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Source: OECD Income Distribution Database Despite strong growth, labour informality is widespread in developing countries and emerging market economies. This is particularly the case in Sub-Saharan Africa, where on average 7 out of 10 individuals in the non-agricultural sector are informal workers (AfDB, 2012). Among OECD countries, informal employment is most widespread in Mexico and Turkey, where 40-60% of the workforce is employed without social security coverage or runs its own business (OECD, 2008b).

Although the informal sector acts as a safety valve in countries where the formal sector is narrow, labour informality can exacerbate inequalities. It excludes workers from formal social protection schemes and puts them at a social disadvantage, in particular those who hold 3D jobs (dirty, dangerous and demeaning) (OECD, 2009a). Informal workers are also exposed to a lack of access to financial services and job training, which perpetuates the vicious circle of low productivity jobs and poverty.

1.3. Education and skills The great educational improvement worldwide There has been significant improvement in adult literacy, school enrolment and educational attainment worldwide. The adult literacy rate is expected to reach 86% by 2015 (UNESCO-UIS, 2013a), although progress is uneven across countries. From 1990-2000 the literacy rate increased by 22% in Arab states, 16% in South and West Asia and only 6% in Sub-Saharan Africa, from a baseline of about 50% literacy in each region. In developing countries, people had on average nearly two years more education in 2010 than in 1990 and the number of out-of-school children of primary school age fell from 108 million in 1999 to 61 million in 2010. However, progress has slowed worldwide, and on current trends the Millennium Development Goal (MDG) target of universal primary education by 2015 will be missed (UNESCO, 2012a). One third of the world’s out-of-school children live in just four countries: Ethiopia, India, Nigeria and Pakistan. In addition, even if female enrolment rates have improved at all education levels, girls remain disadvantaged, in particular, in Southern Asia and SubSaharan Africa.9 By contrast, in OECD countries, where school enrolment is universal, educational attainment has risen significantly, and on average 75% of 25-64 year-olds have reached uppersecondary education (Figure 1.18) (OECD, 2013b).

Educational outcomes have also improved globally but again with great differences among countries.10 Results from the latest OECD Programme for International Student Assessment (PISA) shows that in mathematics, over 245 points, equivalent to almost six years of schooling, separate the highest and lowest average performance by country. Differences in performance are generally even greater within countries, with over 300 points often separating the highest and lowest performers in a country. Students from the lower quarter on the index of economic, social and cultural status (ESCS) show significantly lower levels of achievement than students at the top quarter of the index.11 Across the OECD, there is a 90 point difference in average mathematics scores between two ends of the spectrum (OECD, 2013i). In general, the capacity of a country to decrease the gap between socially disadvantaged and advantaged students greatly influences their overall educational performance. The study also reveals that developing countries are increasingly focusing on the quality of learning outcomes. Brazil’s progress places it among the PISA countries that have shown the most significant improvements.

Figure 1.18.

Upper secondary attainment is now the norm across almost all OECD countries (2011) Percentage of the population that has attained at least upper secondary education Note: Excluding ISCED 3C short programmes. Countries are ranked in descending order of the percentage of 25-34 year-olds who have attained at least upper secondary education.

Source: OECD (2013b), Education at a Glance 2013, OECD Publishing, Paris.

Unequal access, unequal educational attainment and skills Unequal access to education remains an issue in developing countries, especially among children from disadvantaged socioeconomic backgrounds. Financial constraints (e.g. foregone salary or labour, school uniforms, textbooks and consumables) create barriers to participation. The same can be said of inadequate infrastructure, such as a lack of clean water and sanitation, which often results in high dropout rates among the poorest and most marginalised children. The quality of schooling, teacher shortages, teacher absenteeism, and the ability to travel safely to and from school also impact on dropout rates. At the secondary education level, there remain barriers to enrolment, as many schools are located in urban areas, making it impossible for poor children, especially girls, dwelling in rural areas to attend given the costs of transport. Overall, disparities in access to education persist regionally within countries, driven by factors such as wealth, location and gender (UNESCO, 2012b). In Latin America, more than 70% of the children whose parents are tertiary educated also complete tertiary studies, but only 3.1% of the children with parents who did not complete primary education attain this level (OECD, 2012f).

