I think it did not necessarily matter if people had lower literacy in those days - there were more jobs, only a small percentage went to university and no-one advertised for street-cleaners to have A-levels (and other qualification inflation).
I am slightly younger than OP and my DF/DM left school at 15 (they just got caught by the raising of the school-leaving age) with a leaving certificate. DF became an apprentice and worked for the NHS in the same place for the next 40 years. DM became a junior civil servant, had a year or so in London, became a SAHM for 12 years and then worked in clerical jobs. My guess is that no-one in the UK does (can do) that these days.
When I was in secondary school (comprehensive, Scotland), 80% of the people in my school left at 16 for jobs. Only about 5% stayed on to S6 and probably less than 10% in total went from school to university. I went to university (vocational degree) and came out with a choice of which job I took. I took a job that involved moving to SE England, changed jobs twice and have chosen to be self-employed for the last 10 years of raising DC.
Now the school-leaving age is (and, effectively, has been for years) 18. The apprenticeship system was dismantled. The government has an idea that all young people should go to university (and about 40% do). My DD will graduate (vocational degree) next year and it will be hard for her to get a graduate-level job. A job in the field of her degree is extremely difficult to get.
The lack of jobs makes it difficult to see why anyone thought that 40% going to university was a good idea - particularly with student loans, it staves off the inevitable and means that the young people are saddled with debt. It has also meant qualification inflation - jobs that previously required a degree often go to someone with a PhD because there are more of them around.
To return to your post: The articles linked by EuphemiaInExcelsis are interesting. They show that there has been a reasonably steady state in literacy (despite government rhetoric). There have always been fewer people who can cope with maths - and government are among the worst offenders. Ofsted saying that all schools should be above average, anyone? One of the problems is that primary school teachers are often not secure in maths, so they pass on their feelings about it. The way maths is taught is not necessarily a good idea. There was a small experiment in the US in not teaching maths until the children were 11. Then they picked it up easily because they were secure in how numbers and maths work in the real world. Many home educators in this country (including me) have done their own small-scale experiment and found the same thing - children who do real stuff in the world do not need to do maths worksheets from age 5 (and set up a fear of what to do and the feeling that they have to memorise when to use specific techniques). When they are ready to do formal abstract maths (perhaps to get a GCSE), they learn what they need for the exam and it is not scary.