The Human Capital Imperative
I had the privilege of attending the World Bank/IMF meetings this past week. The World Bank launched the Human Capital Index on Thursday. The Human Capital Index ranks countries on measures of life expectancy rates, quantity and quality of education, healthy growth of children under five and growth stunting. This index highlights the spending drains, opportunity costs and application of funding and input policies to results, and quantifies the overall contribution of health and education to the productivity of the next generation of workers. If properly utilized, the index can drive an agenda forward that includes innovative
private-public partnership mobilizing civil society, public institutions and the private sector. Improvements to human capital can forward and sustain a productive, adaptable and innovaton-driven labour force and citizenry.
Human capital refers to the aggregate intellectual knowledge, social and personal experiences, skills and intangible resources and dispositions citizens contribute to their society and economy. Human capital investments through education, health and social protection can support and sustain productive and resilient citizens. The human capital of a society plays a crucial role in technological advances and innovation and can contribute positively to economic growth. Unfortunately, Alberta has seen a consistent downgrading of its innovation index. While Canada ranks 12th of 16 peer countries on the innovation index, Alberta now ranks 19th out of 26 jurisdiction with a D grading (a two letters downgrade over the past four years).
The Conference Board of Canada defines innovation as the “process through which economic or social values is extracted from knowledge to produce new or improved products, services and processes.” Innovation drives a country’s productivity and economic growth and competitiveness. It also accrues positive economic benefits to individuals. As the Council of Canadian Academies Expert Panel on Business Innovation notes, productivity growth as a result of innovation also “...creates the potential for rising wages and income and thus a higher standard of living.”
The World Bank Human Capital Index for Canada measures at .8. The most notable gap that can be perused from the report is on the measure of quality of education. Canadian children spend an average of 13.7 years in school however when the measure of quality of learning is factored in, a two year gap is noted. This equates to two years of opportunity cost, ineffective spending and investment not actualizing intended outcomes for students. As the index outlines, attendance and years of schooling do not equate to quality of learning or acquisition of skills.
The long term strategic plan for the economic growth of Alberta must incorporate a robust human capital development agenda to offset the opportunity cost of human capital gaps and to increase the quality of its talent pool. Currently, two challenges are noted. The greatest challenge for Alberta is its rising public debt which may result in deep cuts to public services and human capital development in the future. A downward pressure will be inevitably exerted as a result of changing demographics and immigration, particularly in the major cities in Alberta. Secondly, with increase global competition, Albertans will not be able to retain a high standard of living without an increase in innovation, research and development and technological advancement in the private sector.
Education is not only a strong lever for economic empowerment and social and economic mobility, but it is also a mechanism for social protection from cradle to grave. Investments and input-based policies must prioritize three key human capital development efforts in Alberta; first, strong starts for children in the early years through service delivery focusing on early childhood development, nutrition and health; secondly, strengthened curricular frameworks and teaching profession focused on deep learning, the acquisition of powerful knowledge and global competency skills. and thirdly, the mobilization of talent and the continual education, training and up-skilling of workers to procure the right skill sets in an era of technological advances, shifting economies and labour market fluctuations.
Alberta’s continued economic prosperity will require a comprehensive agenda, inclusive of efficient and effective human capital investment considerations for the benefit of all Albertans.
-The Human Capital Project (2018), World Bank Group
-The Impact of Human Capital on Economic Growth: A Review by R. Wilson and G. Briscoe
-The Conference Board of Canada (Provincial and Territorial Ranking- Innovation)
-Expert Panel on Business Innovation, Innovation and Business Strategy: Why Canada Falls Short (Ottawa: Council of Canadian Academies, 2009), 27.
-Council of Canadian Academies, Paradox Lost: Explaining Canada’s Research Strength and Innovation Weakness (Ottawa: CCA, 2013), 6.