Knowledge and Skills Start Economy Takes a Heavy Toll to Suffer as Ailing on 'Human Capital' FINDINGS RAISE CONCERNS OVER 'A WIDENING SOCIAL DIVIDE'

Western Mail (Cardiff, Wales), December 21, 2011 | Go to article overview

Knowledge and Skills Start Economy Takes a Heavy Toll to Suffer as Ailing on 'Human Capital' FINDINGS RAISE CONCERNS OVER 'A WIDENING SOCIAL DIVIDE'


Byline: ALED BLAKE

THE ailing economy is hitting the value of the workforce's knowledge and skills, according to official data released yesterday.

A government-appointed study showed the economic value of knowledge and skills of the UK workforce has slipped for the first time in nine years.

The UK's human capital - measured by assessing educational achievement, income growth and investment in education and training - dropped by pounds 130bn to pounds 17.12 trillion in 2010, after steadily growing since 2001, the Office for National Statistics (ONS) said.

Elsewhere, the ONS study revealed that women's human capital at pounds 6.64 trillion was around 63% of men at pounds 10.48 trillion, as women spent less time in paid work and, on average, earned less.

The ONS published the estimates as part of a programme to measure national well-being, which was set up by David Cameron after he decided the Government needed to separate indicators of economic progress from those assessing the public's quality of life.

The average human capital per working age person was pounds 428,500 in 2010, a decrease of pounds 5,370 on the 2009 figure, the ONS said.

The value of human capital stock increased steadily between 2001 and 2007, averaging annual increases of pounds 425bn.

But the slowing of earnings growth and increases in unemployment during the economic downturn meant that growth in the stock of human capital growth stalled to an average of pounds 120bn per year between 2007 and 2009, before falling in 2010.

Economist Professor Brian Morgan, of Cardiff Metropolitan University, who specialises in leadership and entrepreneurship, said the figures painted a worrying trend. And he warned that the lost skills from the Welsh may not be easily redeemed, thanks to a slow and painful economic recovery.

Prof Morgan said: "The reason why the headline figure has fallen is largely because people have cut back on training and expenditure and up-skilling in the workforce.

"The problem is that small businesses in the UK have a poor record on investing in training anyway. It's a predictable thing that people try and save on expenditure and staff training.

"A lot of businesses go bust in a recession and there are a lot more people unemployed."

Prof Morgan argued that it will be difficult to recoup the lost skills that the recession and the subsequent difficult recovery have driven.

He said: "We are not going to have a massive boom over the next five years, it will be a very slow crawl out of this recession and that will mean companies are going to be looking for economies and will be unlikely to be splurging out on training budgets."

Prof Morgan said the most valuable measure of the UK's economic status remained Gross Domestic Product (GDP) - adding that new measures of well-being have the potential to blur the real picture. …

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