How does a country’s educational structure connect to its economic performance? Why the workers who have college degrees earn so much more than those who have no college degrees? Getting to know-how education and training interrelate with the economy can help to explain why some employees, business entities, and economies thrive while others fail.
More downward pressure is placing on the wage rate along with increasing labor supply. If employers’ demand for labor doesn’t keep up with the labor supply, remuneration usually falls. An overload of employees is mainly harmful to workers working in sectors with low barriers to entry for new workers – that is, especially for the jobs that don’t require degrees or any specialization to do the jobs.
On the other hand, business sectors that require higher education and further specialized training tend to pay higher wages for their employees. Smaller labor supply in those business sectors with higher pay, capable of operating those sectors, and the required education and training carry high costs.
Countries and economies are compelling to compete with one another via globalization and international trade. Even though a single country rarely specializes in a particular industry, the countries with flourishing economies will hold competitive and comparative advantages over other economies. A classic representative developed economy will cover various sectors with many different competitive advantages and disadvantages in the global marketplace. The education and training of an economy’s labor force is the main factor in deciding how well that particular country with such an economy will perform.
Such a victorious economy has a labor force capable of operating sectors and industries at a level where it holds a competitive advantage over the other competitive economies. Countries sometimes encourage training via tax relieves, providing training facilities, or several other methods designed to improve skilled labor forces. It is rare and unlikely a country’s economy will hold a competitive advantage in all sectors, it can point to several industries in which skilled workers are more well-trained.
Training level differences between the workforces is a significant factor that decides to categorize developed and developing countries. Although the other factors such as geography and available resources certainly are in play, having well-trained labor creates spillover throughout the economy and positive externalities. Worldliness spatial relation position outwardness; in short, an externality can positively affect the economy due to a better-trained labor force. On the other hand, all businesses benefit from the external factor of having a well-skilled workers pool from which to hire employees. In some scenarios, they might consider the highly skilled workforce in a particular geographic region. As a result, similar business clusters may evolve in the same area geographically due to those professional labor forces. (Example: Silicon Valley, Calif).
It is an essential factor that any employer wants workers who are productive and require less management. It is a must that the employers should consider many factors while deciding whether or not to pay for training for employees. They should concentrate on identifying whether the productivity of the workers can be improved via such training programs? Will the increasing productivity warrant the cost of paying for all or part of such training programs? If the employer paid for such training, will the employer leave the organization for a competitor after the training program is complete? Will the new worker be able to command a high wage by training? Will the worker gain an increase in bargaining power or leverage for a higher salary by training? If the movement resulted in a salary increments warranty, Will the increases in productivity and profit be enough to cover any pay raises and the overall cost of the training program?.
As employers have to be worried about leaving newly trained workers, most employers expect their employees to remain within the organization for a certain period as a return for the paid training. There are situations that businesses may also come across to pay employees who are unwilling to accept pieces of training which can happen in the labor unions dominated industries as increased job security would make it severely difficult to hire trained workers or to fire less-trained workers. However, there are situations where labor unions may also negotiate with employers to provide the union members with better training to make them more productive, which reduces the possibility of jobs being shift overseas.
Workers get the chance to improve their potential to learn by developing and refining their capabilities and skills. The more they know about how their jobs function, the more they will see the industry, the more important and valuable they become to an employer. Workers need to learn advanced techniques or new methods, or skills to compete for higher wages. Generally, the employees can have hopes for their salaries to increase, but usually, it happens at a smaller percentage than the productivity gain by employers. There are factors that workers also should consider while deciding whether to enroll in a training program. Those concerns should include: How much extra productivity can they expect to gain? Is there a cost to the employee for the training program? Will the employee receive a wage increment that would warrant the cost of the program? What would be the labor market conditions for well-trained professionals in the dynamic field? Is the labor market significantly saturated with trained labor in the particular specialty?.
Some employers pay the total cost of the training expenses, and some do a portion, but this is not always the case. There are situations where our employer wouldn’t pay for the program. Such conditions will cause employees to lose income, and in the meantime, those employees are unable to work as many hours as they had previously.
Many countries have emphasized developing educational structures that can manufacture employees who can operate in new and essential sectors, such as science and technology. Mainly this has happened as older sectors in developed economies have already become competitive and are most likely to continue dominating the industrial topography. This great movement to improve the primary education of the public emerged, with an improving belief that all people have the right to have a proper education.
When it comes to the word ‘education, it is not mainly focused strictly on workers obtaining college degrees. Education derives in specific levels as – primary, an elementary school in the United States; secondary, which is being called to the middle, high, and preparatory schools; post-secondary, which refers to universities, community colleges, and vocational schools.
As educated workers increase, that country’s economy becomes more productive since the educated workers can efficiently and effectively perform jobs requiring literacy and critical thinking. Nevertheless, obtaining a higher-level education also involves a higher cost factor. It is not a must for a country to provide many universities to benefit its economy from schooling. Introducing and providing some basic literacy programs will still being notable economic improvements.
Countries with considerable numbers in their population graduating from schools yearly have e speedier economic growth than the countries that have less-educated workers. In this sense, most governments fund primary and secondary education, intending to improve their financial performances.
UNESCO and the United Nations Human Development Programme says, the ratio of the number of children of official secondary school age enrolled in school to the number of children of secondary school age in the population which is called the enrollment ratio, is higher in developed countries than it is in developing countries.
A country’s education spending as a percentage of the GDP doesn’t always correlate strongly with the level of education in a nation’s population as the GDP refers to the goods and services output. In this sense, allocating to spend a higher percentage of GDP on education does not necessarily ensure that a nation’s population is more educated.
An employee’s intellectual ability can be count as an asset at work, and this asset can be used to produce products and services that can be sold in the marketplace. The more a business employs well-trained workers, the more that company can theoretically perform. An economy where it treats education as an asset by its employers, is often called a knowledge-based economy.
Like always in any decision, investing in education involves an opportunity cost for the employees. The more time spent in classrooms, the more time lost from working and then earning an income. Employers offer higher salaries and benefits when the tasks required to complete a job require a higher educational level. Accordingly, the employee’s income might be lower in the short-term during the training period, but wages will likely be higher in the future once the training is complete.
Availability of knowledge and skilled workers in the labor supply plays a crucial role in determining the growth of both businesses and economies. Economies with a significant pool of skilled workers brought on through formal education and vocational training are primarily able to capitalize on this by developing more value-added industries. Nations need to ensure through legislation and career-related programs that all their people have access to the education and training that can lift laborers, businesses, and the entire economy.
