Efforts to fully realize people’s economic potential – in countries at all stages of economic development – are falling short due to ineffective deployment of skills throughout the workforce, development of future skills and adequate promotion of ongoing learning for those already in employment.
These failures to translate investment in education during the formative years into opportunities for higher-quality work during the working lifetime contributes to income inequality by blocking the two pathways to social inclusion, education and work, according to the World Economic Forum’s Human Capital Report 2017, which is published today.
The report measures 130 countries against four key areas of human capital development; Capacity, largely determined by past investment in formal education; Deployment, the application and accumulation of skills through work; Development, the formal education of the next generation workforce and continued upskilling and reskilling of existing workers; and Know-how, the breadth and depth of specialized skills-use at work. Countries’ performance is also measured across five distinct age groups or generations: 0-14 years; 15-24 years; 25-54 years; 55-64 years; and 65 years and over.
According to the report’s Human Capital Index, 62% of human capital has now been developed globally. Only 25 nations have tapped 70% of their people’s human capital or more. With the majority of countries leveraging between 50% and 70% of their human capital, 14 countries remain below 50%.
A fundamental tenet of the report is that accumulation of skills does not end at a formal education, and the continuous application and accumulation of skills through work is part of human capital development. All too often economies already possess the required talent but fail to deploy it.
While much is often made of intergenerational inequalities when it comes to the realization of human capital, the report finds every generation faces considerable challenges when it comes to realizing individual potential. For example, while younger people are consistently better off than older generations when it comes to the initial investment in their education, their skills are not always deployed effectively and too many employers continue to look for ready-made talent. The problem of under-deployment of skills among the young also affects those coming towards the end of their working life. Meanwhile, few among those currently in employment – across all age groups –are gaining access to higher skilled work and opportunities to enhance know-how.
“The Fourth Industrial Revolution does not just disrupt employment, it creates a shortfall of newly required skills. Therefore, we are facing a global talent crisis. We need a new mind-set and a true revolution to adapt our educational systems to the education needed for the future work force,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.
“Human capital is not a fixed concept – it can be enhanced over time, growing through use and depreciating through lack of use – across people’s lifetimes. This means we need a more proactive approach to managing the transition from education to employment and to ongoing learning and skills acquisition for today’s workforce. Otherwise, every country risks creating lost generations,” said Saadia Zahidi, Head, Education, Gender and Work, World Economic Forum.
“Skills are the fundamental unit of human capital. Knowing which skills are most resilient, most persistent, and most likely to remain relevant through technological innovation and economic change is key to successfully upskilling and reskilling workers. Using our data to arm governments and broader policy communities with a richer understanding of skills dynamics can and should fuel more nuanced and strategic investments in building human capital for the future,” said Guy Berger, LinkedIn Economist.
The Human Capital Index 2017
The top 10 is topped by smaller European countries – Norway (1), Finland (2), Switzerland (3) – as well as large economies such as the United States (4) and Germany (6). Four countries from East Asia and the Pacific region, three countries from the Eastern Europe and Central Asia region and one country from the Middle East and North Africa region are also in the index top 20.
At a regional level, the human capital development gap is smallest in North America, followed by Western Europe, Eastern Europe and Central Asia, East Asia and the Pacific, Latin America, and the Middle East and North Africa. The gap is largest in South Asia and sub-Saharan Africa.
North America is the strongest regional performer, with an average score of 73.95. The United States (4) ranks in the top 10 and Canada (14) in the top 20.
Western Europe has an overall average score of 71.10, the second highest after North America. The rankings are dominated by the Nordic countries –Norway (1), Finland (2), Denmark (5) and Sweden (8), as well as Switzerland (3) and Germany (6) –which collectively take the region’s top spots. Twelve countries have crossed the threshold of developing at least 70% of their human capital. The Netherlands (13) and Belgium (15) rank ahead of the United Kingdom (23) and France (26) to make up the mid-range of the regional league table, while three Mediterranean countries – Portugal (43), Spain (44) and Greece (48) – take the bottom ranks.
Eastern Europe and Central Asia ranks in third place globally, with an overall average score of 67.36. Three countries from the region rank in the top 20: Slovenia (9), Estonia (12) and the Russian Federation (16). The Czech Republic (22), Ukraine (24) and Lithuania (25) all score above the 70% threshold. The bottom-ranked countries in the region, Macedonia, FYR (67) and Albania (85), are held back by high unemployment and underemployment rates across all age groups.
