Human Capital of the New Generation By Jorah Ramlan ISIS Malaysia

Introduction Human capital consists of: Knowledge Skills Abilities Integrity

Development of Knowledge Support for scientific research, Private incentive for R&D and innovation, Alternative opportunities for talented individuals Learning-by-doing. (Romer, 1996)

Sources of Knowledge Formal education Informal education Family influence Government support

Importance of Human Capital Human Capital is very significant to growth/development New Generation is the source for human capital Various types of capital Human capital = Labour force; labour force ≠ human capital

Unemployment in Malaysia (Challenge # 1) More than 50 per cent of the unemployment total are young population/new generation (age group 15-29) (MOHR, 2006)

Malaysia: Selected Employment Statistics 2006 Population27.2 million % % 65 and above4.3 % Employment Labour force67 % Annual growth2.6 % Unemployed3.1 % New jobs created1.6 million Inflation2.9 %

220,000 people join the labour force each year 44,000 will possess tertiary qualification

Labour Force Participation 2006

Quality, Quantity, and Productivity Quality and quantity are important for productivity Quality of human capital refers to education level, formal and informal education, worldwide marketability Quantity of human capital refers to market size, consumer spending Productivity refers to output per person, Total Factor Productivity (TFP),

Competitiveness Index (Challenge # 2) (Most problematic factors for doing business in Malaysia) govmt instability crime and theft tax regulations tax rates inflation access to financing foreign currency regulations inadequate infrastructure poor work ethics restrictive labour regulations policy instability inadequately educated workforce corruption govmt bureaucracy

Technology and the New Generation

Labour Force and Productivity (Challenge # 3)

Education and Human Capital Education levels and totals Increase/decrease; = effect on human capital

Labour Market Mismatch (Challenge # 4) In-demand skills and talents Moving up the value chain From ‘B’ grade workers to ‘A’ grade workers Service on-demand Competitiveness Human capital flight

Personal and Economic Requirements Personal Self development Financial independence Social assimilation Economic Leadership development Strategic investment Profitability Productivity

Policy Issues (Challenge # 5) Youth development policy Poor coordination among policies and sectors that affect youth and limited accountability for youth outcomes Weak voice of young people in monitoring and providing feedback on the quality of policy and service delivery The paucity of proven successes

Developing a coherent framework and integrating it with national policy A coherent national framework for youth Integration with national policy planning and implementation mechanisms Building capacity Role of the education system

Listening to young people Maintain an open channel of consultation and feedback between government and young people Monitoring and evaluation Monitoring Evaluation

Conclusion Re-evaluation of political, social and economic systems’ incentives and disincentives Strengthen formal institutions, social organisations and family institutions These are the requirements for the development of human capital of the new generation

Developing Human Capital Knowledge, Skills,Abilities Values,Beliefs, Attitudes Personality, Intelligence, Behaviour Formal Institutions (Schools, Universities, Workplace) Social Organisations (Peers Groups, Clubs, Networks Family Institution (Parental, Sibling & Extended Family) Political System: Incentives & Disincentives Social System: Incentives & Disincentives Economic System: Incentives & Disincentives

Issues and challenges are dynamic for every generation but need to be met for sustainable economic growth The race for human capital will intensify, strategic planning of this resource is essential Gestation period for return on human capital investment may be longer that other investments, hence appropriate measures need to be taken promptly Human capital and new generation: develop it or lose it!

Thank you for your attention