The economic and social cost of illiteracy

A white paper by the World Literacy Foundation
Literacy Financial literacy Low socioeconomic status Digital disruption Economic indicators

Key findings:

  • Globally, it is estimated that 1 out of 5 people are completely illiterate with a further three billion people struggling to read and write at a basic level. Low level reading and writing skills cost the global economy around £800 billion each year. In 2018, illiteracy is estimated to cost UK economy approximately £80 billion. However there are often-hidden costs of functional illiteracy that poses even more significant costs to the economy and long-term personal and social impacts on a person’s quality of life.
  • Functional illiteracy means a person may be able to read and write simple words, but cannot apply these skills to tasks such as reading a medicine label, balancing a chequebook, or filling out a job application.2 Around 15%, or 5.1 million adults in England, struggle to read and write at a very basic level and can be described as functionally illiterate.
  • The financial cost of illiteracy to the economy includes: £24.8 billion on welfare, unemployment and social programs. An additional £55.2 billion is lost through lower personal income, productivity or business earnings.
  • Latest findings show there has been a 30% decrease since 2012 in numbers of children who read regularly and own a book from low-income and disadvantaged homes. For children in the UK, digital devices are replacing a nightly routine of reading.
  • In other countries like the United States, for example, literacy is just as huge a problem. In 2015 a study by the FINRA Foundation estimated that 2/3 of Americans could not pass a basic financial literacy test covering credit, interest, investing diversification and inflation. Other countries, such as France estimate that around 2.5 million people are affected by illiteracy. On an even more dramatic scale, Egypt has a population of around 16 million illiterate adults.

This White Paper will discuss the economic costs of illiteracy as it is being faced within the United Kingdom and across the globe, address the social impacts that arise from that fact and provide recommendations for governments, city society and businesses. Improved literacy transforms lives and communities by allowing people to engage in everyday activities like getting a job. Governments, civil society and businesses must work together urgently to tackle this problem.

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