East Asia and the Pacific region scores towards the middle of the range of the index, with an overall average of 65.77. The best-performing countries in the region, such as Singapore (11), Japan (17) and the Republic of Korea (27), are global strongholds of human capital success, while countries such as Lao PDR (84), Myanmar (89) and Cambodia (92) trail behind despite their high degree of human capital utilization across the deployment pillar. ASEAN economies such as Thailand (40), Vietnam (64), Indonesia (65) and Malaysia (33) score towards the middle range. China (34) ranks well ahead of the other BRICS nations except for the Russian Federation.
Latin America and the Caribbean scores in the lower middle range of the index, with an overall average score of 59.86. The gap between the best and worst performers in the region is smaller than for any other region. The two best-performing countries in the region are Argentina (52) and Chile (53). The region’s two largest economies, Mexico (69) and Brazil (77), rank in the middle and lower half of the index overall along with Peru (66) and Colombia (68). The bottom ranks of the region are made up of Venezuela (94) and Central American nations such as Honduras (101).
Middle East and North Africa has an overall average score of 55.91. Only one country, Israel (18), from the region makes it into the top 20. Three gulf states – the United Arab Emirates (45), Bahrain (47) and Qatar (55) – outperform the rest of the region’s Arab-speaking countries and score in the mid-range of the index overall. Turkey (75) scores at 60%. Saudi Arabia (82), the region’s largest economy, ranks ahead of Egypt (97), its most populous one. Algeria (112), Tunisia (115) and Morocco (118) make up the lower end of the rankings, ahead of Mauritania (129) and Yemen (129).
South Asia scores second lowest in the index, with an overall average score of 54.10. Sri Lanka (70) is the top performer, while Nepal (98), India (103), Bangladesh (111) and Pakistan (125) lag behind. With the exception of Sri Lanka, the rest have yet to reach the 60% threshold with regard to developing their human capital.
With an overall average score of 52.97, sub-Saharan Africa is the lowest-ranked region in the index. Rwanda (71), Ghana (72), Cameroon (73) and Mauritius (74) have developed more than 60% of their human capital. South Africa (87), the region’s second largest economy, comes towards the middle in the region. Nigeria (114) ranks in the lower midfield and Ethiopia (127) is the lowest performer, fourth from the bottom on the index overall.
The Specialization of Skills – an Analysis
A research partnership with LinkedIn sheds new light on education and skills around the globe.
Within the broader scope of expansion of higher education between generations, there has been a shift in the choices made by students on which subjects to specialize in as well as an expansion of the set of degrees on offer. Some fields of specialization, such as business administration and management see continued substantial representation by age group across all generations. Others such as economics have declined as the proportion of degrees amongst younger generations. Degrees such as computer science have been growing as a proportion of the degrees held by younger generations. Finally, degrees such as psychology have resurged as a proportion of the degrees held by the youngest cohorts, matching the popularity they once held amongst the oldest cohorts after having dipped among the middle cohorts.
Business, administration and law, social sciences, journalism and information as well as information and communication technologies (ICT) dominate the most popular specializations across all labour markets. Economies in South America are among the most likely to have a focused specialization in business, administration and law, especially in some of South America’s largest economies such as Argentina, Brazil, Chile and Colombia. On the other hand, some of the countries in which students are more likely to have pursued a specialization in arts and humanities are the United Kingdom, Ireland, Denmark, the United States, Canada, New Zealand and France. Countries that are home to large tertiary-educated talent pools specialized in engineering, manufacturing and construction include economies with high demand for petrochemical engineers, such as Qatar, Brunei Darussalam, Kuwait, the United Arab Emirates, Malaysia and Bahrain.
When it comes to Information and Communication Technologies talent, data from LinkedIn’s global membership shows that there has been a considerable expansion of this particular set of specialist skills. Yet, this boom in ICT talent is not equally distributed across countries and generations. Economies such as Sweden, Australia, the United States, Switzerland and the United Kingdom have relatively more mature ICT talent; others such as Lithuania, Brazil, Romania and Estonia have predominantly young pools of ICT talent.
