The changing workforce landscape: Human Capital Report
Since the birth modern economics, focus on humans as an integral part of the four key factors of production has grown exponentially. It has meant that as humans have become an increasingly important resource for industries to grow, more has been in the investment been done to help humans find access to education and health facilities. This is necessary for humans to remain productive. A well-educated and healthy workforce is necessary for industries to grow. The growth of various industries, in turn, have led to countries charting a strong economic route of growth. For any developing country choosing to function within a free market economy like ours, with a huge working population, it becomes important for state functionaries to provide, and ensure access to, the right opportunities in order to leverage the demographic dividend.
World Economic Forums latest report, titled The Humans Capital Report 2016, throws the light on some of the emerging trends and issues in the development of human capital, globally. Stressing the importance of a nations ‘human capital endowment’—the knowledge and skills embodied in individuals that enable them to create economic value— the report agreed it to be a more important determinant of a country's long-term success than almost any other resource. Such an ‘endowment’ entails access to good quality health and education opportunities. Globally the mismatch between the demand for such education opportunities with its respective supply has been alarming. According to one report, globally, there are about 90 million children without access to primary school, 150 million children unable to attend secondary school and hundreds of millions of young people who cannot afford to go to university, while the world is experiencing a shortage of 4 million qualified teachers per year.
As the global human capital landscape continues to change and evolve the gaps between education and employment becomes even more pertinent to address. To put things into perspective, one study points out how currently there almost 25,000 new workers who will enter the labor market in the developing world every day until 2020 while there exists a projected shortage of about 50 million high-skilled job applicants over the coming decade. The report also consists of a country wise analysis of the success of their respective investments in building a human capital. Being a global measure of performance, the Human Capital Index ranks countries on the basis of how well their talent is developed and how effectively does it get absorbed into various industries. The aim of the report is to assess the outcome of past and present investments in human capital and offer insight into what a country’s talent base will look like in the future. The Index provides country rankings that allow for effective comparisons across regions and income groups. The Scandinavian and other West European countries feature as the top performing countries, with Finland, Norway and Switzerland being top three ranked countries respectively.
Coming to the Indian subcontinent, the report pegs India as the 105th ranked country in the list. This puts India at the top of the bottom quartile of the Index. The report mentions that although the country’s educational attainment has improved markedly over the different age groups, its youth literacy rate is still only 90% (103rd globally), well behind the rates of other leading emerging markets. India also ranks poorly on labor force participation, due in part to one of the world’s largest employment gender gaps (121st). More positively, it receives solid rankings on Quality of Education System (39th), Staff training (46th) and Ease of finding skilled employees (45th) indicators, suggesting a primary avenue for improvement for the country consists of expanding access to its numerous learning and employment opportunities. This in the light of sizeable working population that India will be facing raises some very pertinent questions on the increasing gap between the demand and supply of a skilled, healthy and educated workforce for tomorrow's India.
A comparison with other countries in the G20 give us a fair idea of the amount of dedication and work is necessary from India’s side to actually bridge the gaps and translate its growing young population into a ‘dividend’. It shows the long journey India has still to make to reach a point where the expanding population can actually contribute towards the nation’s growth. Among the various countries that are a part of the G20, Japan (4th) is the country with the highest human capital performance, followed by Canada (9th) and Germany (11th) while Saudi Arabia (87th), South Africa (88th) and India (105th) make up the lower ranks of the group, the report states.
The study goes on to point out that not just India but this South Asia’s most populous countries fall back quite significantly. Looking closely at India the reasons one finds that the country is held back has been an insufficient focus given towards building robust education systems at all levels. This lack of focus has manifested as low educational enrolment rates and poor-quality primary schools along with low levels of skill diversity among their university graduates and a significant employment gender gap. The report states that the youth literacy rate in India stands at 89%, far behind other emerging markets as well as their own lower-middle income group’s average. This has raised some strong doubts over the traditional claims of ‘equitable and distributive growth’. The reality has remained that the country’s GDP has increased over a period of years without directly impacting jobs growth in a positive manner. The reasons for this increasing gap between the countries growth and jobs creation can be better understood under the light of this current research. Due to faulty and inaccessible channels of education and skill training and the changing skill preference patterns, a concerted approach from both the state and businesses are required.