Declining school retention

From Challenger Chief Economist Dr Jonathan Kearns

Educational attainment is an important contributor to workers’ skill levels and so productivity growth (which has of course declined with important macroeconomic implications). With that in mind, disappointing new data show that in the past two years the share of year 10 students who go on to complete year 12 has fallen to less than four out of five (these ‘apparent’ retention are a cohort’s total enrolment in year 12 divided by their enrolment in year 10). Retention rates declined slightly in the years before COVID but after the pandemic have taken a notable step down.

Retention rates only declined significantly for government schools and not at independent and catholic schools (this could be year 10 students from government schools shifting to non-government schools for year 12, but seems unlikely at this scale).

The fall in retention rates has occurred across all states and territories suggesting it may have been a broad COVID effect rather than specific lockdown policies. First Nations students experienced a similar fall, and their year 12 retention rates remain much lower than for other Australian students, highlighting the room to improve education outcomes for First Nations peoples.

Hopefully the fall in retention rates was a pandemic-induced aberration and they recover for all students in the coming years. But for those with lower educational achievements there can be persistent effects on income over their lifetime.