While expanding education access and undertaking curricula reform are critical for ensuring that future generations are prepared for a changing labour market, the Human Capital Report 2017 emphasizes the vital nature of continuous skilling, upskilling and reskilling through the workforce. This requires employers to provide learning opportunities to their workers and see these as investments, governments to take a holistic view to broadening and deepening the skills-specialization and complexity of work across their economies, and individuals to see learning as a lifelong activity.
How to build your entrepreneurial mindset today
An entrepreneurial mindset is a way of life. Even if you aren’t starting your own business, an entrepreneurial mindset teaches you that no problem is insurmountable: you can overcome challenges through perseverance and resilience.
Here are five things you can remember to build an entrepreneurial mindset today. If you’re aged between 18-30, why not start by applying to be a Young Champion of the Earth in 2019? Stay tuned—the competition is opening soon!
Transform problems into opportunities
There are so many clues in everyday life. Is there anything that you experience daily that frustrates you? Perhaps it is the prominence of unsustainable materials in your local shop and restaurants, such as plastic straws or unnecessary food packaging? Often, alternatives to problems do exist, but no one has thought of connecting them in specific circumstances. A good example is supplying restaurants and bars with paper straws. Entrepreneurial mindsets apply a lens which identifies problems not as negative issues but as opportunities to be solved, towards creating value in our economy.
Dare to dream and believe in yourself
If you can dream it and believe it, you are halfway there. How big you can dream is a component of your potential for success. Everyone has ideas—but daring to dream big, and then believing in yourself to apply an entrepreneurial mindset and bring them to reality, takes effort. This year, why not push yourself to think creatively? You could come up with a problem once a week, and each week, come up with one matching solution, for example. The key is to think outside the box, to think of a problem as a potential solution.
Know yourself and discover what you are passionate about
Solving problems, especially those associated with the environment, can be daunting. You will constantly be faced with challenges in your journey to change the world. Some environmental challenges feel so large—like those brought about by climate change. But helping to break down large issues into smaller ones which everyone can take steps to solve, is part of the entrepreneurial journey. Remember that you are capable. Find problems that you are passionate about solving and connect with others passionate about solving them too. This will help you through the tough times to stay motivated.
Go for it and don’t take no for an answer
We all have the foundations of an entrepreneurial mindset. We can all identify problems and think up ideas about how to solve them. Being an entrepreneur pushes you to go out there and take actions to achieve them. Often, this process forces you to think through a specific problem in more detail. It helps you to truly understand pathways towards a solution which others might not have thought about. An idea does not have application in the real world if it is not hammered out in real situations. Part of being an entrepreneur requires following this process, identifying real experiences which can be made better or more efficient, and talking with other people who experience similar challenges to find solutions. Using the resources you have at your disposal will force you to be creative. Keep improving your solution. As you go on, you will eventually gain traction and interest. From there, the possibilities are endless.
Learn, embrace uncertainty and accept failure
Eric Ries from the lean startup says that entrepreneurship is “management under conditions of extreme uncertainty”. Forging your own path to solve a problem that no one has solved before is scary—things change constantly. There will be many obstacles and there will be failure. But an entrepreneurial mindset teaches you that failures are opportunities to learn in disguise. An entrepreneurial mindset embraces uncertainty and learning, to leverage the opportunities that emerge from the space between them.
Iran’s oil market facing the new sanctions era: What to expect
After an expected hiatus in Iran’s oil exports to some of the country’s main customers following the reimposition of the US sanctions, once again the country’s old buyers are coming back to take advantage of the 180-day window which has been presented by the waivers granted in November.
Although it took some of these buyers more than a month to make necessary arrangements or to contemplate on the matter, it seems that finally the convenience of buying oil from Iran has outweighed the skepticism overshadowing Iranian oil industry.
With the customers coming back everything was seemed to be, once again, in favor of Iran’s oil industry, however the US government’s disappointing comments last weekend could change all the equations for Iran’s oil market in the months to come.
“The United States is not looking to grant more waivers for Iranian oil imports after the reimposition of US sanctions.” Brian Hook, the US special representative for Iran, told an industry conference in the United Arab Emirates capital Abu Dhabi.
Considering this new stand, the immediate question which comes to mind is what would become Iran’s oil market after the 180-day period is over? To answer this question two main aspects should be taken into account, one is the consideration of Iran’s ability to bypass the sanctions and the second is the possibility of Iranian oil customers being pushed away in the wake of difficulties resulted from the sanctions.
