...Advancing Australia’s ‘Human Capital Agenda’( Gary Banks Chairman, Productivity Commission Introduction It is a privilege to have been invited to give the fourth Lecture in this annual series in honour of Ian Little. Ian was a passionate advocate for good public policy and for reform — within his own state and nationally. This was grounded in an equally strong attachment to good analysis and evidence in support of policy decisions. As Secretary of the Victorian Treasury, he championed the use of quantitative analysis, including the development of an input/output based model of the Victorian economy, to gain a better understanding of the effects of policy changes on different industries and on the State’s overall economic performance. It was under his and John Brumby’s stewardship of the Treasury portfolio that the Victorian Competition and Efficiency Commission was established, to provide rigorous arms-length analysis and advice on key policy issues affecting the welfare of Victorians (akin to the role of the Productivity Commission at the national level). Victoria’s more systematic attention to good analysis and policy innovation commenced in the 1990s. It has yielded considerable benefits for Victoria’s citizens since then, not only in the comparative economic performance of this State, but also in its achievements in the social and environmental domains. Victoria was a first mover in the ‘second wave’ of economic reforms in the 90s — reforms that...
Words: 6958 - Pages: 28
...WHY IS THE HUMAN CAPITAL SO IMPORTANT FOR THE ECONOMIC DEVELOPMENT OF MAURITIUS? Introduction This assignment aims to look at the special importance of human capital to the economy of Mauritius. First, we go about defining the concept of human capital. Afterwards, there will be a section which talks a bit about the history of the economy of Mauritius. Then we will move on to another section which tries to explore the different factors as to why and how human capital is important to Mauritius. We will then have a concluding remark. We will end by some possible recommendations. What is human capital? Adam Smith defined human capital as follows: “Fourthly, of Justin Slay’s types of capital which is of the acquired and useful abilities of all the inhabitants or members of the education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense which certainly repays afterwards. The use of the term in the modern neoclassical economic literature dates back to Jacob Mincer's article "Investment in Human Capital and Personal Income Distribution" in the Journal of Political Economy in 1958. Theorists also...
Words: 4728 - Pages: 19
...HUMAN CAPITAL DEVELOPMENT Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, cognitive abilities, embodied in the ability to perform labor so as to produce economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic transactions. Many theories explicitly connect investment in human capital development to education, and the role of human capital in economic development, productivity growth, and innovation has frequently been cited as a justification for government subsidies for education and job skills training.[1] "Human capital" has been and is still being criticized in numerous ways. Michael Spence offers signaling theory as an alternative to human capital.[2][3] Pierre Bourdieu offers a nuanced conceptual alternative to human capital that includes cultural capital, social capital, economic capital, and symbolic capital.[4] These critiques, and other debates, suggest that "human capital" is a reified concept without sufficient explanatory power. It was assumed in early economic theories, reflecting the context, i.e., the secondary sector of the economy was producing much more than the tertiary sector was able to produce at the time in most countries – to be a fungible resource, homogeneous, and easily interchangeable, and it was referred to simply...
Words: 552 - Pages: 3
...Define ‘human capital’ and its impact on your organization There are various ways Human capital can be defined; I have chosen to define Human capital in simple terms: Human capital is the value that each employee brings to the organisation, in accordance to individual’s knowledge, skills and capability. Probably this is the only reason why the biggest companies in the world are recognised by their talent and attitude of their employees. Analyse what differentiates human from intellectual capital I work for a media organisation Engine Group. One of our division (JAM) is dominated by age 21-30.Creative industry has a very strong association with technological developments which is generally more rapidly adopted by young people. There is a brainstorming and idea sharing session conducted across all nine companies. With effective nurturing and regularly conducting training workshop we aim to add value to our capital and leap frog into new areas of wealth creation. We as creative industry are always at the crossroad between Technology, Business and Arts. Hence the marriage of technological application and intellectual capital provides the main source of wealth in this sector, continuous learning and high degree of experimentation are key to achieving sustained and cumulative growth Analyse relationship between human capital and other forms of Capital Different forms of Capital are: Human Capital, Social Capital, Economic Capital and infrastructure Capital Any effort to...