In OECD countries, the expansion of educational opportunities has not necessarily delivered higher educational outcomes and better skills to all. Rather, socio-economic status strongly affects a student’s opportunities for upward educational mobility. In Italy, Portugal, Turkey and the United States, more than 40% of young people from low educational backgrounds have not completed upper-secondary education, and less than 20% have enrolled in tertiary education. In contrast, the probability a youth from a low educated background will complete tertiary education exceeds 25% in Canada, Denmark, Finland, France, the Netherlands and Sweden, and is greater than 30% in Australia and Ireland.

The skills distribution among the adult population is also heavily determined by socioeconomic background. The 2013 OECD Survey of Adult Skills (PIAAC) shows that parental levels of education, a strong measure of socio-economic background, influence literacy proficiency scores in all countries (Figure 1.19) (OECD, 2013g).12 On average across countries, adults with tertiary-level qualifications have a 36 score-point advantage in literacy – the equivalent of five years of formal schooling – over adults who have completed less-than-upper secondary education, after other characteristics have been taken into account. The combination of poor initial education and lack of opportunities to further improve proficiency has the potential to evolve into a vicious cycle in which poor proficiency leads to fewer opportunities to further develop proficiency, and vice versa. Similarly, the PISA results show that there are large differences on numeracy scores within countries, again with students from disadvantaged socio-economic backgrounds registering significantly lower scores than the average. The Survey also shows that immigrants with a foreign-language background have significantly lower proficiency in literacy, numeracy and problem solving in technology-rich environments than native-born adults.

Figure 1.19.

Adults’ socio-economic background matters for their literacy proficiency

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Source: OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, OECD Publishing, Paris.

From input to output: learning outcomes and skills It is possible to combine high level of performance with equity in education (Figure 1.20). On the basis of the PISA test scores, several countries, including Australia, Canada, Finland, Japan, Korea, Hong Kong-China and Macao-China simultaneously display high student performance in mathematics and a below-average impact of economic, social and cultural status on student performance. By contrast, those countries where poor performance is combined with inequality in outcomes face the challenge of raising the average performance and providing more equal educational opportunities for disadvantaged students. Although immigrant students tend to be socio-economically disadvantaged and thus lower-performing than non-immigrant students, the concentration of immigrant students in a school is not, in itself, associated with poor performance (OECD, 2013j).

Although skills are a powerful determinant of employability, there is often a mismatch between the qualifications of workers and the demands of employers. Mismatches between supply and demand of specific qualifications exist in most advanced economies (OECD, 2013g). Student choices are made on the basis of many different considerations; labour market prospects and needs compete with personal interests and social stereotypes. For example, most developed economies face shortages in the STEM disciplines (science, technology, engineering and mathematics) and many countries take initiatives to stimulate young people – especially girls and young women – to study STEM subjects. The OECD Survey of Adult Skills (PIAAC) also points to the existence of significant mismatches between skills and their use at work, particularly for some socio-demographic groups.

Skills-use indicators show that it is not uncommon that more proficient workers use their skills at work less intensively than less proficient workers do. Data show that over-qualification is particularly common among foreign-born workers and those employed in small establishments, in part-time jobs or on fixed-term contracts. Over-qualification has a significant impact on wages, even after adjusting for proficiency. It also implies a “waste” of human capital, since over-qualified workers tend to underuse their skills. However, part of this type of mismatch is due to the fact that some workers have lower skills proficiency than would be expected at their qualification level, either because they performed poorly in initial education or because their skills have depreciated over time. By contrast, underqualified workers are likely to have the skills required at work, but not the qualifications to show for them. Mismatches in skills proficiency have a weaker impact on wages than qualification mismatch.

In many developing countries, skills mismatch is a serious concern as joblessness is more widespread among the highly educated than among individuals with primary levels of education or less (ILO, 2012b) (Figure 1.21). In the MENA countries, a significantly higher number of tertiarylevel graduates have careers in the social sciences, humanities or law, than in technology or science.13 According to recruitment and temporary work agencies in these countries, there is a lack of tertiarylevel graduates qualified for technical fields, such as the extractive industries, logistics, the chemical and pharmaceutical industries, manufacturing and agri-business (AfDB, 2012).