Even though at first the markets were almost certain about the severe impact of Trump’s plans on Iranian oil industry, but the surprising decision on granting eight countries waivers to continue buying Iranian oil significantly mitigated the harsh outlook.
Now, nearly three months after the reimpostion of the US sanctions on Iran, the market has witnessed that the Iranian oil exports are not plunged as much as expected.
Although due to the confidentiality of Iran’s crude oil sales data, especially in the sanctions era, there is not an exact report for the level of the country’s oil exports in recent months, however based on the estimations presented by institutes which track Iranian oil vessels, the country’s oil exports stood at near 1.1 to 1.3 million barrels per day in November and December.
Furthermore, considering the exempted countries which are going to resume their oil purchasers from January, and the new approaches which Iran is taking to sell its oil like offering oil at energy exchanges or finding new customers, the country can definitely maintain an even higher level of exports in the months to come.
According to a FGE report, Iran will ship 1.08 million barrels per day in January and exports 1.115 million barrels per day in February.
We should not also forget Iran’s experience in bypassing sanctions to sale its oil. As I mentioned before, Iran has acquired certain ways to bypass sanctions and sell its oil even during the sanctions.
Iranian oil buyers
Nearly two months after the US granted eight countries waivers to continue purchasing oil from Iran, recently some of the Asian buyers have signaled willingness for resuming oil imports from the country.
China, India and South Korea have placed orders for loadings in January or February and Japanese refineries have also expressed hope to resume shipping in Iranian oil as from late January provided that some final clearance and paperwork were made.
As reported by S&P Global, the presidents of Japan’s JXTG Holdings and Cosmo Oil stated that they aim to load Iranian barrels at the end of January upon making some final clearances.
“Cosmo Oil aims to load around 1.8 million barrels of Iranian crude at the end of this month” the report read.
Last week, head of South Korea’s SK Innovation, which owns South Korea’s biggest oil refiner SK Energy also told Reuters that South Korean oil buyers are expected to restart Iranian oil imports in late January or early February.
India’s Ministry of External Affairs has also stated recently that the Asian country will continue importing Iranian oil. According to data provided by FACTS Global Energy Group (FGE), four Indian refineries namely, Indian Oil, Bharat Petroleum, HMEL and HPCL have placed orders for 321,000 barrels of Iranian oil in February.
Regarding Greece, Italy, and Taiwan which were exempted from the US sanctions, no news has been officially out since November.
Even though Europe opposed Trump’s actions, and have reassured Iran’s government that they want the nuclear deal to continue, refiners in the green continent have had little choice but to comply with sanctions. The US can cut off access to their financial system for any company judged to be doing business with Iran.
The customer preferences
With all that said, there are still other considerations which should be taken into account to have a rather clear view of what to expect for the future of Iranian oil.
The fact that it took near two months for some of the Asian buyers of Iranian oil to make necessary arrangements to come back to Iran’s market, is an indication of the hardships that the customers of Iranian oil will be facing in trade with Iran.
The heavy bureaucratic process which the exempted countries have to go through in order to buy Iranian oil, could push some of the more cautious customers like Japan and even South Korea away from Iran.
Most Asian customers of Iranian oil are very sensitive and conservative in their relations with the United States, and this is likely to be a barrier in the way of their energy relations with Iran.
Japan is a clear example of this situation; despite being granted sanction waiver the Japanese refineries have conditioned the resumption of their purchases upon “making some final clearances”.
Regarding Iranian oil buyers’ future decisions, yet another fact that should be taken into account is the reality that with Saudi Arabia, Russia and US producing almost at their peak, and with prices hovering near $60 there is currently a lot of cheap oil in the market.
In such a market, it is natural that some of the Iranian oil customers prefer to purchase their oil from other oil suppliers instead of exposing themselves to the consequences of breaching the US sanctions.
So in the end, it all comes to the incentives which Iranian government is willing to provide to make its oil attractive enough to worth the risk.
It seems that the country has taken some steps in this regard, since earlier this month, the Iranian Deputy Oil Minister for International Affairs and Trading Amir-Hossein Zamaninia said despite the US. sanctions more oil buyers have approached the country for negotiations.
“Despite US pressures on Iranian oil market, the number of potential buyers of Iranian oil has significantly increased due to a competitive market, greed and pursuit of more profit.” Zamaninia said.