Words: 438 - Pages: 2
...Human Capital Human Capital is a set of skills which an employee acquires on the job, through training and experience, and which increase that employee's value in the marketplace. It is also the skills and knowledge acquired thru education. A computer training course, schooling and lectures on the virtues of punctuality and honesty are also capital because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime. Therefore, economists regard expenditures on EDUCATION, training, medical care, and so on as investments in human capital. They are called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets. Human capital can be viewed in general terms, such as the ability to read and write, or in specific terms, such as the acquisition of a particular skill with a limited industrial application. Critics of the theory argue that it is difficult to separate human capital investment from personal consumption. I think in my opinion there is is no difference between human capital investment and personal consumption because both help in improving a person’s life. For example a skill in particular field could help a person get a job and that brings in money which could be used to feed the family. Adam Smith a Scottish moral philosopher and a pioneer of political economy defines four types of fixed capital (which is characterized...
Words: 1157 - Pages: 5
...1. Introduction - The role of Human Resource During the early 20th century, the primary role of human resource is a care taker. Primarily they are involve in record keeping of the employee personal information, the most administrative job scoop. Hence during that period of time most human resource personnel is not required to go through formal training. Moving forward to 21st century, the primary role of human resource has been shift from a care taker to strategic planner which is vital for all companies. Not only they are required to maintain employees' record, in addition human resource personnel is required to think of strategy and ways to bridge between the employee and company management. Not only they are required to go through formal training, experience plays an important part as well. In modern days, human resource is known as a "people" profession. Their main asset are human and intellectual capital. As a human resource personnel, they are required to plan and execute plans to retain talent at the same time they have to ensure that human resource strategy is in line with their organization strategy. The foundation of an organisation is employee, in other words is intellectual capital in this main asset of an organisation. Even though in 21st century most company is moving towards machinery and technology but all these is build on intellectual capital. According to most researches, not only Human resource increase employees' capabilities in discovering business...
Words: 905 - Pages: 4
...Emphasis on human capital is a recent development. For a long time, concern has been placed on other factors of production. It was not until recently that attention shifted to Human capital which has led to a massive wave of investment in human capital development. Human capital development is the term used in referring to factors such as education, health, and other variables that can raise productivity. It refers to the ability to perform work so as to produce economic value. To a large extent this a function of the skills and knowledge workers acquired through education and experience. When viewed from a macro perspective, Human capital represents the human factor in an organization and this consists of the combined intelligence, skills and expertise of workers that gives the organization its distinctive character. It consists of those elements of the organization that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of an organization. Increasing attention is being given to Human capital due to globalization and its attendant saturation of the labour market. Concern about the issue has been being compounded by the recent downturn in the various economies of the world. This has led Organisations to appreciate the need to leverage on the workforce for competitive advantage in order to thrive and keep ahead of the competition. One major way of doing this is through human capital development...
Words: 1592 - Pages: 7
...Daria Sociology B2 Human Capital Theory What is human capital? According Schultz (1993), the term “human capital” has been defined as a key element in improving a firm assets and employees in order to increase productive as well as sustain competitive advantage. To sustain competitiveness in the organization human capital becomes an instrument used to increase productivity. The theory of human capital is rooted from the field of macroeconomic development theory (Schultz, 1993). Becker’s (1993) classic book, Human Capital: A Theoretical and Empirical Analysis with special reference to education, illustrates this domain. Becker argues that there are different kinds of capitals that include schooling, a computer training course, expenditures on medical care. And in fact, lectures on the virtues of punctuality and honesty are capital too. In the true sense, they improve health, raise earnings, or add to a person’s appreciation of literature over a lifetime. Consequently, it is fully in keeping with the capital concept as traditionally defined to say that expenditures on education, training, and medical care, etc., are investment in capital. These are not simply costs but investment with valuable returns that can be calculated. Uluslararası Sosyal Arastırmalar Dergisi The Journal of International Social Research Volume 2 / 8 Summer 2009 The Relationship between Human Capital and Firm Performance Human capital is getting wider attention with increasing...
