In our highly technical and globalised world, the value of human capital is still important

Naturally there is some push-back against the idea that the sole purpose of education is to prepare people for jobs, but teaching people the right skills is kind of important

The UK is ranked 23rd in the world for human capital productivity (Getty)

Every year the World Economic Forum produces its Global Human Capital Report, a study of how different countries compare in the development of their workforce. It explains the concept this way:

“By ‘human capital’ we mean the knowledge and skills people possess that enable them to create value in the global economic system.”

Come to the rankings in a moment. The important thing here is that in a world where technology and money pass across national boundaries with the click of a mouse, one of the key competitive advantages a country has is the quality of its workforce. Yes, people – especially highly skilled ones – can move across national boundaries, but with a handful of exceptions the proportion of any country’s workforce that has come from abroad is small. Countries can and do seek to become magnets for talent, and that is fine. But that does not reduce the need to make the best of the talent they have already got.

Indeed there is a moral argument here as well as an economic one. You want people to do as well as they possibly can, not just for the good of the economy, but for the good of themselves.

The forum looks at four elements that determine a country’s human capital. First, there is the stock: how well the present generation of people, young and old, is educated. Second, it is how well a country develops that stock: how the next generation of the workforce is being educated and how the present workforce is being reskilled and upskilled. Third, there is deployment: how well skills are being applied. And finally there is the level of know-how: how broad is the range of skills used at work.

The results are, for Britons at least, not very encouraging. We are middle of the pack in the developed world. Top come Norway, Finland, Switzerland, the US, Denmark and Germany. The UK is 23^rd, France 26^th, with Portugal, Spain and Greece at the bottom of the EU league. I don’t think there is an EU point to be made, for two of the top three are non-EU European nations. But there is no question that Scandinavia scores highly – Sweden is number eight.

The present developed world, viewed as a whole, scores higher than the emerging world, as you might expect. Singapore and Japan do well, China comes in at 34, above Portugal, Spain and Greece. Surprisingly perhaps Russia also does well, for at 16^th, it is well above much of the EU. Less surprisingly, Latin America, South Asia and Africa come out badly. India, currently the fastest-growing large economy on earth, is at 103.

A list is only a list, and these particular rankings could be tweaked by changing the inputs to produce somewhat different results. But I think while one could quarrel with some of the rankings, the broad message stands. It is that many countries are wasting the potential of their people, and could and should do better.

One clear message is about inequality. As the study puts it: failure to “develop people’s talents is underpinning inequality by depriving people of opportunity and access to a broad base of good-quality work”. That must be right, though it is interesting that the US, which does have relatively high levels of inequality among developed nations, should score so high. Much the same point applies to Russia.

A second message is that while education is of course the key to boosting human capital, it has to be well-focused. The report notes that investment in education often fails “due to inadequate focus on lifelong learning, failure to develop high-skilled opportunities and a mismatch of skills required for entering and succeeding in the labour market”.

Naturally there is some push-back against the idea that the sole purpose of education is to prepare people for jobs, but teaching people the right skills is kind of important. I would emphasise the need to teach people soft skills as well as formal ones.

There is I think a particular message for the UK right now. We have been a huge jobs machine, importing labour not just from the EU but also from all over the world. But that has led to social problems, and in any case suggests that we are not doing well enough by our existing workforce. Current reports of skill shortages support these concerns. Whatever your views on Brexit, we should do better with educating and training our workforce, asking ourselves why we need to bring in labour from abroad.

So this is a bit of a wake-up call. We are not doing dreadfully in developing our human capital, but we could and should do much better.