Human capital: the economic priority of our time
Each year, when the G20 convenes the countries representing the 20 largest economies in the world, the discussion focuses on issues that are too large and complex – and where the cost of failure is too high – for any single country, region, or organisation to tackle on its own.
Argentina’s focus on the future of work in its G20 presidency comes at a critical moment. Technology and innovation are rapidly changing the nature of work. Estimates for the number of jobs that will be lost to automation vary widely, but we know for certain that technology is replacing scores of tasks, changing the scope of existing jobs, creating new occupations and launching career fields that didn’t exist just a few years ago.
These profound shifts are creating a sense of urgency for all countries, at all income levels, to prepare their people for the emerging, complex future. The good news is we know how to help countries prepare for that future. The key is making the right investments in people – ensuring that they accumulate the health, knowledge, and skills they will need to compete in tomorrow’s economy.
This year, the World Bank Group launched the Human Capital Project, an accelerated effort to help countries invest more – and more effectively – in their people to improve outcomes in the nutrition, health, quality education and skills that are the building blocks of human capital. The project emphasises not only the role of governments, but also of the private sector and civil society in developing human capital.
Finding correlations
The Human Capital Index, which we launched in October in Indonesia, is part of the project. The Index ranks countries on how effectively they are preparing their people for the future and demonstrates to leaders how much more productive their citizens could be if they enter the workforce with full health and complete, high-quality education. It draws a direct line between better health and education outcomes and future economic growth.
The Index focuses on productivity-related outcomes in three key areas:
Survival: What is the probability that a child born today will survive to age five?
School: How much school will they complete and, most importantly, how much will they learn?
Health: Will children be stunted before age five? And will they be healthy into adulthood, ready for work, with a foundation for lifelong learning?
Countries have demonstrated that they can rapidly transform these outcomes. For example, Poland enacted education reforms between 1990 and 2015 – including three years of comprehensive secondary school for all students – that led to one of the fastest improvements in Programme for International Student Assessment (PISA) test scores among members of the Organisation for Economic Co-operation and Development (OECD). Vietnam, which has achieved extraordinary success in basic education access and learning outcomes, today outperforms the average OECD country on PISA. Peru cut its stunting rate in half – from 28% to 14% in just seven years.
Even the top-performing countries cannot let up in their efforts to build human capital. Singapore, the country closest to the frontier on the Human Capital Index, is continuing to improve its education system to teach ‘21st-century competencies’ such as self-awareness and responsible decision making and focus on universal early childhood education.
Accelerated priorities
So far, 29 countries have signed on as Human Capital Project Countries, including G20 members Indonesia and Saudi Arabia. These countries have each developed a set of accelerated priorities for human capital development, working across government ministries. Other countries have shown keen interest and are in the process of joining the project.
We have no time to lose – world leaders must urgently invest in their people. As innovation continues to accelerate, it will be harder to catch up. Every day that heads of state and finance ministers don’t focus on building human capital, their economies, and their countries, will fall further behind.
The impact of investing in people – or failing to do so – will affect the entire global economy. The G20 can set the global agenda and help countries implement policies that work for them. Building human capital and giving everyone a chance to compete in the future must be the economic priority of our time. The collective leadership of the world’s 20 largest economies will be critical to making sure that all countries have the opportunity to thrive and that everyone, everywhere on Earth, has a chance to achieve their highest aspirations.
