How to get a productive work force

You Can't Ignore The Formation of Human Capital!

A professor earns a higher wage than a peon in the college. Why? Because a professor has the skill or abilities to produce more professors. For Example- An Engineer Professor has the skill to produce more engineers and a Medical Professor has the skill to produce more doctors. The peon in the college does not have this skill, so he is paid much less. Skill is valued because it contributes to the process of production or the process of growth by raising the level of efficiency or the level of productivity. Higher the skill, greater the contribution to the process of production/growth, accordingly higher the value or reward. This article deals with relationship among human capital, economic growth and human development.

Human Capital refers to the stock of ‘skill and expertise’ of a nation and Human Capital Formation is the process of adding to the stock of human capital overtime. Let us illustrate it- if ‘human capital stock’ of a nation consists of 10,000 skilled workers at the beginning of 2014, and if at the beginning of 2015 it increases to 12,000 skilled workers, (implying an increase of human capital stock by 2,000 workers in a year) there is human capital formation to the extent of 2,000 skilled workers in a year.

Now, you must be questioning yourself that ‘How do we add to the existing stock of human capital of the nation?’ Or you must be thinking that ‘What are the ways by which  we can convert unproductive workers into productive workers’ other than education? And even some must be trying to figure out that even if we have skilled workers then ‘How we can make existing workers more efficient and more productive?’ These questions point to the determinants or the sources of Human Capital Formation, they are as follows-

  1. Expenditure on education– It is the most effective way of enhancing and enlarging a productive workforce in the country.
  2. Expenditure on health– A ‘sound mind in a sound body’ is an old saying. It makes a man more efficient and productive. That person adds more to GDP of the nation than a sick person.
  3. On the job training– It helps the workers to improve their specialised skills. Returns on account of enhanced productivity far exceed the cost of training programmes.
  4. Study programmes for adults– The government and NGO’s organize study programmes for adults with a view to making them proficient in their work areas.
  5. Migration– It contributes to human capital formation as it facilitates utilisation of inactive skills of the people by better utilisation of the skills.
  6. Expenditure on information– Information relating to job markets and educational institutions offering       specialised skills is important. In the absence of such information people fail to actualise their productive potential.

Here, I would like to withdraw the attention of the readers on few terms and facts.

  1. Human Capital and Human Development are related concepts, but certainly not identical. Human Capital means to an end and refers to abilities and expertise in a particular area and Human Development is an end itself and refers to the development of the individuals.
  2. Education and Literacy are not identical terms. Education is a much wider term whereas Literacy just refers to the ability to read and write.
  3. In India, spread of education has not been linked with vocationalisation. Accordingly, there is an acute problem of educated unemployment.

As it is said, Ideas can be created only it needs a correct way to implement it similarly, every human in our country is a valuable resource and should utilise their efforts in a correct way and should develop his/her skills to satisfy the qualifications that an employer needs. If China is like a manufacturing factory of the world, India should become the human resource capital of the world. But skills without education will not build a human resource base. India is in course to become world’s populous nation by 2022 then why not take out advantage from the disadvantage. If Education is being imparted, teachers fails to develop the skills among students. And those who have skills also are the sufferers of unemployment. So, a balance between a skilled person and an educated person has to be maintained. Not only teaching skills but it has also to be checked that ITIs are provided with good equipments like infrastructure and manpower to meet the requirements of industry and market. To eradicate the problem of joblessness there should be a proper connection between skill development programmes and employment policies of the government.

From the above given facts it is to be noted that Human Resources i.e. Manpower must be developed to achieve success. Overtime, Human Capital has come to be recognised as a factor of much greater economic value than Physical Capital. Which is why investment in education and professional training is being accorded a high priority in all countries of the world. If physical capital represents production capacity of a nation, human capital is the cause behind physical capital. Who designs machines? Who engages machines in the diverse areas of production? Who innovates technology? It is all done by human brain, more specifically the skill in human brain. Without skill i.e. Human Capital, Physical Capital would not have got the new characteristic and without the innovative techniques of production, growth and development would have remained only a dream!

Hence, the title “You can’t ignore the formation of Human Capital” is very true and concludes that human capital is nothing else but the human resources itself. Here, quality of human capital matters not the quantity. So, a well educated and skilled human capital will surely help in earning profits for the company which will eventually give rise to economic growth of the country.

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