Lower literacy and numeracy has wages penalty

Mary Fogarty
Research Officer

Higher literacy and numeracy skills are associated with an increased likelihood of employment.

Literacy and numeracy skills of Australia’s adult population have been profiled in a Productivity Commission paper Literacy and Numeracy Skills and Labour Market Outcomes in Australia.

Fourteen per cent of Australians aged 15-74 (2.4 million people) have low literacy, meaning they can, at best, read only relatively short texts from which they can locate only a single piece of information.

Twenty two per cent could only carry out one step or simple processes such as counting where the mathematical content is explicit with little or no text or distractors.

Sixteen per cent of the population have high literacy meaning they can make complex inferences and evaluate claims or arguments in lengthy or multiple texts.

Twelve per cent of Australians have high numeracy skills and can understand a broad range of mathematical information that may be complex, abstract or embedded in unfamiliar contexts.

There is a high correlation between a person’s literacy and numeracy skills but literacy and numeracy skills vary across different groups. People with non-English speaking background have lower English literacy and numeracy skills than other people. Older people have lower literacy and numeracy than younger people.

More than half of the “penalty” that affects the wages of people with a non-English speaking background is explained by their lower literacy and numeracy skills.

Higher literacy and numeracy skills are associated with an increased likelihood of employment whether the person has a degree, diploma or year 12 education. Up to 40 per cent of the association between education and employment is attributable to literacy and numeracy skills.