In a recent article and webinar, we looked at the importance of gaining qualifications at school. People who leave school with higher qualifications are more likely to transition to tertiary education and study higher qualifications. Having higher levels of education increases the likelihood of a person being employed and earning higher wages and reduces the duration they are unemployed. More education also reduces the risk of a person becoming NEET (Not in Employment, Education or Training).

Can a student who doesn’t flourish at school catch up through tertiary education? Not every student flourishes in the school environment. For some, an additional few years to grow and mature might be what they need to succeed in an educational environment. Tertiary education providers cater for these ‘second chance learners’ by offering foundation level courses, often free of charge, effectively lowering any education barriers to post-school education and hopefully smoothing the transition to higher qualifications. Second chance learners can improve their prospects, but based on an analysis of average earnings, people who attain lower qualifications at school remain at a disadvantage compared with their higher-attaining peers.

Chart 1 focuses on people who left school in 2009 and went on to attain a Level 4 Certificate in tertiary education. The chart splits these people by what NCEA level they attained at school and shows their average earnings in 2018 — nine years after they left school.

You would expect that people with the same tertiary education qualification would end up with similar earnings. But Chart 1 shows that people who left school with NCEA Level 2 and went on to attain a Level 4 Certificate had, on average, 54% higher earnings than people who left school with no qualification and went on to attain a Level 4.

A similar pattern is evident regardless of the level of tertiary education attained. For example, people who left school with NCEA Level 2 and went on to attain a Level 3 Certificate had, on average, 61% higher earnings than people who left school with no qualification and went on to attain a Level 3. And people who left school with NCEA Level 2 and went on to attain a Level 5-7 Diploma also had, on average, 61% higher earnings than people who left school with no qualification and went on to attain a 5-7 Diploma. People with the same level of tertiary education can have significantly different earnings, and this is seemingly influenced by their level of school attainment.

There are several reasons why school attainment matters for people with the same level of tertiary education attainment. The average earnings figures include people in work and out of work. People with lower school attainment are more likely to be out of work after they leave school and spend longer periods unemployed. So, the average earnings in 2018 of people who left school with lower qualifications in 2009 might be dragged down by them having had previous periods of unemployment which tend to lower subsequent earnings, or possibly by more of them being unemployed in 2018.

People with lower school qualifications might also take longer to attain the Level 4 Certificate in tertiary education, thus delaying any earnings premium they might receive as a result of attaining this level. They might, for example, spend a year or two after school in low-skilled employment or unemployment before they decide to return to education. They might need to study at a lower level before they are ready to complete Level 4. Or they might simply take longer to complete the Level 4 qualification due to them not having acquired some foundational skills at school. Regardless of the scenario, if they attain their Level 4 at a later date, this could result in lower earnings compared with their peers who attained higher qualifications at school, transitioned to a Level 4 qualification post-school, completed it promptly, gained a higher wage as a result of their attaining that qualification, and have been receiving annual wage increases ever since.

Among those jobs that require a Level 4 qualification, many of them trades, some will offer higher earnings than others. Students who do well at school might get the pick of the crop when it comes to higher-earning apprenticeship or industry training opportunities, thus placing them on a higher-earning trajectory early on. Employers that offer lower-earning jobs or training might settle for people with a less impressive level of school attainment.

Most fundamentally, employers looking to take on young people either in training or full-time employment have very little information to go on when they compare job applications. Attainment at school is probably a key indicator of an applicant’s quality when they are young and have little to no employment record. As people get older, school attainment becomes less important to employers. But in those first few years after school, it can set the level and trajectory of future opportunities and earnings.