Pricing Talent: Fulfilling People’s Potential Could Boost Global GDP by 20%

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  • New Human Capital Report finds that a world where “nobody is left behind” remains a distant prospect, even in advanced economies
  • First study of its kind measures countries’ ability to nurture talent through education, skills development and deployment at all stages of the human life cycle
  • Finland ranks number one in the index, having developed and deployed 86% of its human capital potential
  • World Economic Forum believes that talent, not capital is the key factor linking innovation, competitiveness and growth in the 21st century
  • Download the full report here

Geneva, Switzerland, 13 May 2015 – When it comes to developing people’s talents and helping them reach their full potential, the concept of a world where no one is left behind remains a distant prospect. This is the case even in rich countries with well-developed educational systems and robust employment, the World Economic Forum’s new Human Capital Report reveals today. Included in the report is the Human Capital Index, a study of 124 countries covering 46 indicators.

PR_rankingsThe index takes a life-course approach to human capital, evaluating the levels of education, skills and employment available to people in five distinct age groups, starting from under 15 years to over 65 years. The aim 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.

Globally, Finland tops the rankings of the Human Capital Index in 2015, scoring 86% out of a possible 100. Norway (2), Switzerland (3), Canada (4) and Japan (5) make up the rest of the top five. They are among a group of only 14 nations that have crossed the 80% threshold.

Among other large advanced economies, France is in 14th position, while the United States is in 17th position, scoring just under 80%. The United Kingdom holds the 19th spot and Germany 22nd. Among the BRICS, The Russian Federation (26) scores highest with a score of 78%, with China next at 64, having optimized 67% of its human capital. Brazil is in 78th place, followed by South Africa (92) and India (100).

In addition to the 14 countries that have reached 80% human capital optimization, 38 countries score between 70% and 80%. A further 40 countries score between 60% and 70%, while 23 countries score between 50% and 60% and nine countries remain below 50%.

“Talent, not capital, will be the key factor linking innovation, competitiveness and growth in the 21st century. To make any of the changes necessary to unlock the world’s latent talent – and hence its growth potential – we must look beyond campaign cycles and quarterly reports. Dialogue, collaboration and partnerships between all sectors are crucial for the adaptation of educational institutions, governments and businesses,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

Results by Region

In addition to Finland, Norway and Switzerland, which occupy the top three spots overall, another four countries from Europe and Central Asia occupy the top 10, while another eight from the region are among the top 20. Albania (66), Turkey (68) and Moldova (71) hold the last places within the region. Italy (35), Greece (40) and Spain (41) are buoyed by their past human capital investments but are hampered by relatively low scores on quality of education measures, lifelong learning opportunities, labour force participation rates and unemployment.

In Asia and the Pacific, where the majority of the world’s population is concentrated, the spread between the highest and lowest performing countries is among the widest. After Japan, the best performing countries are New Zealand (9), Australia (13) and Singapore (24), while Nepal (106), Myanmar (112) and Pakistan (113) occupy the lowest positions. After China and India, the region’s third most populous nation, Indonesia, holds the 69th spot. Iran is in 80th position.

Chile (45) and Uruguay (47) are Latin America and the Caribbean’s human capital leaders. Argentina (48) and Mexico (58) follow next. Brazil, the most populous country in the region, is in 78th place. Nicaragua (90), Venezuela (91) and Honduras (96) occupy the last spots in the region. Overall, the gap between the best and worst performers in the Latin America and the Caribbean region is smaller than in other regions. While high-skilled employment is in the range of 20% of the workforce across the region, in several countries, such as Uruguay and Brazil, businesses perceive difficulties in finding skilled employees.

In the Middle East and North Africa, Israel (29) leads the way, followed by the United Arab Emirates (54) and Qatar (56). Jordan (76) and Egypt (84) outperform higher-income economies like Saudi Arabia (85) and Kuwait (93). Morocco (95) and Tunisia (98) follow next, while Algeria (114), Mauritania (122) and Yemen (124) hold the last spots in the region.