Mentioning “pursuit of more profit” indicates that Iran is probably going to provide its customers with remarkable discounts or provide them with long-term payment plans which considering the current situation in the market seems to be the best decision at the moment.
First published in our partner MNA
Iran: Currency reconversion not a turning point in economic reformation
One of Iran’s main economic policies, under the framework of the sixth five-year development plan, is modification of banking system and reformation of monetary policies, moving forward toward which the Rouhani administration put forward the plan to shift the national currency from Rial to Toman earlier in December 2016 by eliminating specific number of zeroes.
However, the administration decided to postpone implementation of currency reconversion policy in 2016 due to some reasons including the expressed concerns about the time unfitting economic conditions which would ignite inflation and economic instability.
The policy basically seeks to facilitate monetary transactions among the Iranians and match the currency being transcribed in official documents and banking bills (rial) with the one utilized in real daily lives of Iranians (toman). Rial has practically been replaced by Toman in daily transactions as the result of the cumulative inflation over the recent years.
On Saturday, the Central Bank of Iran (CBI) submitted the bill on lopping off four zeroes of the national currency to the cabinet, the act which drew public attention to the issue again, forming a chorus of criticism and speculations.
Through its proposed bill, the CBI seems primarily able to re-empower the depreciated national currency, tangibly decrease the ever-increasing liquidity volume, and make a nominal reduction in prices of goods and services in the country.
The most remarkable achievements of implementing the bill, however, would be a psychological one among the society. Shifting from rial, the free market exchange rate of which is presently about 110,000 against the U.S. dollar, by cutting four zeroes to toman may cover the psychological aspects of the inflationary impacts of rial devaluation, which has unprecedentedly increased prices in Iran. It is said to be able to recover national currency’s value against U.S. dollar to some extent and cool down the inflated prices, as well.
Omitting zeroes from the national currency would surely facilitate calculations and money transfers in daily transactions and would seemingly retaliate for the sharp recent rial devaluation but it should not be expected to improve Iranians purchasing power at all.
It would not have any specific impact on economic indices, inflation, investments, job creation or demand and supply, either.
As a matter of fact, economic stability and single-digit inflation rate are the most significant prerequisites of implementing currency reconversion while Iran is experiencing none of the named factors.
Currency reconversion per se would have an inflationary effect. To curb its inflationary impact, it must be done simultaneous with taking contractionary measures and modifications in monetary policies.
In addition, printing new banknotes and injecting them to the market would impose an amount of costs on the shoulder of the central bank.
Addressing the issue in an interview with the Tehran Times, the Iranian economist and President of Iran World Trade Center Mohammad Reza Sabzalipour said that “the government aims to hit several targets with one shot.”
“It seeks to control money and liquidity volume in the society i.e. cutting four zeroes would change the present 17 quadrillion rials (about $404 billion) of liquidity down to 1.7 trillion rials (about $40.4 million) overnight,” he explained, “but the zeroes will incrementally come back and liquidity will be increased over time, in case CBI continues printing fiat money.”
“The act would appease the public opinion just for a short time when they see the price numbers of the goods and services are decreased but after a while when their income also comes with lower zeroes, they will find out that what has happened has not improved their commonwealth,” he added.
“There is no reason for us to consider a national currency with less zeroes a more valuable one,” Sabzalipour said, “having a strong economy is not necessary related to having a national currency with low number of zeroes but to positive trade balance and high quality of the nation’s livelihood.”
“The decided monetary reconversion is mere a political and a psychological move,” he underscored.
What the government is getting prepared to do should not be expected as a revolutionary step in Iran’s economic and banking reformations, that would bring the nation a better livelihood and a more prosperous economy.
It is a postponed measure that has not been implemented in previous years due to lack of proper economic conditions and it is being done under the circumstances that the country is experiencing the toughest economic conditions in its history thanks to the U.S.-led draconian sanctions and when a rampant inflation rate is expected for the upcoming Iranian year.
The costly currency reconversion would, for sure, facilitate money transfer and calculations in daily transactions and also reduce the volume of exchanged paper money and etc., but its effect would be neutralized and the omitted zeroes would snap back one after the other in the long-run, in case of monetary mismanagement or any other unpredicted international, political or economic event which would threaten the economy.
First published in our partner Tehran Times
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