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Source: OECD (2013), PISA 2012 Results: Excellence through Equity, Volume II, OECD Publishing, Paris.

Figure 1.21.

In some developing countries a tertiary degree may be too much to get a job Unemployment rates by educational attainment in selected developing countries, 2005-2011aUnemployment rate (%)

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a. Unemployment rate is computed over the adult population. The definition of adult population is usually 15+ but may differ across countries. The educational categories are conceptually based on the levels of the International Standard Classification of Education (ISCED).

Source: ILO (2012b), “Key Indicators of the Labour Market”, 7th Edition, KILM, ILO, Geneva, www.kilm.ilo.org.

1.4. Rich and healthy: the link between inequalities in income and health status

There have been huge gains in life expectancy worldwide, but large disparities remain among socio-economic groups. Improvement in living conditions, a reduction of certain risk factors and progress in health care are the main factors that explain increased longevity. For the first time in history, in 2011, the average life expectancy across OECD countries exceeded 80 years – an increase of ten years since 1970. Life expectancy has also increased over the past decades in many emerging market economies and developing countries, but it still lags behind current OECD levels. In 2011, the average life expectancy at birth in low-income countries was 60 years, 20 years less than the average in OECD countries.14 In addition, everywhere, the richest and the most educated are in better health: at age 30, people with the highest level of education could expect to live six years longer than people with the lowest level of education (53 years versus 47 years) (Figure 1.22). Differences in life expectancy by education level are particularly large in Central European countries, especially among men.

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Note: The figures show the gap in the expected years of life remaining at age 30 between adults with the highest level ("tertiary education") and the lowest level ("below upper secondary education") of education.

Source: Eurostat database complemented with national data from Austria, Netherlands and Switzerland.

In many OECD countries, large inequalities remain in self-rated health status across different socio-economic groups (Figure 1.23).15 These inequalities reflect differences in living and working conditions, as well as in behavioural factors (e.g. smoking, use of alcohol, physical inactivity, and obesity). Poorly educated women are two to three times more likely to be overweight and obese than those with high levels of education. People in low-income households may also have more limited access to certain health services or use these services less for financial or non-financial reasons, notably certain preventive services (OECD, 2013c). Greater emphasis on public health and disease prevention especially among disadvantaged groups, and improving access to health services and the quality of health care, can contribute to the further improvements in population health status and life expectancy.

Figure 1.23.

People with higher income report being in better health than those with lower income

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Note: Countries are ranked in descending order of perceived health status for the whole population.

1. Results for these countries are not directly comparable with those for other countries, due to methodological differences in the survey questionnaire resulting in an upward bias.

Source: OECD Health Statistics 2013 (EU-SILC for European countries).

Access to health care varies considerably among social groups, especially in developing and emerging market economies, but also in some OECD countries (Box 1.4). In general, access to health services continues to be out of reach to much of the low-income population in developing countries, either for financial reasons or because it is simply unavailable. Women still often give birth without the aid of a trained midwife, nurse, doctor or other skilled birth attendant (Bhutta et al., 2010), and coverage rates of births attended by skilled health personnel are substantially higher among women and children in better-off families than in poor families (Figure 1.24). In many cases, the poor pay out of pocket for health services due to a lack of insurance coverage, which puts them at a further disadvantage. By contrast, in most OECD countries the health needs of a majority of the population are met, but low-income individuals may face difficulties accessing some health services (OECD, 2013c). A survey, conducted in 2013 in 11 European and non-European countries, shows that lowincome individuals are more likely to report unmet health care needs than people on high incomes (Figure 1.25). In the United States, nearly half of adults with below average income reported having some type of unmet health care need due to cost in 2013 (Commonwealth Fund, 2013).

Box 1.4. Increasing universal and equitable access to healthcare

Equity in health care access supposes that people in equal need of healthcare should be treated equally regardless of their income, race, place of residence, occupation or educational level. The ideal is universal health coverage (UHC) which most OECD countries have achieved (Mexico and the US are the major exceptions).

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