Three reasons why business leaders and policy makers should make human capital their number 1 priority
Human capital is a key factor for growth, development and competitiveness but all too often economies and business possess talent but fail to deploy it effectively. Here are three reasons why human capital should be the number one focus for business and economies
1. Productivity, innovation and meaning
Learning and working provide people with livelihoods, an opportunity to contribute to their societies and, often, meaning and identity. Workers’ skills lead to productivity and innovation in companies. At the national level, equality of opportunity in education and employment contribute to economic development and positive social and political outcomes.
People’s human capital in the form of relevant skills is likely to produce higher returns if invested in optimally, starting early in life, and may also experience depreciation if not kept current and developed continuously. Formal education enhances people’s capacity and while applying and acquiring skills through work further develops people’s human capital. Maximising opportunity for all entails lifelong access to acquiring education and skills and working-age access to deploying and developing skills through work.
2. The Fourth Industrial Revolution changes it all
Neither cheap labour nor through winning the ‘war for talent’ enable business and countries to optimise their long-term human capital potential. Too many countries, especially developing economies, look to create economic value by solely focusing on maximising the deployment of their people’s current human capital with little regard to skill diversification and acquiring more advanced know-how. This rings true with business.
The technological changes brought about by the Fourth Industrial Revolution open the very real possibility of disrupting these pathways to economic value creation beyond all viability. On the other hand, economic value creation in a growing number of advanced economies is based on highly specialised know-how but the jobs and sectors driving these trends risk leaving behind a growing share of the workforce. Only through building up deep, diverse and resilient talent pools and skills ecosystems that allow for inclusive participation in good quality, skilled jobs by the largest possible number of people will businesses and countries find future value creation.
3. Human capital is critical to the functioning of society too
A human-centric vision of the future of work recognises people’s knowledge, talents and skills as key drivers of a prosperous and inclusive economy. There is an intrinsic value in human productivity and creativity. Even if, in the long term, technological and social changes give rise to a world in which work and earning are not as closely tied as in the past, enabling humans to thrive (maximising their human capital) should be a top priority.
Human capital is critical not only to the productivity of society but also to the functioning of its political, social and civic institutions. All stakeholders should care about fully leveraging the human capital potential residing in people’s skills and capacities.