A LACK of education and skills will drag down global economic growth in the coming decade unless governments and businesses take drastic action to improve training, according to a report out today from McKinsey.
The consultancy believes there could be 85m too few high- and medium-skill workers and around 90m too many low-skilled workers by 2020.
The lack of highly educated workers is illustrated by the rising pay premium for graduates – in 2008 weekly wages for college graduates in the US were 2.8 times the wages of dropouts, up from 1.7 times the wage in 1963.
Similarly unemployment rates are far lower for those with higher levels of education – in the UK last year four per cent of university graduates were jobless, compared with 10 per cent of those who left secondary school without completing A-Levels.
Improving training and productivity is also vital as populations age, the report argues – workers will need to support the 360m people set to retire by 2030.
To sustain historic rates of GDP growth, productivity growth in Germany will have to rise by about a third to 1.6 per cent per year, while southern European countries will need to double their rate to 1.4 per cent per year.
If they fail to do so, “the next generation could be poorer than their parents,” McKinsey warns.
To compete and grow in this “skills-scarce” environment, businesses will have to “dramatically step up their role in public education and training, and invest in their own training programs,” the report argues.