Poor literacy skills cost Welsh workers 18 months in lost earnings

180,000 could enjoy an estimated £200m national pay rise if skills improved

A worker in Wales with poor literacy would have to work an extra 18 months in their lifetime to earn the same as someone with basic communication skills.

New research by Pro Bono Economics shows that the average 18-year-old with “very poor” literacy skills will earn around £27,000 less over their lifetime.

That is equivalent to an extra 18 months’ employment, as the average worker in Wales with very poor literacy earns around £18,000-a-year, according to the study in partnership with the National Literacy Trust.

PBE estimates that there are nearly seven million working age adults (aged 16-65) in the UK with “very poor” literacy, meaning they have only limited vocabulary and cannot read lengthy texts on unfamiliar topics.

This includes 184,000 adults in work in Wales who could earn up to £1,300-a-year extra if they improved their literacy skills, equivalent to an annual national pay rise of up to £200million.

The research also shines a light on the significant differences in literacy levels across the UK – part of wider regional inequalities in adult skills.

Among its key findings, the study found that:

·   16.6% of working age adults in the UK, close to 7 million people, are estimated to have “very poor” literacy skills.

·   The average worker in Wales with very poor literacy skills earns around £1,300 less per year than they would if they had a basic level of literacy.

·   This means the average 18-year-old with very poor literacy skills will earn around £27,000 less over their lifetime.

·   It is the equivalent of an extra 18 months of work over their lifetime as the average worker in Wales with very poor literacy skills earns around £18,000 annually.

The PBE study is based on the latest OECD Survey of Adult Skills which shows that the UK ranks better for levels of very poor adult literacy skills than the average for the 32 OECD countries surveyed. However, it still ranks far behind the likes of Japan where only 5% of working adults have very poor literacy skills.

There are also significant differences in literacy levels within the UK. The North East (23%) and West Midlands (22%) have the highest percentage of working age adults with very poor literacy, while the South East (11%) and East (12%) have the lowest percentage.

These are the same regions which have the highest and lowest percentages of adults with low numeracy skills respectively, suggesting that an adult skills shortage could be a major driver of regional inequalities seen across the country.

Individuals with poor literacy are more likely to be unemployed and earn lower wages. PBE’s analysis shows that very poor literacy rates are twice as high for people not working (26%) compared to those working (13%) in Northern Ireland. In England, very poor literacy rates

are ten percentage points higher for those not working (23%) compared to those working (13%).

With approximately four million workers (13%) in the UK estimated to have very poor literacy skills, this is a large percentage of the population earning lower wages and operating less productively.

According to the study, if these four million workers improved their literacy to a basic level, they could collectively benefit from an estimated annual pay rise of up to £6bn each year.

Matt Whittaker, CEO of Pro Bono Economics, said:

“The fact that there are nearly seven million adults across the UK who lack even basic literacy skills is deeply concerning. The scale of the UK’s literacy problem is symptomatic of the adult skills crisis facing the country.

“Our new research reveals there are 180,000 workers with very poor literacy in Wales earning £1,300 less each year on average than those with basic skills.

“Literacy skills go beyond the basics of reading and writing. They are the cornerstone of effective communication, helping people get on at work, understand the world around them and engage fully in modern society.

This skills crisis is a huge problem, but it is one we can solve with the right ambition and collaboration across all parts of society. The government – at both the national and local level – can provide the cash and the leadership. Charities like the National Literacy Trust can provide the expertise. And companies can inspire change by investing in skills training for their employees.

“Working together we might secure a £6billion pay rise for the country, alongside a range of other personal and societal benefits that would go some way to fulfilling the government’s ambitions for levelling up the country.”

Jonathan Douglas, CBE, Chief Executive of the National Literacy Trust, said:

“Literacy plays an essential role in all aspects of life and so it’s unacceptable that the average worker in Wales with very poor literacy skills earns around £1,300 less per year than they would if they had a basic level of literacy. It is also unacceptable that seven million people of working age across the UK have very poor literacy skills.

“The fact that this figure includes four million adults who could get a collective pay rise of up to £6billion if they improved their literacy skills, sends an important message to the government ahead of its spending review.”

Methodology Note

The study uses the OECD’s Survey of Adult Skills to measure and categorise literacy levels in the UK. The OECD survey sampled nearly 9,000 adults in England and Northern Ireland between 2011 and 2012. The PBE study assumes that Scotland and Wales have “very poor” literacy prevalence of 16.6%, as the study found for England and Northern Ireland. The PBE study defines adults with “very poor” literacy as those scoring at Level 1 or below on the OECD’s literacy measure:
https://literacytrust.org.uk/parents-and-families/adult-literacy/what-do-adult-literacy-levels-mean/
The study compares adults with “very poor” literacy to adults with “basic” literacy who are defined as those scoring at Level 2 or above on the OECD’s literacy measure.
The study uses earnings information from the ONS Annual Survey of Hours and Earnings and published research on the relationship between literacy and earnings to estimate the lost earnings associated with “very poor” literacy skills.

The study’s finding that the average 18-year-old with very poor literacy skills will earn around £33,000 less over their lifetime is in “present value” terms. This means that future increases in income are weighted less heavily than current increases in income, in line with standard practice for economic evaluation.