Education is intrinsically linked to labour markets and economic growth, influencing economic returns for both individuals and gross domestic product (GDP). Better education levels contribute to healthier and more agile labour markets. Universal secondary education could lift 420 million people out of poverty worldwide. Apart from economic returns, education steers countries towards peace and stability, essential for economic prosperity, creating a virtuous circle.
Education is the smartest investment a country can make. The more a country invests in its education system, the greater its economic performance overall. Evidence shows that countries with more people attending school see faster economic growth than countries with fewer educated workers.
Studies by the World Economic Forum (WEF) show that investing in education is essential to protect economies from sudden shocks and rapidly changing labour markets. Education has a direct impact on salaries.
People with better jobs and salaries pay more taxes, increasing national economic growth. A study by UNESCO found that for every $1 spent on education, between $10 to $15 was generated in economic growth. Each additional year of education increases a person’s income by 10 percent, while one additional year of schooling can increase a woman’s earnings by up to 20 percent.
Despite this mounting evidence, education remains in a chronic crisis, aggravated by dwindling resources. The pandemic has worsened the sector’s woes, with more than 1.6 billion impacted by school closures worldwide, causing significant learning losses and putting this generation at risk of losing $21 trillion in potential lifetime earnings. Today, over 250 million children and youth are out of school, and 70 percent of 10-year-olds in low- and middle-income economies can’t read and understand a basic text.
This and future generations will grow up in a digitalised society with an estimated 70 percent of new value created in the economy over the next decade from digitally-enabled business models. Over the next five years, half of workers’ competencies are likely to be disrupted by Artificial Intelligence (AI) and half of today’s work activities could be automated between 2030 and 2060. The MENA region needs to create more than 33.3 million new jobs by 2030, but skills mismatches have pushed youth unemployment to 25 percent, with female youth unemployment reaching 40 percent.
Today’s education systems, particularly in lower income countries, are mostly ill-designed for tomorrow’s market. This bodes ill for business and economic development, particularly at this critical juncture where AI is rapidly changing the way we do business.
Tomorrow’s labour will not be created overnight; it is nurtured in classrooms today. As AI and other technological innovations speed forward, there is an indisputable need for education systems that prepare young people for a digitalised world. It is therefore crucial that education keep up with the changing demand of skills and focus on human-centered skills that are hard to replace, such as critical and analytical thinking, problem-solving, collaborative and adaptability skills, and other socio-emotional skills.
As technologies and competency needs evolve, so too should education systems to produce a skilled workforce that can develop businesses and drive economic growth. Quality education not only broadens children’s perspectives and skillsets to thrive in an ever-changing labour market, but also build the workforce that today and tomorrow’s businesses need to develop and contribute to economic advancement and prosperity that leave no one behind.
This requires adequate financing for education. But since 2020, education budgets in nearly half of all lower-income countries have dropped by an average of 14 percent. There has also been a decline in foreign aid to education.
According to recent data by the Organisation for Economic Co-operation and Development (OECD), official development assistance to education dropped to under 10 percent of total aid in the first year of the pandemic from nearly 12 percent a decade earlier. While trimming education spending might relieve budgets in the short-term, it is depriving economies of long-term prosperity.
Multilateralism is essential to channel adequate funding to education in lower-income countries. Sharing the firm belief that education is an essential pathway to prosperity, the Global Partnership for Education’s engagement with Gulf countries started in 2018 with the UAE, and has been growing ever since to include Saudi-based entities such as the Islamic Development Bank (IsDB) and the Arab Coordination Group (ACG).
Last February, we welcomed Saudi Arabia into the partnership along with a generous contribution of $38m made at the Human Capital Initiative, under the Patronage of Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud.
Together with our Gulf partners, we have strived to address the education funding crisis through innovation. The Smart Education Financing Initiative (SmartEd) is one such collaboration that allowed GPE, IsDB and ACG to generate a half billion dollars to help millions of children get quality education.
By providing $4 for every $1 drawn from the GPE Multiplier, SmartEd has helped governments tackle the learning crises in their countries by mobilising more funding on better terms and ensuring that these resources are invested in effective and sustainable education programs.
During its 2024 Annual Meetings and Golden Jubilee Celebration, IsDB and ACG joined GPE in celebrating the success of SmartEd.
Building on this success, the partners pledged an additional $350m towards SmartEd to unlock more learning opportunities for children in low and lower-middle income countries that are members of the Organisation of Islamic Cooperation (OIC).
It is no coincidence that we have celebrated SmartEd’s success in Saudia Arabia, a country that has made great strides in giving its children the skills they need to achieve its Vision 2030 of creating a thriving economy. Indeed, Saudi Arabia has transformed its own education system to prepare its children for the jobs of the future. The kingdom can offer lower-income member countries of the OIC not only vital resources to finance transformative education, but also the know-how of building the human capital that powers tomorrow’s economy.
Saudi Arabia’s Vision 2030 offers a roadmap for other countries to unleash the potential of their children. This vision is aligned with our endeavours to increase access to quality education that prepares children for tomorrow’s jobs and challenges.
Financing quality education is not a luxury; it is a market necessity and collective responsibility to build prosperous and equitable future. Together with our Saudi partners, we will continue to innovate education financing so that every boy and girl can access the quality education they need to learn, grow and thrive in a rapidly changing labour market.