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More Education Leads to Higher Productivity and Better Business Performance

Employers pay more to more educated workers for two reasons. Firstly, they use education as an indicator of a worker’s skills and knowledge. Though other factors, especially past working experience, are taken into account as well, these are usually considered only if the candidate’s education meets the employer’s requirements. This is due to the fact that in general, education provides a guarantee that the individual is capable and competent to perform a particular job. And the second reason why employers put so much emphasis on education is because it has been shown to lead to higher productivity and better business performance.

Countries with More Educated Workers More Economically Successful

Education itself doesn’t guarantee high productivity and excellent business performance. As a result, not all businesses that invest in educated labour force, and encourage their employees to continue their professional development and training are successful. However, there is strong evidence - at both micro and macro levels - that the overall performance increases with the proportion of educated workers. For example, virtually all countries with large portions of educated workers are economically more successful than nations with less educated working-age population. Also, countries with more educated labour force report faster economic growth.

Businesses with Better-Educated Workers Perform Better

Though educational level of the labour force doesn’t always determine how well a business will perform, in general, businesses with better-educated workers do much better than those with less educated and trained employees. As mentioned earlier, more educated workers are usually more productive which means that they can create more and often also better products or/and services, and consequently, increase their employer’s profits. Despite being more expensive to hire, better-educated workers thus in most cases bring their employers more money.

The Cost-Benefit Ratio of Investing in Employee Training and Education

There is no such thing as too much training and education, especially in today’s rapidly changing world. On the other hand, the best training and education programmes are not inexpensive. In the long term, they almost always pay off, however, it is important for the employers to find a way to protect their ‘investment’, for example by asking the workers not to leave for a certain period of time, or else, cover the cost of training themselves.