About 18% of Dutch human capital unused due to insufficient investments in education and refresher courses

The World Economic Forum (WEF) has just launched the latest edition of its Human Capital Report, which ranks 130 countries in terms of their workforces’ knowledge, skills and capacities. This year’s Human Capital Index shows how countries are deploying and developing their human capital. As of this year, the report also looks into data pertaining to online labour market platforms and the platform economy, thanks to a partnership agreement with LinkedIn. INSCOPE Research for Innovation, which is part of Rotterdam School of Management, Erasmus University (RSM), contributed to the report as a partner institute of the World Economic Forum. Prof. Henk Volberda, RSM professor of strategic management & business policy who led the team collecting the data for the Netherlands, presents the main conclusions drawn in the 2016 Human Capital Report.

On a global level, some 35 per cent of human capital currently remains unused due to a lack of learning and employment opportunities. This low deployment rate of our human capital is caused by poor alignment of present-day education systems and the skills required by the labour market of the future. In addition, society tends to focus on ‘front-loading’, which means that too much money is invested in the development of younger people, and relatively little in the development of older people. At present, 13 per cent of the global workforce work independently, while 4 per cent are unemployed, 7 per cent have jobs below their education level and 20 per cent do not participate in the job market at all.

What this means for the Netherlands is:

1. Once again, the Netherlands is ranked eighth in the Human Capital report: 18 per cent of its human capital is unused.

The Netherlands’ score of 82.18 means the country is ranked eighth in the Human Capital Index, which, according to Prof. Volberda, implies that “about 18 per cent of Dutch human capital is not being sufficiently deployed.” The quality of the Dutch education system is worthy of its place in the top 10 with regard to primary education (ranked sixth) and secondary and tertiary education (ranked eighth), and the country boasts many highly educated knowledge workers (ranked ninth). However, Volberda also states: “The required diversity in the skills mastered by recent graduates is insufficient in view of the expected exponential growth of new professional profiles and skills (ranked 51st).” Although the Dutch population scores well in the younger age categories, the participation of Dutch citizens aged 55 and older in the labour market is low (ranked 54th), and their unemployment rate is high (ranked 90th).

2. Investments must be made in life-long learning with a view to capitalising on the fourth industrial revolution. At present, the Netherlands is focusing too much on the younger generations and on formal education programmes offered by knowledge institutions and universities.

The Human Capital Index shows that human capital is not developed and deployed to the same extent across all age brackets. For example, the human capital deployment rate for the 15-24 age bracket is at 83.7 per cent, whereas the human capital deployment rate for the 25-54 age bracket is at a mere 77.48 per cent. Volberda argues that “investments in human capital are mainly being made in younger age brackets, which means that about 58 per cent of national talent is being neglected. Ageing economies, such as that in the Netherlands, will have to emphasise life-long learning if they are to remain competitive.” In order to capitalise on the fourth industrial revolution, in which disruptive technologies such as the Internet of Things (IoT), robotics, big data and 3D printing are increasingly being applied to business processes, Volberda feels the Netherlands must invest more in older age brackets with refresher courses, learning-on-the-job programmes, online learning and gaming. He also calls for established knowledge institutions to provide more training courses and educational modules for older members of staff.

3. Approximately 60 per cent of children who are currently attending primary school will end up with jobs that do not exist yet, which will require greater investments in STEM-subject degree courses.

According to the calculations presented in the World Economic Forum’s Future of Jobs report, 60 per cent of children currently embarking on their primary education will end up with jobs that do not exist yet. This means that technological skills will become increasingly important, and there will be a significant demand for people with technological knowhow. Economists expect the demand for graduates of degree courses in science, technology, engineering, and mathematics (known as STEM subjects) to increase strongly. The 2016 Human Capital Index clearly demonstrates that a large percentage of graduates of STEM degree courses are being trained by a small number of countries, particularly China and India. Data analysed by LinkedIn shows that some countries are doing well at attracting such STEM talent, while other countries are experiencing a technological brain drain. According to Volberda, Australia (ranked 18th), Chile (ranked 51st) and the United Arab Emirates (ranked 69th) lead the pack in terms of attracting such talent from other countries, whereas Greece (ranked 44th), Canada (ranked 9th) and Finland (ranked 1st) are losing their technologically minded talent. So Professor Volberda thinks countries must not only invest in education, thus ensuring their knowledge workers’ knowledge and skills remain up to date, but must also ensure that sufficient high-quality jobs are created so this knowledge is actually deployed.

4. The Netherlands lacks the skill diversity required to capitalise on the fourth industrial revolution.

Because today’s economies are becoming more knowledge-oriented, technology-driven and globalised, and because no-one knows what the jobs of the future will be, there is increasing awareness that countries must have a diverse and wide range of skills at their disposal. According to Prof. Volberda, the Netherlands must attain such skill diversity, not just through formal education, but also through learning-on-the-job programmes and new online learning platforms. As far as skill diversity is concerned, the Netherlands is currently ranked 51st in the Human Capital Index. Volberda posits that the Netherlands must increase its skill diversity in order to remain competitive as a country. The Human Capital Index’ findings with regard to skill diversity acquired through formal education (i.e. university degrees) and LinkedIn’s findings about informal skill diversity acquired in the job market (i.e. skills acquired on the job) both bear out this unequal focus. The Netherlands obtained only average marks in these fields, and will therefore have to make progress in terms of skill diversity. If the Netherlands is to remain competitive, it will have to increase its skill diversity significantly, both through academic degree courses and through informal learning processes (on-the-job learning).

5. The labour market will become increasingly mobile due to the increased popularity of online platforms.

Digital disruptions, along with demographic and socio-economic motives for change, will result in changes to the nature of employment. The rise of digital talent platforms is enabling prospective employees to get in touch with prospective employers in an online environment. As a result, the job market is becoming more mobile than ever, and it is becoming increasingly easy to fill vacancies in some countries with other countries’ surplus graduates. According to Prof. Volberda, this means that “it is easier to spot talent and the job market is becoming increasingly mobile, competitive and no longer tied to just one country.”

6. Gig economy and on-demand work are on the rise because the labour market is increasingly moving online.

The increase in online job markets has enabled the numbers of own-account workers (independent entrepreneurs or self-employed people) to rise. Researchers expect the number of gig workers, for example people who find temporary work through online platforms, to increase sharply in the next few years. They expect 40 per cent of American workers to find their jobs through online platforms by 2020. A similar trend can be spotted in China. Didi Chuxing, the country’s largest on-demand transportation platform, currently boasts 13.3 million registered drivers, who make up 4.2 per cent of workers in the Chinese mobility industry.

More information

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s leading business schools, and ranked among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in Chengdu, China, and Taipei, Taiwan. www.rsm.nl

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