Human Capital
En Español

The critical importance of human capital investment for observance of labor standards requires an assessment of educational attainment to identify the main weaknesses in the education system and suggest steps to improve it. To help make such an assessment, the committee proposes a framework of human capital measures in four broad groups: children and youth, adults, allocation of public resources, and awareness of rights. Unlike previous chapters, these data are not direct measures of compliance with core labor standards. Rather, they are presented as complementary factors to the indicators of compliance discussed in previous chapters, to provide socioeconomic contextual information recognizing that the linkages between human capital and labor standards compliance can go in both directions.

Children and Youth

The population of young people in a country represents its future labor force. The degree to which a country invests in the human capital of its youth affects national development and the economy, as described above. The child labor trap perpetuates the cycle of children with no skills becoming low-wage earning adults who go on to send their young children into full-time work. Human capital investment is a key component in breaking this cycle of poverty and illiteracy.

To assess the degree to which a country is investing in human capital of youth, the committee proposes four measures.

• Compulsory schooling: A country's laws requiring children of certain ages to attend school represents its commitment to promoting education. In addition, measures of compliance regarding the abolition of child labor relate the laws governing minimum age of work with compulsory schooling laws.
• Size of school population: This measure represents the potential demand for education/training and renewal of the workforce.
• Net enrollment, at the primary and secondary levels, by gender and ethnicity: This measure of the percentage of the relevant age group attending primary and secondary schooling demonstrates the extent to which children are in school. The distribution by gender and ethnicity provides information about the differences between boys and girls and different ethnic groups in educational opportunities and investment, which partly relates to the nondiscrimination standard.
• Gross enrollment ratio at the primary level: This is the total number of students enrolled at the primary level of education, regardless of age, expressed as a percentage of the population corresponding to the official school age of primary education in a given country. This ratio may be higher than 100 percent because total enrollment includes students above and below the primary school age, as well as repeaters.
• Participation and completion rates of higher education: Participation rates in tertiary education are a measure of high-level skills and knowledge acquisition. Completion rates are an indicator of the current production rate of higher-level knowledge by a country's education system. These measures relate to the development and maintenance of a highly skilled labor force.

Adults

Adults represent the existing labor force population in a country. A well-educated work force is critical for economic and social development and contributes to a country's capacity to meet or even exceed labor standards. To measure the degree to which a country is investing in the human capital of adults, the committee proposes three measures.

• Participation in continuing education and training: This measure shows the extent of skills maintenance and upgrading for the workforce.
• Educational attainment: This measure is the percentage of the adult population by highest level of education completed through secondary school in total and by gender and ethnicity. It provides a quantitative measure about the amount of schooling a population receives and is the most commonly used proxy to measure human capital.
• Illiteracy rates: This measure is a proxy for the performance of the national education system. This measure also provides information about the human resource capacity within a country in relation to their potential for growth, contribution to development and quality of life.

Allocation of Public Resources

Allocation of resources is a good indicator of country's priorities. The emphasis here is on the public (budgetary) resources because information about private resources in the education sector is not available in most countries The committee proposes three measures.

• Public expenditure on education relative to GDP: This measure serves as a point of reference for the volume of educational spending in relation to size of national wealth.
• Public expenditure on education relative to total budgetary expenditure: This measure serves as a proxy for the extent to which countries value education relative to other sectors.
• Public educational expenditure per student: This measures the resources devoted to prepare each student for life and work and serves as another proxy for quality of education.

Awareness of Rights

Monitoring compliance with labor standards depends a great deal on workers' awareness of rights and their ability to act on those rights. With respect to freedom of association, for example, workers who are aware of protections under national legislation to form unions and bargain collectively will be more likely to act on those rights. To what extent does education and training, then, impact compliance? Important indicators to consider, as described in previous chapters, include the extent to which governments promote education programs or campaigns related to freedom of association, forced labor, equality, and child labor.