Words: 534 - Pages: 3
...firm-specific human capital which is likely to generate organizational rents, since those assets are more likely to be unique, sporadic, and thus a better basis for sustainable advantage. However psychological literature supports that generalized investments have value for the firm through it’s effects on worker’s commitment to the firm. This paper examines the impact of firm’s specificity in human capital versus generalization commitment of externalized workers. Externalized workers, face persistence pressure to maintain assets that are highly desirable in the market. Firms cannot offer lifetime contracts but nonetheless offer workers greater assurances of remaining competitive in the job market through more attention to general skills development and training. These skills increase the probabilities of the employees remaining employable, thus reducing their anxieties about the diminished job security (internal workers) or the stability of the employment relation (external workers), decreasing the likelihood of future or prolong unemployment. The study show more positive response in external workers when generalized investment by employers are made. Firms often fear to invest in externalized labor but the potential positive effects it has on employee’s commitment level are valuable outcomes of firm’s investments in general skills development and other transferable resources. The resource-based literature holds that the key strategic assets for a firm are its human capital. Loyalty...
Words: 598 - Pages: 3
...rapidly, is the ultimate competitive advantage. Jack Welch. Human Capital Theory (HCT) purports that peoples learning capacity when effectively utilised results in profitability for the individual, organisation and society at large. It underlines or seeks to explain why Human Resource Development (HRD) is beneficial not only for the individual, but for the firm and the macro-economy. The extent to which firms undertake training is important in establishing the amount of support for human capital theory. During 2001 – 2002, the Australian Bureau of Statistics reported 81% of all Australian employers provided some training for their employees. Of all employers, 79% provided unplanned or on-the-job training while 41% provided structured or specified content training. These statistics are evidence of employers approach in that training is seen as a necessity; but does management d understand the link between training and improved performance outcomes? Capital is a product that yields returns. Traditionally we associate this with investment funds, land or equipment. Taylorism emerged in the 1890’s and focused on applying science to the engineering process with a view to driving efficiencies by way of increasing productivity by refining processes or reducing inefficiencies via reduced wastage. It was not until the 1950’s that consideration was given that workers contributions could be recognised as capital. The fundamental principle underpinning HCT is the belief that...
Words: 2835 - Pages: 12
...Human Capital Every business relies on their personnel. Without a strong workforce a company cannot thrive and be successful in an ever changing corporate environment. Leslie Weatherly maintains that this human capital is a company asset like any other. In the article “Human Capital – The Elusive Asset” Weatherly presents a definition of human capital and strategies for measuring the actual value of human capital assets and the ROI it provides to the company’s bottom line. If human capital is seen as the collective sum of the attributes, life experience, knowledge, inventiveness, energy and enthusiasm that people invest in their work (Weatherly) how can this be possibly be measured and put on a balance sheet as an asset? The truth is it cannot. GAAP standards cannot account for the intangible human capital within an organization. Recruiting, salaries and training and are expenses incurred for finding and developing human capital but they cannot be expensed against the tactic knowledge, professional certification or education an individual brings to an organization. It is the intangible elements of human capital that hold the most value, but are the most challenging to place a value on. An example of this is the recruiting methods of what are called Big Law jobs. Large firms in major cities recruit from a small number of elite schools. The law schools themselves have an intangible value that translates into actual value for the firm. The firm uses...
