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Building Human Capital

Building Human Capital

May 30, 2016
Samira Saleh Usman
Samira Saleh Usman Senior Education Reform Researcher at TRENDS Research & Advisory

Innovation and human capital are intertwined. In a knowledge and innovation economy, the greatest resource a country has is manifested in its workforce. Improving the qualifications of the population by providing education, training and continuous professional development significantly enhance the economic prospects.  As described by Theodore William Schultz, an American Economist and Nobel Laureate, “Human capital is like any other type of capital; it could be invested in through education, training and enhanced benefits that will lead to an improvement in the quality and level of production.” Building human capital has been adopted by UAE leaders as a  key to sustainable growth. His Highness Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Emir of Dubai, said at the conclusion of the UAE cabinet retreat in early 2016 discussing the UAE’s post oil phase: “The development of human capital is the global currency of the 21st century economies, and the only way to achieve sustainable development and promote the UAE’s journey towards further progress and prosperity…[is] to ensure our economy is sustainable.” Developing human capital improves the economic and social opportunities of young individuals and fosters technical progress in society supporting ongoing sustainable development.  At the same time the challenges of building human capital are substantial as it is not just about individuals obtaining more qualifications.  Plus there is a significant concern in ensuring the building of human capital supports and includes all sectors of society, including women.

Human capital involves a combination of education, skills, training, attitude and ethics in addition to self-initiative to be productive.  Frank & Bemanke[1] explain human capital as “an amalgam of factors such as education, experience, training, intelligence, energy, work habits, trustworthiness, and initiative that affect the value of a worker’s marginal product”. By focusing on producing employable graduates, especially in dynamic fields that support economic growth, societies are able to support innovation based economic growth and counter unemployment trends among the youth.  Focusing on the importance of producing more graduates will not be enough to secure the future workforce needed.

It is critically important to prepare students for high-value jobs based on innovation and creativity, and offering lifelong learning programs to allow the existing workforce to stay current with rapidly changing technologies and business dynamics. In today’s competitive job market, the STEM (Science, Technology, Engineering, Mathematics) subjects are the most valuable in terms of preparing youth for the high value jobs central to an innovation economy.  While many MENA states have overhauled their education system to increase the supply of STEM graduates, there is still a low level of graduates in these fields. Around the region, science, technology and engineering programs represent 22.6% of university enrolments on average, compared to 30.8% in Asia.

Developing a knowledge based economy, as planned by the UAE, is directly based on the production, distribution and use of knowledge and information. This is reflected in the trend of the UAE’s economy towards growth in high technology investments, high-technology industries, more highly-skilled labour and associated productivity gains.  Knowledge, as embodied in human beings (as “human capital”) and in technology, has always been central to economic development, competitiveness and sustainability. Embracing the role of  STEM and innovation, including environmentally sound technologies has been recognised by the United Nations General Assembly as positively contributing to a wide range of desired global goals such as eradicating poverty, achieving food security, protecting the environment, accelerating the pace of economic diversification and ultimately supporting the Sustainable Development Goals.

Building human capital is a long-term, continual task.  Central to these efforts is ensuring the opportunity for participation to all those who may be able to contribute, particularly the groups marginalised in education, or in the STEM fields, such as women. Economic empowerment of all persons, especially women, accelerates reaching national development goals, providing ample opportunities to improve individual health and social security, as well as an access to lifelong learning through an efficient educational and training systems.  According to the Centre for Higher Education and Data Statistics (CHEDS) it is estimated that 57% of the UAE national population between the ages of 18 and 23 age band are enrolled in higher education, 68% for females and 45% for males.  A survey carried out in 2011 reported that up to 20 per cent of Emirati boys drop out of secondary school and almost a quarter of Emirati men aged between 20 and 24 are school dropouts who will never return to education. For a healthy economy and stable society, these young nationals should be part of the workforce, which requires the acquisition of employable skills for all.  There is significant positive evidence regarding women in education. The participation of UAE females in STEM subjects at university is over 62% for all students in the academic year 2011-12. Graduation rates on STEM-related courses also show substantial developments for women with the number of female graduates in STEM courses reaching 50.7% across all institutions in the UAE, and 56.8% in government universities.

Building human capital also requires policies and practices that go beyond education and deal with the workplace and career development. In addressing this issue, The Abu Dhabi Economic Vision 2030 emphasises maximizing the contribution of women to the economy. A study by Booz Allen shows that UAE female participation in STEM careers would boost GDP by 12%  . This data is supported by the past experience in Greece, Ireland and Spain (where female participation grew by 15-20% over three decades). Current market demands make investing in the preparation of young UAE women to focus on STEM studies and providing suitable conditions for them to thrive in science and technology careers will actively support the ongoing development of human capital.  Although UAE women are actively seeking educational opportunities, they are underrepresented in the work-force and face many challenges in developing their careers, especially in STEM related areas, and contributing to the UAE’s human capital.

It has been identified that the advancement of gender equality in STEM fields is an enduring challenge as there exists a ‘leaky pipeline’ as women drop out from STEM careers before advancing within their careers.  For the GCC states a combination of cultural and social norms along side meeting work demands, have all contributed to the limited participation of women in the labour force.  Given the demands on women for their role in the family, many prefer work places with fewer working hours or flexible timings so that other commitments can be achieved.  Additionally, it has been reported that some Emirati women feel that male colleagues overlooked their contributions and may have resented them for leaving their homes to work.  Women’s education and employment opportunities are thus reduced due to geographic mobility, culture, stereotyping and work involving travel can also be very problematic.  To encourage the further engagement of women in the work force, innovative strategies should be tailored specifically to target women in different stages of their education and career paths.   And we are seeing developments in this regard.  The Emirates Foundation, supported by the Ministry of Education, sponsors an annual “Think Science” event which aims to encourage young people to consider a career in science and technology through competitions, ambassador mentoring, and establishing connections with other like-minded people.  The event works to not only raise an interest in STEM areas, but also gives the participants the tools to keep that interest going.  The Meera Kaul Foundation has created a Women in STEM Community which brings together a diverse range of individuals to “interact, educate, mentor, guide as well as share knowledge and experiences for inspiring a global shift in the attitude towards Women in STEM.”  These initiatives contribute to new thinking on how modern workplaces can create an environment suitable and empowering for women to excel in STEM areas, where they don’t find themselves choosing between family and career.

The Human Capital Index highlights several trends and future challenges for the world major economies. It shows that 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. Policy makers have issues like women’s empowerment, youth engagement, employment, human capital development in addition to building resilient society among the top priorities. According to the 2014 Human Development Programme (UNDP) report, the UAE has made notable progress on all dimensions of human development, which is crucial to the development of human capital.

In the current economic environment states around the world face many challenges, as well as significant opportunities for building human capital.   Reiterating the words of Sheikh Mohammed bin Rashid “development of human capital is the global currency of the 21st century economies, and the only way to achieve sustainable development”.  And repeating the words of Theodore William Schultz, “Human capital is like any other type of capital; it could be invested in through education, training and enhanced benefits”.  We are experiencing significant developments in this regard but must remain aware of the importance of women in contributing to the overall development of human capital.

[1] Frank, R. H., & Bernanke, B. S. (2007). Principles of Microeconomics (3rd ed.). New York: McGraw-Hill/Irwin.

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