The ONS is reviewing how it measures human capital in the UK and is seeking views on its proposals for a new indicator-based, dashboard approach, focusing on possible measures, rather than existing data.
It defines human capital as a measure of the skills, knowledge and experience of an individual or population which can be applied in the economy or in society at large. And it explains that human capital is widely recognised as a driver of productivity and helps people achieve their needs and wants and improve their well-being.
The ONS proposes taking an indicator-based approach, supplementing existing human capital estimates with a wider suite of indicators. This is intended to allow a broader consideration of the factors that impact on people’s skill and knowledge development throughout their lives, as well as starting to consider the impact human capital has on other outcomes, such as on health and well-being.
The ONS currently measures human capital stock in monetary terms, as the discounted lifetime earnings of the working age population. It uses an internationally recognised approach set out in the United Nations Economic Commission for Europe (UNECE) guide on Measuring Human Capital.
The ONS is now considering how to improve and expand upon its existing estimates to meet a wider set of users’ needs, such as:
- Understanding skills gaps and the threats of automation across all sectors of the economy
- The value for money of education and training, from vocational and higher education to apprenticeships and job-related training
- Producing international comparable estimates of human capital
The ONS is engaging with international efforts to develop comparable human capital estimates on this topic, such as by OECD and World Bank, which feed into this consultation as well as wider work.
This consultation seeks views on the ONS plans for a new indicator-based approach, presented as a dashboard of indicators. It explains that an indicator is a measure, a statistic, of a variable of interest and a dashboard is a collection of indicators presented together. This consultation sets out how the ONS plan to:
- measure human capital across the whole lifetime of an individual (rather than focus solely on the working age population)
- expand the scope of the ONS analysis, focusing on a series of themes and mechanisms.
- focus on specific mechanisms that influence a person’s human capital (rather than wider associations)
- present a series of indicators, grouped into three groups (input, outcome and enabling indicators)
The themes include: work; health and ageing; education; independent learning; family and home; crime; and personality. This consultation is the first of several phases in the ONS wider review of measures of human capital. This first phase maps out a human capital measurement framework alongside potential indicators. The ONS intends to focus on an optimal set to provide a more complete picture of what impacts an individual’s human capital improvement.
Other phases will look to review the full list of skills and knowledge that should be captured, as well as data sources to fill them. An overview of the different phases is outlined in the consultation annex.
The ONS questions (1-12) are found at relevant parts of the consultation document, available on the ONS website. They seek views on whether respondents agree with an indicator-based approach for ONS and why or whether they would recommend alternative approaches and so on.
We invite IOSH members to send us comments on this ONS consultation to firstname.lastname@example.org, to help inform an IOSH submission, by 11 October 2019.
IOSH members wishing to also respond individually to the ONS can do so by emailing their response to email@example.com by Monday 11 November 2019.