The Human Capital Index reveals several trends and challenges in the current education, skills and jobs agenda and the future outlook for major economies. These developments imply that we need to rethink how the world’s human capital endowment is invested in and leveraged for social and economic prosperity and the well-being of all. Similar to all global challenges in which our existing systems, structures and formal institutions no longer suffice, the world needs a new level of global cooperation on education, skills and jobs. Governments, business leaders, educational institutions and individuals must each understand the magnitude of the change underway and fundamentally rethink the global talent value chain. In order to be proactive in our response to both the current predicaments and a highly uncertain future, we must re-think what it means to learn, what it means to work and what is the role of various stakeholders in ensuring that people are able to fulfil their potential.
Many of today’s education systems are disconnected from the skills needed to function in today’s labour markets and the exponential rate of technological and economic change is further increasing the gap between education and labour markets. The premise of current education systems is on developing cognitive skills, yet behavioural and non-cognitive skills that nurture an individual’s capacity to collaborate, innovate, self-direct and problem-solve are increasingly important. Current education systems are also time-compressed in a way that may not be suited to current or future labour markets. They force narrow career and expertise decisions in early youth. The lines between academia and the labour market may need to blur or disappear entirely as learning, R&D, knowledge-sharing, retraining and innovation take place simultaneously throughout the work life cycle, regardless of the job, level or industry.
Education delivery and financing mechanisms have gone through little change over the last decades. In many countries, many youth and children may find their paths constrained depending on the type of education they are able to afford, while others may not have access to even basic literacy and learning. On the other hand, many developed world education systems have made enormous increases in spending with little return. Early childhood education and teacher quality remain neglected areas in many developed and developing countries, despite their proven impact on learning outcomes; both areas also suffer from lack of objective, global data. The emergence of potential disruptors is only just starting to open the space for re-imagining education delivery mechanisms.
Business must re-think its role as a consumer of ‘ready-made’ human capital. Some companies understand this and are already investing in the continuous learning, re-skilling and up-skilling of their employees, but most employers still expect to obtain pre-trained talent from schools, universities and other companies. Instead, business must work with educators and governments to help education systems keep up with the needs of the labour market. At the same time, given the rapid and ongoing changes in the skill sets required for many occupations, business must re-direct investment to on-the-job training and lifelong learning in order to remain competitive and talent management must be a critical part of any company’s growth and innovation strategy. And while business cycles can naturally lead to peaks and troughs in employment, any socially responsible business in today’s deeply interconnected and transparent world must consider how it can contribute to mitigating unemployment and enhancing people’s abilities to earn a livelihood.
Rapid demographic changes and the ability to forecast them offer a valuable opportunity for planning, while creating unprecedented pressures in markets and societies, and adapting to these changes requires a mind-set from policymakers that transcends political cycles. Ageing economies will face a historical first, as more and more of their populations cross into the 65 and over age group and their workforces shrink further, necessitating a better integration of youth, female workers, migrants and older workers. Youth-bulge economies face burdens of a different kind as a very large cohort of the next generation—one that is more connected and globalized than ever before—enters the workforce and with very different aspirations, expectations and worldviews than their predecessors.
Addressing the challenges of the current system requires a fundamental and holistic re-thinking of what it means to learn, to work and to fulfil one’s potential as an individual, of how companies should plan for and invest in talent, of how education is delivered and what its substance and timing should be, and of how governments should be addressing not just today’s short-term concerns but also planning now for the needs of tomorrow’s generations. The Human Capital Index is among the set of tools that we hope will enable better decision-making in this direction.