Words: 702 - Pages: 3
...Topic of Research Proposal: HUMAN CAPITAL AND SUSTAINABLE DEVELOPMENT OF THE NIGERIAN ECONOMY. Background of the Study Human Capital has been recognized globally as one major factor that is responsible for the wealth of nations. According to Smith (1776) and Folloni & Vittadini (2010), human capital refers to the acquired and useful abilities of all the inhabitants or members of the society. Without adequate investment in developing the human capital which is the process of increasing knowledge, skills and the capacities of people in the country, the possibility of sustainable development might be minimal. Investment in the human resource determines the type, quality, availability and productivity of the nation’s manpower. It involves the socio-economic development strategies (European Commission, 2007) critically needed to facilitate sustainable development. One major challenge facing Nigeria as a nation within the global community, is how to achieve sustainable development. According to the IMF (2002), sustainable development is made of three pillars. They are economic development, social development and environmental development. The essence of these pillars are to maintain and enhance the capacity and capability of future generations while meeting the needs of the present generation. To accomplish these multi-dimensional tasks, human capital should be strategically cultivated and positioned for the preservation of both the present and the future economic growth and development...
Words: 4067 - Pages: 17
...Brain Drain: Intentions to Migrate by Future Malaysian Professionals Abstract Globalisation has led to the fierce competition for skilled labor between firms and thus leading to intense labor mobility worldwide. Shortfall in professionals in host countries has led organizations aggressively search for foreign professionals needed to fill up the gap in their own country. Most commonly observed is the outflow of professionals from developing countries to the developed nations more often than not at the expense of the developing countries. Malaysia is one developing country which is not spared from this phenomenon that is threat to the economy. Malaysian professionals are heavily sought after because they are able to adapt themselves anywhere in the world, multi-lingual and inexpensive. Malaysian professionals are steadfastly flowing out to fill the soaring demands abroad. If this situation were to continue, Malaysia would have to endure a shortage of professionals within the country and will create the issue whether our talent pool can maintain equilibrium to support our robust industry growth. Approaches to offset this phenomenon have to be carried out immediately. Thus, this paper will examined the relationship between the push-pull factors and intentions to migrate which eventually may lead to Brain Drain. Seeing that brain drain of our Malaysian professionals will continue to go on which definitely will have an impact on our transformation, researcher believe that an intention...
Words: 9398 - Pages: 38
...KEY REQUIREMENTS OF HUMAN CAPITAL (OR HR) METRICS Four elements are necessary for enhanced human capital metrics or measurement:2 Evidence—to establish that the effects of HR are indeed significant enough to merit intensive measurement and study. Explanation—to provide a logical reason to suggest why and how human resources create their significant effects on organizations. Purpose—the goals of measurement systems must consider the effects of measures on key stakeholders within and outside the organization. Method—a model and framework to support developing better HR measures. To be most useful, HR metrics should focus on outcomes that are directly relevant to the strategic objectives of a business. They should guide decisions about employees and programs, and they should be expressed in language that key decision makers find meaningful. Our objectives, therefore, are to develop a set of HR measures that indicate clearly how people create value. In the language of corporate finance, they do so in at least three different ways:3 1. By enhancing return—that is, the expected performance in a position, as defined by a competency model. Firms do this by selecting for specific skills and by training for specific skills. 2. By reducing risk—by lowering the variability in performance, and by reducing or eliminating factors that might derail performance. Firms use selection methods to screen out counterproductive behaviors and employee assistance programs...
Words: 420 - Pages: 2
...Kinicki and Kreitner (2012) describe Human Capital as individual intelligence, vision, skill, self-esteem, ethics, and emotional maturity. The two describe Social Capital as productive potential based on strong relationships, goodwill, trust, and cooperation. The Whole Foods enterprise is a prime example of valuing Human and Social capital. Whole Foods has many examples of valuing Human Capital. The first example is that they hire the right people for their culture. Whole Foods team members believe they are changing the world through integrity and having the highest values. Management employs individuals with these same values. The second example is the training model utilized at Whole Foods. The organization believes in producing well-trained...
Words: 306 - Pages: 2
