World Economic Forum (WEF), a Switzerland-based independent international organisation committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas, has released the Human Capital Report 2013 which is first ever of its kind by WEF. It seeks to provide a holistic, long term overview on how well countries are leveraging their human capital and establishing workforces that are prepared for the demands of competitive economies. By providing a comprehensive framework for benchmarking human capital, the report highlights countries that are role models in investing in the health, education and talent of their people and providing an environment where these investments translate into productivity for the economy.
A Human Capital Index based on four pillars has been used for capturing and tracking the state of human capital development around the world. The four pillars are: Education, Health and Wellness, Workforce and Employment and Enabling Environment. The Education pillar contains indicators relating to access to education, quality of education and educational attainment. The Health and Wellness pillar contains survival, health, well-being and services areas. The Workforce and Employment pillar is designed to quantify participation, talent and training issues. The Enabling Environment pillar captures infrastructure, collaboration, legal framework and social mobility issues.
A total of 51 sub-indicators in total, are spread across the four pillars, with 12 indicators in the Education pillar, 14 in the Health and Wellness pillar, 16 in the Workforce and Employment pillar and 9 in the Enabling Environment pillar. The values for each of the indicators have been collected from publicly available data produced by international organizations such as the World Health Organization (WHO), the United Nations Educational Scientific and Cultural Organization (UNESCO) and the International Labour Organization (ILO).
The indicators used in the Index are measured on different scales. In order to standardise the data, WEF used the z-score statistic which is based on the assumption of normal distribution. Z-scores are expressed as standard deviations from the mean. At z=1, the mean is zero and has a standard deviation of one. This means that all data points above the mean are expressed as positive scores and all data below the mean are expressed as negative scores. A standard deviation of plus (minus) 1 represents the area 34.13 per cent above (below) the mean (zero) covering 68.26 per cent population and a standard deviation of plus (minus) 2 represents the area 47.72 per cent above (below) the mean covering 95.44 per cent population. Once all underlying data is converted into z-scores, a country's score on a given pillar is determined by giving equal weightage to each indicator in that particular pillar. A country's score on the overall index is an unweighted average of the four pillar scores. Based on that, final rankings among the competing countries have been derived.
The index covers 122 countries. Switzerland ranked top (Score 1.455) in the rankings followed by Finland (Score 1.406), Singapore (Score 1.232), Netherlands (score 1.161) and Sweden (Score 1.111) which ranked 2nd, 3rd, 4th and 5th position respectively. While reviewing the ranking of separate pillars, it has been observed that Switzerland ranked top in Health and Wellness as well as Workforce and Employment Pillars, while Finland ranked top in Education and Enabling Environment Pillars.
Bangladesh, being one of the lowest performer in human capital index, ranked 110th in the list scoring -0.782. It ranked 104th in both Education (score -0.959) and Health and Wellness (score -0.606) Pillars, 103rd in Workforce and Employment (score -0.543) Pillar and 110th in Enabling Environment (score -1.019) Pillar. The position of Bangladesh in all separate pillars as well as overall index position is shown below:
Among the 20 countries of Asia and the Pacific region, Singapore (3rd in global ranking) ranked top followed by New Zealand (12th overall), Japan (15th overall), Australia (19th overall) and Malaysia (22nd overall). Among the competing five SAARC countries Sri Lanka (50th overall) ranked top followed by India (78th overall), Bhutan (88th overall), Bangladesh (110th overall) and Pakistan (112th).
The Human Capital Index seeks to create greater awareness among a global audience of human capital as a fundamental pillar of the growth, stability and competitiveness of nations. This Index is the first attempt by WEF to measure human capital holistically and across a large set of countries. The Index seeks to serve as a tool for capturing the complexity of workforce dynamics so that various stakeholders are able to take better-informed decisions.
Human capital is critical not only to the productivity of society but also to the functioning of its political, social and civil institutions. Thus clear understanding of its current capacity is valuable to a wide variety of stakeholders. It is hoped that all our stakeholders along with the policymakers shall come forward to examine and identify all the areas where we are lagging behind and take steps to improve the same.
The writer is Assistant Vice President, Islami Bank Bangladesh Ltd.
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