more STEM workers tend to have higher job growth, employment rates, patent rates, wages, and exports. In the US, for each high-tech job added, an additional five jobs are created. (Moretti, 2013) (Rothwell, 2013)
  • Closing the skills gap unleashes economic potential. If education systems successfully address the skills gap for the future of work, as much as US$11.5 trillion could be added to global GDP by 2028. (Accenture, 2018)
  • Young people are demanding that the education system step up and provide critical skills for the future of work. In a 2018 Global Youth Survey, 79% of young people reported that they had to go outside formal schooling to get the skills necessary for their desired jobs. (Deloitte & GBCE, 2018)
  • Education is essential to address the growing mismatch in skills and employment. Following current trends, sub-Saharan Africa will be home to the largest concentration of young people without the skills to participate productively in the workforce. Nearly nine in 10 children in the region lack basic skills for the labour market. (Global Business Coalition for Education/Education Commission, 2019) (World Bank, 2019).
  • Urgent investment into education and training is needed to meet the needs of the future – to resolve the risk that 50% of tomorrow’s human capital will be unprepared for the workforce in 2030. (Deloitte & GBCE, 2018)
  • Job growth is likely to be concentrated in high-skills sectors. It is estimated that by 2020, more than 80% of jobs will require medium- to high-skills levels, while low-skills jobs will continue to decline. (GEM, 2016)
  • Education is essential for the transition towards green growth to address pressing environmental challenges. Green industries are growing faster than the global economy average, with a job creation potential of 15-60 million additional jobs, yet the green skills gap is already creating bottlenecks in some countries. (IRENA, 2014) (GEM, 2016)
Job creation
  • Education spending is more effective at job creation than tax cuts. A study found that spending on education created almost twice as many jobs as would be expected from tax cuts of equal value and also resulted in better paying jobs. (Pollin et al., 2009)
  • Better educated individuals are more resilient in the labour market. In the US, unemployed workers with at least a high school degree are 40% more likely to find a job again within one year compared with those who did not complete high school. Each additional year of schooling increases the chance of re-employment by about 6-7 percentage points. (Riddell & Song, 2011)
  • Most of the new jobs created in the previous economic recovery went to college-educated workers. After the 2008 recession, jobs for college graduates in the US sharply rebounded and increased by 8.4 million, but jobs for those with a high school diploma or less only increased by only 80,000. (Carnevale et al., 2016)
  • Education is an important asset to securing formal employment. In developing countries, the share of informal employment decreases from 93.9% for workers with no education, 86% for those with primary education, 59.1% for those with secondary education, and only 32% for those with tertiary education. (ILO, 2018)
  • Higher levels of education reduce employment vulnerability. In 27 low- to upper-middle income countries, eight out of 10 young people with a higher education degree were in non-vulnerable employment. (Sparreboom & Staneva, 2014)
Economic growth
  • A single additional year of education yields great economic gains. In some cases, an additional year of education has generated as much as 35% higher GDP per capita and a 10% increase in income, with larger gains for women. (Patrinos & Psacharopoulos, 2013) (UNICEF, 2015)
  • Getting all children into primary education, while raising learning standards, could boost economic growth by 2% annually in low-income countries. If all students in low-income countries acquired basic reading skills, 171 million people could be lifted out of poverty, equivalent to a 12% reduction in world poverty. (UN Global Compact, 2013)
  • Education increases income. In Guatemala, each additional school grade that a child completed raised their earnings as adults by 10%. Increasing their reading comprehension test score to the average score raised their wages by 35%. (Behrman et al., 2009)
  • Education is an important source of economic growth. Increased educational attainment, especially for girls and women, accounted for about half of the economic growth in OECD countries over the past 50 years. (OECD, 2012)
  • Higher education leads to increases in productivity and earnings that feed back to governments through higher taxes. Over a 34-year period in the US, states that invested more in education ended up having higher per-capita income. (Contemporary Economic Policy, 2008)
  • One additional year of school can increase a girl’s earnings by up to 20% – reaping benefits for the girls themselves, their future families and their communities. (EFA GMR, 2013)
  • Educating girls raises earnings. Each additional year of schooling helps a woman increase her wages by about 12%. (Brookings, 2016)
  • Educating girls means they can earn more and have more secure working conditions. Women with good literacy skills in Pakistan earn 95% more than women with weak literacy skills. (EFA GMR, 2013)
  • Financial literacy raises earnings. Women with high financial literacy skills received 95% more income than women with little or no literacy skills. (EFA GEM, 2014)
  • In the US, virtually all growth in the labour force over the next 40 years is predicted to come from immigrants and their children. It is essential that this group is provided with a high-quality education to maintain economic growth. (Passel, 2011)
Cross-sectoral benefits
  • Education’s spillover benefits save lives and promotes a healthy workforce. A healthy workforce contributes to a stable operating environment. Over the past four decades, the global increase in women’s education has prevented more than four million child deaths. If all children completed primary education, 700,000 cases of HIV/Aids could be prevented annually. (UN Global Compact, 2013)
  • A better educated labour force is essential to ensuring the technological transformation required to combat climate change. Education provides the basic, technical, and managerial skills necessary to innovate and develop green industries, transforming economies and food systems, and reducing environmental destruction. Green growth could produce up to 60 million additional jobs globally. (Technopolis Group, 2015) (ILO, 2012)
  • It is important to remember the long-term horizon. In Jamaica, providing toddlers with psychosocial stimulation increased earnings by 25%, but these returns only materialised 20 years later. (World Bank 2019)
  • Early childhood education and increased childcare availability helps parents, especially mothers, re-enter the workforce. A low-cost, universal childcare programme in Quebec increased labour force participation by 12.3%. (MacEwan, 2013; see also Lefebvre & Merrigan, 2005)
  • Investing in education helps build a strong public health workforce to combat future pandemics. Without the immediate ramping up of education, there will be a shortage of 15 million health workers worldwide by 2030. (Liu et al., 2017)
  • Providing educational opportunities for refugees creates more productive members of society. Education lays the base of foundational skills, preparing students for technical or vocational training, or university-level opportunities, leading to better job prospects and greater self-reliance for refugees. (UNHCR, 2016)
  • Education integrates refugees into the local economy. Among refugees in Germany, good German speaking, reading and writing skills were associated with a 19% higher probability of employment and 18% greater wages. (Hanemann, 2018)
  • Ocean literacy provides valuable social and economic returns. Limiting global warming to 1.5 degrees Celsius, as outlined in the Paris Climate Agreement, could result in billions of dollars in extra revenue for fisheries globally, most concentrated in the developing world where many rely on fish as a source of protein. (Sumaila et al., 2019)
  • Education increases entrepreneurship and economic opportunity. A sound understanding of financial mechanisms, management, and concepts like interest compounding, exchange rates and fee structures diversify and boost economic opportunity. (Atkinson & Messy, 2015)
  • Educating children with disabilities has high returns on investment. In the Philippines, returns on education for people with disabilities in terms of higher earnings can reach more than 25%. (International Disability and Development Consortium, 2016) (Mori & Yamagata, 2009)
Encouraging innovation
  • Innovation is almost exclusively accomplished by those with advanced degrees. In the US, more than 90% of patent holders have at least a bachelor’s degree, and 70% have at least a master’s degree. If Finland had not invested substantially into engineering education in the postwar era, the number of US patents obtained by Finnish inventors is likely to have been 20% lower. (The Hamilton Project, 2017) (Toivanen & Väänänen, 2016)
  • Investment in higher education is essential for research and development, and technological advances. Only 7% of young people in the least developed countries are currently enrolled in college, nine times less than the rate in developed countries. (Deloitte & GBCE, 2018)
  • Almost all technology entrepreneurs in the US have a higher education. 92% of US-born tech founders hold at least a bachelor’s degree. (Wadhwa et al., 2008)
  • When immigrants are educated, they help drive innovation and entrepreneurship. Research on one million inventors applying for a patent in the US from 1976 to 2012 shows that immigrants make up 16% of the inventor population and 22% of total patents. (Bernstein et al., 2019)
  • An educated and skilled workforce is key to growth and technological progress. Data from 19 OECD countries between 1960 and 2000 show that their growth was more driven by skilled human capital rather than the total human capital of the workforce. (Vandenbussche et al., 2004)
Funding
  • More and more businesses are playing an active role in education. In a study of 250 companies, 28% of total corporate philanthropic giving went to education programmes, making it the number one cause that businesses supported. (CECP, 2018)
  • Corporate support for education can have a greater social impact if it is better coordinated. Although US Fortune 500 contributions to global education were reported to be small, short term, uncoordinated and not reaching the most marginalised, the total contribution was not negligible at just shy of US$500 million. This is equivalent to about two-thirds of the entire United States Agency for International Development (USAID) education budget. (Van Fleet, 2011)
  • Global Fortune 500 companies invest a lot in education. It is estimated that of the US$20 billion per year spent on corporate social responsibility initiatives, US$2.6 billion was spent on education-related activities. (Varkey Foundation, 2015)
  • High net worth individuals can be powerful catalysts of change in education. Key figures in global health have been instrumental in restructuring aid and building coalitions to leverage funds at scale. (KFF, 2020)

