Indicator Based approach to measuring Human Capital

Closes 11 Nov 2019

Opened 3 Sep 2019

Overview

ONS is reviewing how we measure human capital in the UK, and we’d like your views on our proposed approach.

Human capital is 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. It is widely recognised as a driver of productivity and helps people achieve their needs and wants, and improve their well-being.

ONS currently measures human capital stock in monetary terms, as the discounted lifetime earnings of the working age population. We use an internationally recognised approach set out in the United Nations Economic Commission for Europe (UNECE) guide on Measuring Human Capital.

Why We Are Consulting

In the 2018 Spring Statement, the Chancellor of the Exchequer asked the ONS to develop a more sophisticated measure of human capital. From this ONS has considered how to improve and expand upon our existing estimates to meet a wider set of users’ needs.

In addition there has been growing UK user interest to better understand wider impacts to improve sustainable growth in the economy and the impact on the individual. These focus on:

  • 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.

There are also international efforts to develop comparable human capital estimates for policy, from work the OECD is doing on productivity to efforts from the World Bank to develop a human capital index, and ONS is engaging with international efforts on this topic, which feed into this consultation as well as wider work.

ONS published a workplan in October 2018, setting out how we plan to review human capital estimates in the UK. This included a recommendation to consider the feasibility of an indicator-based approach to measuring human capital, which was alongside other areas of work we will look to develop in the future.

This consultation seeks your views on our plans for a new indicator-based approach, presented as a dashboard of indicators. An indicator is a measure, a statistic, of a variable of interest. A dashboard is a collection of indicators presented together. Examples of existing uses of indicator approaches can be found in the consultation annex.

This consultation sets out how we plan to:

  1. measure human capital across the whole lifetime of an individual (rather than focus solely on the working age population)
  2. expand the scope of our analysis, focusing on a series of themes and mechanisms.
  3. focus on specific mechanisms that influence a person’s human capital (rather than wider associations)
  4. present a series of indicators, grouped into three groups (input, outcome and enabling indicators).

This consultation represents the first of several phases in our wider review of measures of human capital. This first phase maps out a human capital measurement framework alongside potential indicators of human capital. This is not restricted to indicators currently measurable by the data available to the ONS. Instead, we will focus on an optimal set of indicators 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.

All the documents you will need are contained in the related documents section at the bottom of this page and are sometimes linked to througout the survey itself.

 

Give Us Your Views

Audiences

  • Analysts
  • Academics
  • Charities
  • Economists
  • Government
  • Local government
  • Operational managers
  • Policy managers
  • Researchers
  • Statisticians
  • Think tanks

Interests

  • Economy
  • Labour market
  • Statistics
  • Data
  • Formal consultations