Educational outcomes in Australia are showing signs of improvement, particularly in the early years and in Year 12 attainment, according to the latest reports from the Council of Australian Governments (COAG) reform council.
But the reports also reveal that one in eight working age Australians have the lowest level of literacy, while one in five have the lowest level of numeracy.
More than a quarter of young people are also not fully engaged in work or study after they leave school.
The number of young people fully engaged in work or study is down 1.2% since 2006. This is in part due to a fall in full-time young workers and comes despite a rise in the proportion of young people in full-time study.
Professor Greg Craven, deputy chairman of the COAG reform council and vice-chancellor at Australian Catholic University, said while there were positive results in other areas, this development was of real concern.
"What happens to young people when they leave school is crucial to how we meet the future demands of our economy – and to the quality of their lives," Professor Craven said.
The fall in full-time young workers was in part due to the effects of the global financial crisis, Professor Craven said.
The reports, which show the five year progress on state and federal government targets, also provides worrying signs in a number of other areas, including educational disadvantage and performance in the high school years.
Primary school reading and numeracy scores improved over the five years, but there was little or no improvement at the high school level.
But Professor Craven said Australian education was heading for "structural" improvement through greater access to quality early childhood education.
In 2008, COAG agreed to ensure that all children have access to a quality early childhood education program in the year before they go to school. This program would be delivered by a four-year university-trained early childhood teacher, for 15 hours a week, 40 weeks a year.
In 2012 the levels of enrolment and attendance at pre-school programs were high, with a national average of around 96%. The highest levels were in Western Australia and the lowest were in the Northern Territory.
"Down the track we should see the benefits of the early childhood reforms flow on to better primary and high school results," Professor Craven said. The reports note that those Australian students in Year 4 who attended up to one year or more of early childhood education achieved a higher score on international tests than those who hadn't.
The goal to lift the number of students reaching Year 12 or equivalent to 90% by 2020 was also on track. The most recent figures show the attainment rate at 85.9%, up from 82.8% in 2006.
Bill Fogarty, a research associate at The National Centre for Indigenous Studies' at ANU, said the good news on attainment extended to Indigenous students. "The reports show more Indigenous young people are attaining Year 12 or equivalent. This rise is a trend that we've seen for over a decade," Dr Fogarty said.
"On the less rosy side, we see that from 2008 to 2012 there's been no real improvement in school attendance at all for Indigenous students. And in fact, in the remote and very remote regions we've seen decreases. The Northern Territory as a whole has seen a 14% decrease in year 10 attendance which shows us that we still have a long way to go," he said.
The reports also found that more than half of working age Australians now have higher level qualifications but that there was a disconnect between vocational training and getting a job.
From 2008 to 2012, the proportion of vocational education graduates who reported improved employment status after training fell by almost five percentage points.
Associate Professor at Griffith Business School John Rice said that recent reforms to the TAFE sector, particularly in Victoria, had been "a complete disaster".
"Various providers are making qualifications available to eligible students for free - but many of these subsidised qualifications are not worth the paper they're printed on, and certainly not worth what the States are paying for them," he said.
When it came to the results on adult literacy skills, lecturer in literacies education at the University of Southern Queensland Stewart Riddle said the results show an important generational shift.
"Despite ongoing claims that we urgently need to return to the basics in schools, young people are more literate than older Australians. In fact, people in their 30s have the highest literacy and numeracy levels. It seems that the good old days of schooling did not actually provide people with better literacy skills at all," he said.
But more can be done to help working Australian men and women improve their literacy levels, Dr Riddle said.
Explore further: Australia: Biggest jump in HIV in 20 years