THE decision by the government to emphasise human capital development is laudable. It underscores the importance of the Performance Management and Delivery Unit (Pemandu) to enhance human capital by leveraging women in the workforce, providing comprehensive labour market data and upskilling and upgrading the workforce.
Pemandu’s Human Capital Development (HCD) Strategic Reform Initiative (SRI) focuses on addressing the human capital capabilities and needs of the 12 National Key Economic Areas (NKEAs) as well as strengthening the skills of the labour force. This strategy should continue to feature prominently in future budgets if we wish to see higher productivity in line with the aspiration of attaining high-income and developed-nation status.
With tax relief for companies next year, the government’s burden to boost human capital through education in colleges, universities and vocational institutions can be alleviated further with contribution from the private sector. Human capital can be increased through education and training. Companies can provide in-house educational and training programmes and even certification programmes to college degrees relevant to the company’s needs.
Understandably, in challenging times, private companies may want to cut down on staff training cost, scholarship budgets, financial assistance or internships for college students. But it is during challenging times that their support is most expected. After all, the private sector is a beneficiary of good human capital development initiatives. Firm-specific human capital programmes can be carried out to provide knowledge and skills that are specific to a particular business.
Next year, the government will allocate a substantial amount for human capital development, apart from providing tax relief to companies. However, allocating a certain quantum of the national expenditure for training human resources is only half the job. Providing additional opportunities is a good move but that alone will not lead to better skills among graduates.
Studies showed that the expansion of education does not always lead to higher productivity and economic growth, especially for developing countries. A study of human capital should also consider educational quality and institutions. Spending more time in school will not build human capital if the quality of education is low. Developing countries have made considerable progress in closing the gap with developed countries in terms of school attainment, but studies have underscored the importance of cognitive skills for economic growth. Research indicates that basic skills and advanced skills are important, particularly for developing countries.
Efforts in the national human capital development has seen plenty of progress. In the World Economic Forum’s inaugural Human Capital Index 2013, released last month, Malaysia did fairly well. It ranked 22 of 122 countries, and fifth in the Asia-Pacific region after Singapore, Japan, New Zealand and Australia, but ahead of South Korea, Thailand and the Philippines. The study compares the abilities of the 122 countries to develop and deploy healthy, educated and able workers. Countries were assessed in four areas: education, health, employment and enabling environment. Switzerland topped the index, with Singapore third.
Malaysia’s scores for the respective pillars are education (ranked 34 out of 122 countries), health and wellness (39), workforce and employment (18) and enabling environment (22). The report showed that our country performed well on most of the qualitative talent and training indicators in the workforce and employment category, but needs to improve on its quality of education, as well as its health and wellness aspects.
For decades, the private sector had done well to help the government in this respect and its support will continue to be sought after. After all, the real value of a company does not lie in its systems, machinery and equipment, but in its human capital. As in many cases, the biggest corporations are recognised by their talent and the attitude of their people.