The relationship between literacy, numeracy, and employability was examined by analyzing data on basic skills that were collected in two of Great Britain's birth cohort studies--the National Child Development Study and the 1970 British Cohort Study. The functional literacy and numeracy skills of samples of 10% of the participants in each study were assessed. The analysis showed striking evidence of the significance of literacy and numeracy gains, both in gaining employment on leaving school and also in retaining and progressing in employment. In both cohorts, more than four-fifths of the young people in the lowest literacy and numeracy categories had left school at the minimum age of 16. Most such school leavers in the 1958 cohort were absorbed into the unskilled and semiskilled jobs that existed at the time, whereas two-thirds of such school leavers in the 1970 cohort entered training schemes or became unemployed. Many of the one-third who got jobs gained little job security or occupational training. Qualifications did not fully eliminate the effect of poor basic skills on unemployment and poor numeracy skills had surprisingly large impacts on rates of employment and occupational achievement, particularly in women, for whom poor numeracy skills equated to a "10% penalty" in employment rates. (Thirteen tables/figures are included. The bibliography lists 35 references.) (MN)