Functional illiteracy is reading and writing skills that are inadequate "to manage daily living and employment tasks that require reading skills beyond a basic level".  Functional illiteracy is contrasted with illiteracy in the strict sense, meaning the inability to read or write simple sentences in any language.
Foreigners who cannot read and write in the native language where they live may also be considered functionally illiterate.
Functional illiteracy is imprecisely defined, with different criteria from nation to nation, and study to study.  However, a useful distinction can be made between pure illiteracy and functional illiteracy . Purely illiterate persons cannot read or write in any capacity, for all practical purposes. In contrast, functionally illiterate persons can read and possibly write simple sentences with a limited vocabulary, but cannot read or write well enough to deal with the everyday requirements of life in their own society.
For example, an illiterate person may not understand the written words of cat or dog, may not recognize the letters of the alphabet, and may be unable to write their own name. In contrast, a functionally illiterate person may well understand these words and more, but might be incapable of reading and comprehending job advertisements, past-due notices, newspaper articles, banking paperwork, complex signs and posters, and so on.
The characteristics of functional illiteracy vary from one culture to another, as some cultures require better reading and writing skills than others. A reading level that might be sufficient to make a farmer functionally literate in a rural area of a developing country might qualify as functional illiteracy in an urban area of a technologically advanced country. In languages with regular spelling , functional illiteracy is usually defined simply as reading too slow for practical use, inability to effectively use dictionaries and written manuals, etc.
Links with poverty and crime
In developed countries, the level of functional literacy of an individual is proportional to income level and inversely proportional to the risk of committing crime. For example, according to the National Center for Educational Statistics in the United States: 
- Over 60% of adults in the US prison system read at or below the fourth grade level
- 85% of US juvenile inmates are functionally illiterate
- 43% of adults at the lowest level of literacy lived below the poverty line, as opposed to 4% of those with the highest levels of literacy.
According to begintoread.com: 
- Two-thirds of students who cannot read proficiently by the fourth grade will end up in jail or on welfare.
- Three out of four individuals who receive food stamps read on the two lowest levels of literacy.
- 16-to-19-year-old girls at the poverty line and below with below-average reading skills are 6 times more likely to have out-of-wedlock children than their more literate counterparts.
In the United States, according to Business magazine, an estimated 15 million functionally illiterate adults held jobs at the beginning of the 21st century. The American Council of Life Insurers reported that 75% of the Fortune 500 companies provide some level of remedial training for their workers. All over the U.S.A. 30 million (14% of adults) are unable to perform simple and everyday literacy activities. 
The National Center for Education Statistics provides more detail.  Literacy is broken down into three parameters: prose, document, and quantitative literacy. Each parameter has four levels: below basic, basic, intermediate, and proficient. For prose literacy, for example, a below basic level of literacy means that a person can look at a short piece of text to get a small piece of uncomplicated information, while a person who is below basic in quantitative literacy would be able to do simple addition. In the US, 14% of the adult population is at the "below basic" level for prose literacy; 12% are at the "below basic" level for document literacy; and 22% are at that level for quantitative literacy. Only 13% of the population is proficient in these three areas—able to compare viewpoints in two editorials; interpret a table about blood pressure, age, and physical activity; or compute and compare the cost per ounce of food items.
The UK government's Department for Education reported in 2006 that 47% of school children left school at age 16 without having achieved a basic level in functional mathematics, and 42% fail to achieve a basic level of functional English. Every year, 100,000 pupils leave school functionally illiterate in the UK. 
|Nation|| Functionally |
(% at age 16–65)
|Flanders ( Belgium )||18.4|
A Literacy at Work study, published by the Northeast Institute in 2001, found that business losses attributed to basic skill deficiencies run into billions of dollars a year due to low productivity, errors, and accidents attributed to functional illiteracy.
Sociological research has demonstrated that countries with lower levels of functional illiteracy among their adult populations tend to be those with the highest levels of scientific literacy among the lower stratum of young people nearing the end of their formal academic studies. This correspondence suggests that the capacity of schools to ensure students attain the functional literacy required to comprehend the basic texts and documents associated with competent citizenship contributes to a society's level of civic literacy.