Key opinions

Guy Ryder

Education and training are the keys to unlock opportunities for women and men to gain employment, launch businesses and create better lives for themselves and their families. As we work to build a better and more resilient future after the Covid-19 pandemic, we must ensure quality education systems that are accessible to all.

Guy Ryder, ILO Director General
kristalina georgieva

Safeguarding our post-pandemic future means safeguarding our human capital. More than a billion learners across the world have been affected by the virus-related disruption to education. That is why we need more investment—not just spending more on schools and distance-learning capacity, but also improving the quality of education and the access to life-long learning and re-skilling. These efforts can pay large dividends in terms of growth, productivity, and living standards. We can build a more resilient world by harnessing the vast potential that education provides for people to learn, grow, and transform their lives.

Kristalina Georgieva, Managing Director of the IMF

Searching for more in-depth reporting or quick refreshers on the relationship between education and business? Check out Theirworld’s groundbreaking reports and explainers that examine the issue in further detail. 

Prefer an audio medium to better understand the connection between education and business? Listen to Theirworld’s Better Angels podcasts, featuring stories from globally renowned campaigners, Nobel Prize winners, celebrities, politicians and remarkable young people who are experts in the field.

Hanzade Doğan Boyner and Vuslat Doğan Sabanci: Interview Special

Top Turkish business women Hanzade Dogan Boyner and Vuslat Dogan Sabanci and their efforts to promote girls’ education through private public partnerships are featured in this interview special

More episodes here

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