Global Human Capital Index and India

Geneva based World Economic Forum (WEF) has just released the 2016 Global Human Capital Index report in the city of Tianjin in People’s Republic of China. The Index measures and compares countries’ ability to optimise the talent of its people through education, skill development and effective employment.

The report aims to assess the impact of a nation’s past and present investment in human capital, by comparing various levels of education, skill development and type of employment to its people, between 15 and 65 years of age and divided the entire population into five age groups for assessment.

India has been ranked a poor 105 out of 130 countries that were included in the report.

The top 10 countries by rank are:

Rank / Country       

1 Finland

2 Norway

3 Switzerland

4 Japan

5 Sweden

6 New Zealand

7 Denmark

8 Netherlands

9 Canada

10 Belgium

Ranks of Some Other Prominent Countries:

Rank / Country       

24 United States

31 Cyprus

36 Cuba

37 Armenia

38 Romania

50 Sri Lanka

64 Colombia

70 Albania

71 China

72 Indonesia

104 Bangladesh

105 India

108 Nepal

118 Pakistan

It is disheartening to note that India is ranked in the bottom quartile. This is worrying, especially for a country that prides itself in being an emerging regional power.

While the rankings are based on factual data, they however, do not necessarily reflect a country’s investments or achievements in developing its human capital.

A quick glance at the top 10 countries, or for that matter the top 20 countries in this report, shows that the higher ranked countries are usually geographically smaller with relatively smaller populations.

It is interesting to note that the same parameter applies to the lowest ranked countries as well.

Countries like Canada (9th) and Australia (18th) have large geographies but relatively sparse population density. Countries like USA (24th ), China (71st), Indonesia (72nd), Brazil (83rd), and India (105th) have higher population densities.

With the exception of USA, the income disparity is also larger in these economies and therefore, the challenge to significantly improve human capital development is also greater.

Although countries like India and China make large investments in education and skill development, given the population size, it does not reflect on the rankings.

India vs China

Since country rankings are subjective, it will be prudent to compare India’s performance metrics with those of China, since both countries are large geographies with high population densities and wide income disparity.

Global Human Capital Index Ranking

  • India Rank: 105 ; Score 57.73
  • China Rank: 71 ; Score 67.81

 Key Indicators : India / China

  • Population (1000s) : 1,326,802 / 1,382,323
  • Working age population (1000s) : 873,678 / 1,005,279
  • GDP per capita (constant  2011;PPP) : $5,701 / 13,206
  • Public spending on education (% of GDP): 3.8 / N.A.
  • Tertiary-educated population (1000s): 77,950 / 77,670
  • Population below age 25: 46.7% / 30.0%
  • Population above age 65: 5.8% / 10.0%
  • Own-account workers: 64.4% / 33.3%
  • Labour force participation rate: 53.8% / 70.8%
  • Employment-to-population ratio: 36.4% / 68.6%
  • Unemployment rate: 4.5% / 4.1%

From the above, one can see that the population levels are more or less the same as is the tertiary educated population. While India has a significantly larger population below 25, it has an advantage over China with a lesser population of people aged 65 years and above. The same is true for own-account workers where India has twice the rate of China.

However, China scores over India on labour participation and employment-to-population ratio, both of which have helped in China’s higher ranking.

Comparison by Age-group

0-14 years :  India / China

  • India Rank 62 ; Score 84.91
  • China Rank 72 ; Score 82.80

Key Indicators (By Rank)

Enrolment in Education: India / China

  • Primary enrolment rate: 84 / 24
  • Secondary enrolment rate: 79 / 85
  • Quality of Primary schools: 46 / 49

Overall in this age group, India scores higher than China at the Primary school level but scores marginally lower at the Secondary school level.

15-24 years :  India / China

  • India Rank 106 ; Score 56.46
  • China Rank 58 ; Score 69.55

Key Indicators (By Rank)

  • Tertiary enrollment rate: 84 / 76
  • Vocational enrollment rate: 111 / 29
  • Quality of education system: 39 / 50
  • Youth literacy rate: 103 / 41
  • Primary education attainment rate: 112 / 51
  • Secondary education attainment rate: 79 / 32

In this crucial age group, China significantly ranks higher than India and also outscores it. On vocational enrollment rate, youth literacy rate, primary education attainment and secondary education attainment, China’s performance is way ahead of India and has played an important role in the overall ranking.

25-54 years :  India / China

  • India Rank 119 ; Score 48.11
  • China Rank 58 ; Score 69.55

Key Indicators (By Rank)

  • Primary education attainment rate: 112 / 58
  • Secondary education attainment rate: 91 / 54
  • Tertiary education attainment rate: 85 / 96
  • Staff training: 46 / 48
  • Economic complexity: 42 / 18

This is the main working group that drives any country. As seen in the 15-24 age group, this group too outperforms India in almost all metrics barring Tertiary education and staff training, where India ranks marginally higher. In all other metrics, the gap between India and China is wide.

55-64 years :  India / China

  • India Rank 120 ; Score 46.48
  • China Rank 87 ; Score 61.61

Key Indicators (By Rank)

  • Primary education attainment rate: 108 / 67
  • Secondary education attainment rate: 95 / 60
  • Tertiary education attainment rate: 90 / 107
  • Labour force participation rate: 88 / 75
  • Healthy life expectancy at birth: 98 / 1

Here again China ranks higher than India in the overall metrics. While India does better in Tertiary and labour force participation, China tops in healthy life expectancy at birth, a crucial indicator for a higher average extended life of citizens.

65+ years :  India / China

  • India Rank 119  ; Score 33.74
  • China Rank 100 ; Score 43.38

Key Indicators (By Rank)

  • Primary education attainment rate: 103 / 71
  • Secondary education attainment rate: 85 / 63
  • Tertiary education attainment rate: 87 / 98
  • Labour force participation rate: 49 / 59
  • Healthy life expectancy at birth: 98 / 33

This is the senior citizen’s category and both countries rank low, although China remains a better performer than India. In the crucial healthy life expectancy at birth metric, India remains far behind China.

Conclusion

It is obvious that India needs to invest more in education and training and support the same by creating appropriate employment opportunities. As per this report, India has harnessed only 57% of its population thus contributing to its low rank.

Prime Minister Modi’s ‘Skill India’ initiative along with private initiatives like ‘Teach India’, will go a long way in harnessing the untapped potential of India’s youth.

India has a distinct advantage over China in having the largest youth force and if initiatives like ‘Skill India’ deliver on their promise, India should see a significant improvement in rankings in forthcoming years.