27/05/2015
World Economic Forum publishes The Human Capital Report 2015
TÜSİAD – Sabancı University Competition Forum’s Report Analysis
The concept of human capital has a number of definitions, but the report defines it as the sum of all skills and talents available to a workforce of a nation for use in the production process. The previous report analyzed the factors contributing to the development of human capital –in other words, a healthy, educated and productive workforce– while the 2015 report goes into deeper analysis. The overarching purpose of the report is to determine gaps in education and employment, demographic trends and untapped potentials to advise governments, businesses, educators and nongovernmental organizations on the key areas to focus and invest.
The report bases its analysis on the “Human Capital Index.” The Index rates countries on two themes of education and employment. The objective of the themes is to measure the capability of nations to improve the talents of individuals and convert the knowledge and skills gained bu individuals to productive employment. The Human Capital Index covers 46 indicators such as primary school, high school and university education and rate of joining the workforce, rate of unemployment, workforce gap percentage and quality of education, and breaks data down into age groups (under 15, 15-24, 25-54, 55-64, 65 and above). Standardization and weighting of data enables comparison between 124 countries. These countries are compared by age groups, and it is also possible to make comparisons within groups of countries according to level of income, geographical location and other data. In addition to the expansive and informative index, profiling was conducted for the 124 countries included in the report. The profiles show the education and workforce breakdown in countries, the composition of employment and economic activity, number of students in each area of education, as well as the breakdown of all the above indicators by age groups.
According to the rankings of the Human Capital Index irrespective of age groups, Turkey comes 68th among 124 nations. The top three countries are Finland, Norway and Switzerland, while Yemen comes last. When ranked by age group, Turkey comes 61st in under 15, 50th in 15-24, 77th in 25-54, 78th in 55-64, and 70th in 60 and above. The striking difference between age groups indicates two significant facts: First, the second youngest age group in Turkey is better than the rest in terms of human capital.
The fundamental reason for this difference is the higher rate of tertiary education attendance in this age group. The second important finding is that the youngest group (under 15) is behind the second youngest group (15-24) in the Human Capital Index. Although the report makes no direct explanations regarding this noteworthy fact, the details in the profile section show that the under 15 age group is behind the 15-24 age group in quality of education. These findings indicate the need to take precautions aimed at individuals under 15. In other words, the fact that the future workforce of Turkey is worse off than their predecessors warrants deeper investigation.
In the regional comparison, Turkey is among the worst in the Europe and Central Asia region. Turkey ranks 42nd among 43 countries, coming second to last. Considering the role of human capital in economic growth and development, this situation implies a bleak outlook. The position reminds us that education in Turkey suffers from issues of quality as well as quantity.
When grouped by level of income, Turkey is in the upper middle income bracket and ranks 18th among 31 countries. The country with the best human capital in the income bracket was Hungary, and the worst Algeria.
The report draws attention to the fact that the largest negative contribution to Turkey’s Human Capital Index comes from low workforce participation rate in the 25-54 age group, and the largest positive contribution comes from the high rate of university or vocational school attendance in the 15-24 age group.
One interesting fact in Turkey’s employment and education data is the distribution of fields of study. Of the 607981 university graduates included in the survey, more than one-third are social science, business and law graduates. The second most popular field of study is education science whose graduates only account for one-tenth of the population.
There is great difference between older and younger generations in participation in education. For example, 69.4% of the 15-24 age group have university degrees while only 5.6% of the 65 and above age group have attended university. Similarly, 59.2% of the 65 and above age group are primary school graduates while more than 95% of the individuals aged under 15 have completed primary school.
Completing the comparison of education and employment data, additional indicators include innovation ecosystem breaking down into state of cluster development, university-business R&D collaboration and ease of starting a business; vulnerability categories such as informal employment and social safety net; and public investment categories of public spending on education (% of GDP) and internet access in schools. Although these indicators are not used to rank countries, the values indicated for Turkey are vastly different from the averages of the top three countries (Finland, Switzerland and Norway). In the informal employment category, the figure for the top three countries is zero while the Turkish value is above thirty. With respect to public spending on education as a percentage of GDP, the Turkish figure is 2.85 while the average of the top three countries is 6.30. This shows that the top countries on the list spend twice more on education than Turkey. The same applies to internet access and social safety nets. The scores of the top three countries in these indicators is 50% greater than that of Turkey. The score for university-business R&D collaboration is significantly lower in Turkey compared to the average of the top three: Turkey’s score is 3.69 while the average of Finland, Norway and Switzerland is 5.15. The only indicator where Turkey tops these three countries is ease of starting a business. Turkey’s score is 79 while the average of the top three is 39,33.
In conclusion, World Economic Forum’s Human Capital Report is an extensive and comparative study of nations to reveal the key challenges and current situation in education, skills and employment.
Further information: TÜSİAD – Sabancı University Competition Forum (REF)