In sub-Saharan Africa, Mauritius (72) holds the highest position in the region. While another six countries rank between 80 and 100, another 17 countries from Africa rank below 100 in the index. South Africa is in 92nd place and Kenya at 101. The region’s most populous country, Nigeria (120) is among the bottom three in the region, while the second most populous country, Ethiopia, is in 115th place. With the exception of the top-ranked country, the region is characterized by chronically low investment in education and learning.

Results by Income Group

While the overall country scores are generally correlated with the GDP per capita, there are differences and overlaps between income groups, with some lower-income countries far outperforming richer ones.

Within the low income group, countries with a GDP per capita under $1,045, Tajikistan (65), Cambodia (97) and Bangladesh (99) perform well ahead Burundi (121) and Chad (123), the lowest-ranking countries within this income group.

Within the lower-middle income group, countries with a GDP per capita between $1,045 and $4,125, Ukraine (31), Armenia (43), Kyrgyz Republic (44) and the Philippines (46) place well ahead of Nigeria (120), Mauritania (122) and Yemen (124).

Within the upper-middle income group, countries with a GDP per capita between $4,126 and $12,745, Hungary (32), Kazakhstan (37) and Romania (39) rank at the top of this group, while Namibia (94), Tunisia (98) and Algeria (114) hold the last three spots.

Among the high income countries, those with a GDP per capita above $12,746, Finland, Norway and Switzerland hold the top three spots in the index overall. Barbados (77), Saudi Arabia (85) and Kuwait (93) hold the last three spots.

Business and Policy Implications

In addition to the index, the report provides the latest available information on the numbers of current and recent graduates in major fields of study in each country and detailed information on the population’s workforce activity as well as levels of education.

“Our goal is to support business leaders, policy-makers, civil society and the public in taking the informed, data-driven decisions that are needed to unlock human potential. The index shows that all countries – both rich and poor – have yet to optimize their human capital and calls for a new people-centric model of growth,” said Saadia Zahidi, Head of the Employment, Skills and Human Capital Initiative and co-author of the report.

The report and index were produced in collaboration with Mercer. “The Human Capital Index is a critical tool for global employers,” said Julio A. Portalatin, President and Chief Executive Officer of Mercer. “It allows them to determine the most pressing issues impacting talent availability and suitability around the world today and identify those issues that have the potential to impact business success in the future – invaluable insight for guiding the allocation of workforce development and investments.”

Methodology

The Human Capital Index ranks 124 countries on how well they are developing and deploying their human capital, focusing on education, skills and employment. It aims to understand whether countries are wasting or leveraging their human potential. The report measures this distance from the ideal – or waste – by disaggregating data across five age groups to capture the full demographic profile of a country:

  • Under 15 years – the youngest members of the population for whom education is assessed among the most critical factors
  • 15-24 years – youth for whom factors such as higher education and skills use in the workplace are assessed
  • 25-55 years – the bulk of the labour force, for whom continued learning and employment opportunities are assessed
  • 55-64 years – the most senior members of most workforce for whom attainment and employment opportunities are assessed
  • 65 and over years – the oldest members of the population, for whom both continued opportunity and health are assessed

The generational lens sheds light on age-specific patterns of labour market exclusion and untapped human capital potential. In total, the Human Capital Index covers 46 indicators. Values for each of the indicators come from publicly available data compiled by international organizations such as the International Labour Organization (ILO), the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the World Health Organization (WHO). In addition to hard data, the index uses a limited set of qualitative survey data from the World Economic Forum’s Executive Opinion Survey. The methodology also allows for comparisons within a country as well as between countries.

The Human Capital Index is among the set of tools provided by the Forum as part of its global initiative on Employment, Skills and Human Capital. The initiative produces analysis and insights focused on forecasting the future of jobs across major industry sectors as well as best practices from businesses that are taking the lead in addressing the skills gaps and unemployment. The initiative also creates public-private collaboration on jobs and skills in several regions of the world and within industry groups, with a focus on involving business in supporting education, lifelong learning, skills development and entrepreneurship.

Partners of the Employment, Skills and Human Capital Initiative at the Forum include Adecco, Al Ghanim Industries, MMC, Manpower Group, Rockefeller Foundation, SAP, Tupperware and Zain Group.