4th June 2014 – Last week the Productivity Commission released a hugely important report documenting the literacy and numeracy of adult Australians.
The report has received hardly any media attention but should be a wake-up call for all of us – the community sector, industry and government – about how we communicate and respond to clients and customers.
Too much of our communication assumes that our audience has the same level of numeracy and literacy. In fact, large numbers of Australians simply do not have the ability to fully understand much of the information we give them nor the forms we ask them to fill out.
The report, “Literacy and Numeracy Skills and Labour Market Outcomes in Australia” ranks literacy and numeracy using five levels, where 1 is the lowest level and 5 is the highest level.
- 14% of Australians have a literacy level of 1 or below. At best, this group is able to locate a single piece of information in a text, as long as the information is synonymous with the information given in the question. Many of the ideas in this press release would not be understood by this group – hence the first sentence of the headline above.
- 22% of Australians have a numeracy level of 1 or below. This group can undertake simple processes such as counting, sorting and basic arithmetic with whole numbers. Some of this group can understand simple percentages and can locate data in a simple graph or table. They cannot undertake tasks requiring two or more mathematical steps or interpret simple data. Interpreting the numbers in this press release, for example, calculating how many Australians have a numeracy level between 2 and 5, would be beyond this group – hence the second sentence of the headline above.
The focus of the Productivity Commission report is on the impact of literacy and numeracy on labour market outcomes – as literacy and numeracy increases so too does the likelihood of employment as well as increases in wages. For example, the econometric analysis shows that more than half of the ‘penalty’ that affects the wages of people from a non-English speaking background is explained by their lower literacy and numeracy skills. An increase in literacy and numeracy by one skill level is associated with an increased likelihood of employment of 2.4 and 4.3 percentage points for men and women, respectively.
However, the broad findings about literacy and numeracy stand alone. There are clear implications for many service providers, for example, in providing more information via short video or pictures, in simplifying language and presenting information in small chunks.
The findings also reinforce how important it is that industry, government and the community sector continue to invest in financial literacy initiatives – the pay-off for individuals and the economy will be significant. These include:
- continuing to embed financial literacy in the school curriculum;
- the investment by ASIC in the MoneySmart website and associated materials;
- the vital role played by money management/financial capability workers in assisting Indigenous consumers to understand and manage money;
- the excellent financial literacy initiatives of the banking, insurance and other industries;
- the often unsung, but incredibly effective programs, run by local community organisations that work to lift numeracy and literacy levels of specific groups, such as people who are unemployed or new arrivals.
Financial Counselling Australia recommends that all decision-makers look at this important report and consider its findings in designing their services. The exception was Alan Mitchell in the AFR 31 May-1 June ‘Literacy, numeracy and the big transition’.
 Available at http://www.pc.gov.au/research/staff-working/literacy-numeracy-skills
 See Table A2 of the Productivity Commission Report.
Financial counsellors: community-based professionals providing information, support and advocacy for people in financial difficulty.
Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007 or visit www.debtselfhelp.org.au.
For further comment please contact: Fiona Guthrie 0402 426 835