Human Capital
Group-6
033- Mahi Kushwaha
034- Ananya Jayaswal
035- Sneha Negi
036- Nikita Sajwan
038- Vidhika Singh
039- Jahnavi P. Yannawar
Introduction
The term human capital refers to the economic value of a worker's experience and skills. Human
capital includes assets like education, training, intelligence, skills, health, and other things
employers value such as loyalty and punctuality.
It is typically managed by an organization's human resources (HR) department, which oversees
workforce acquisition, management, and optimization. Its other directives include workforce
planning and strategy, recruitment, employee training and development, and reporting and
analytics.
Importance of Human Capital
We pretty much need human capital to accomplish anything in the world today. In fact, it takes
human capital to create some other forms of capital.
1. It is essential because it increases productivity in several ways. First, according to the its
hypothesis, education is an investment in skills that contributes to increasing production.
2. Human capital, indicated by the accumulation of scientific knowledge, is directly responsible
for generating new designs/ideas. Moreover, by enhancing research and development,
investment in such capital promotes an increase in physical capital, which results in
economic expansion.
3. To increase profitability, which can be achieved by increasing productivity all together.
Measurement Of Human Capital
Simply attempting to measure and develop your human capital just because it is “good practice”
will never help you achieve your goals. You need to know why you are doing it in order to get the
most out of it.
● Economists have tried several approaches to accurately measure the value of a firm's human
capital.
● Modified return on investment (mROI) is one way of trying to quantify and measure human
capital.
REASONS TO MEASURE IT:
1.To identify gaps in human capital
2.To bridge the gap in your human capital
Limitations of Human Capital
1. One of the main limitations of the Human Capital Theory is that it assumes greater education will
always bring about higher income.
2. Yes, higher education can lead to higher levels of income but is not the only variable in the
equation.
3. Human Capital Theory includes factors such as health, skills, and experience. Yet it doesn’t
consider other factors such as the role of status, network, or societal infrastructure. For instance,
there are those who do not fit well into an academic environment.
4. Even though a greater level of academic education may result in higher wages, it may still be
below the potential wage an individual could receive.
Singapore: Building Human Capital- A Case Study
Singapore’s per capita GDP in 1960s was $500, which grew to $70k(approx.) by 2021. This
happened because they understood the importance of the human capital since very early on.
1. Singapore set up the Workforce Development Agency (WDA), with mission to enhance the
employability and competitiveness of employees and jobseekers, thereby building a
workforce that meets the changing needs of the Singaporean economy.
2. Singapore introduced BEST(Basic Education for Skill Training), to acquire English
proficiency and MOST (Modular Skills Training Initiative) to acquire new skills or
upgrade skills through part-time programs.
3. To make the employees/students technically literate, ITE(Institutes of Technical Education)
was formed to provide technical training.
4. Through NHP(National Health Plan), every citizen was provided with affordable healthcare
services. The govt. provided with subsidies, cheap health insurance plans, and made it
mandatory to have a savings account for medical expenses.
Conclusions
● Human Capital is the backbone of Human Development and economic development in every
nation.
● Human capital plays an important role in people's life as to improving the life and income,
increasing knowledge, skill, and product capacities, economic growth and reducing poverty.
● Human Capital need motivation to raise their value and performance.
● Investment in human capital is also required to raise the general living standards of the
people in developing countries.
