Tuesday, October 16, 2018

Human Capital Index - Singapore's Achievement?

[Hot on the heels of the Oxfam report that slammed SG (well, ranked SG in the bottom 10 countries for our efforts to reduce inequality), comes the World Bank Human Capital Index Report (news article follows) which ranked SG #1 in how well we develop our "human capital".

What are we to make of it?

Well, let's first see what they are reporting.]

World Bank launches highly anticipated human capital index

By Sophie Edwards // 11 October 2018

NUSA DUA, Indonesia — The World Bank’s much-anticipated human capital index has been launched, with Singapore in top place and African countries occupying the bottom spots.

The first edition of the index, which bank World Bank President Jim Kim first talked about a year ago, ranks 157 countries based on their education and health outcomes and the impact they are having on productivity.

The index was due to be officially launched on Thursday afternoon in Bali at a star-studded event featuring ministers of state, Melinda Gates, co-chair of the Gates Foundation, the heads of two United Nations Agencies, and Kim, as part of the World Bank annual meetings. The top three spots went to Singapore, South Korea, and Japan.

At the other end of the rankings, Chad came in last place just behind South Sudan, Niger, and Mali. The United States was ranked 24th.

Singapore’s high score of 0.88 out of a maximum possible score of 1 was driven by a strong focus on quality education and an innovative health insurance system delivered by spending a relatively modest 4 percent of gross domestic product on health care, Kim told reporters during a roundtable on Wednesday.

Modeled on the bank’s existing doing business index, which assesses national business conditions, the human capital index aims to create a similar ranking for countries based on how well they look after their people. It aggregates data from four indicators including under‐5 mortality rates; expected learning‐adjusted years of school; adult survival rates; and stunting rates.

“This is about drawing their attention to a crisis that we think is real … [human capital] is connected to productivity, it’s connected to economic growth.”— World Bank President Jim Kim

Kim has described the human capital index as both a carrot and a stick for governments — on the one hand, “naming and shaming” countries that rank poorly; on the other, presenting compelling data on the economic benefits of investing in education and health.

“This is about drawing their attention to a crisis that we think is real … [human capital] is connected to productivity, it’s connected to economic growth, and it’s probably more highly correlated than other kinds of infrastructure investment that heads of state and ministers of finance are much more likely to go for because the visible outcomes come to you sooner,” Kim said.

The effort is especially important at a time when rapid population growth and technological progress mean the future of work is changing — the subject of the forthcoming “World Development Report 2019.”

“We’re doing this to plead with [governments] … You need to take your human capital investments much more seriously,” Kim said.

The bank president said the index can also be an accountability tool, telling civil society groups at a town hall meeting on Wednesday: “Look at the human capital index and then use that to ask questions of the leaders of your countries.”

The message appears to be hitting home: Demand for World Bank loans for health and education are up 70 percent in the year since the project was first announced, Kim said. While he has said in the past that the index could prove controversial, especially if countries score lower than expected, he told reporters it had received unanimous support from the bank’s shareholders as represented by the executive directors.

The bank had pre-empted negative reactions by forewarning countries of their scores and is already working with 28 countries to help them develop “transformative plans” for boosting their human capital, he added — including Indonesia, the host of this year’s annual meetings.

But the findings are not only relevant to those countries scoring near the bottom. The United Kingdom, which ranked 15th, is in discussions with the bank about doing a “neighborhood by neighborhood” index so it can better target spending, Kim said.

While many civil society groups have welcomed the bank’s emphasis on education and health, some have criticized the methodology for not taking inequalities between populations into account. Others have also said the term “human capital” reduces workers to being “capital goods.”

However, Kim defended the methodology, saying the four indices had been chosen because there was “real data” available on them in all the countries assessed. “We have to be absolutely sure about our data if we are going to go out and rank [countries] … so we asked very specific questions and the index answers those questions,” he said.

Roberta Gatti, chief economist for the bank’s human development practice group said the index would explore including additional indicators, such as equality, in future iterations.

[The report is not without its detractors. Criticism of the report and Index include:

1) the term “human capital” reduces workers to being “capital goods.”
2) Does not take inequalities between populations into account. 
3) It is modeled on the Bank's existing "Doing Business Index". The criticism here is subtle. If the method and scope are nearly identical, it is just the same thing with a different name. If the criticism holds, then if you score well in one (Doing Business Index), then you will not be  too far off on the other (Human Capital Index). Which begs the question, why do we need another index measuring the same thing? (Quick answer, it does not. They measure different things and answer different questions.)

The HCI is intended to rank countries based on how well they treat their population. This is commendable.

And their approach is participatory.
The bank had pre-empted negative reactions by forewarning countries of their scores and is already working with 28 countries to help them develop “transformative plans” for boosting their human capital, 
They told the countries, to forewarn them of their scores, and started working with them to develop plans. 

Compare that with what Oxfam did. Did they try to engage the countries especially those at the lower end? There was no indication that they did (at least none that I could find) I suspect they did all that just to get publicity.

Anyway here is another take on this news from the Guardian:]

Asian countries dominate World Bank's new index of investment in 'human capital'

Index seeks to name and shame countries failing to invest in health and education to create productive children

Phillip Inman
in Bali

Thu 11 Oct 2018

Asian countries have topped a new World Bank measure called the “human capital index” – a measure of youth mortality, schooling and health. The institution said increasing health and education investment could lead to more than half the children born this year doubling their lifetime earnings.

The human capital index is an attempt to shame countries into boosting efforts “to ensure a healthy, educated and resilient population ready for the workplace of the future”, the bank said.

Singapore topped the poll after it was highly rated for its universal healthcare system, education exams results and life expectancy figures. The rest of the top five were South Korea, Japan, Hong Kong and Finland (0.81). Ireland was sixth and Australia was seventh, with the UK in 15th behind Austria, Slovenia and the Czech Republic but above France (22) and the United States (27).

[There is a table in this blogpost (link) that compares SG's spending on Health, Education and "Social Protection", and we are the lowest at 0.221 (index score). But were are second lowest in infant mortality rate, second highest in life expectancy, and our PISA score puts us at #1. Despite spending only about 3% of our GDP, and we are ranked #1. Australia spends 5.6% of their GDP on education, and scored lower than SG. It is not how much you spend, but how much you get out of it. The difference between the Oxfam assessment and report is that they measure the INPUT - how much government spend on Health, Education and Protection. The Human Capital Report assesses OUTCOMES - see the next comment.]

African countries feature heavily in the bottom 20 places in the index, the Washington-based development organisation said in a report. It judged that they had failed to make sure millions of children had the diet, healthcare and education in their early years to prepare them to take skilled jobs later in life.

Launched at the World Bank’s annual meeting with the International monetary Fund in Bali, the report recognises the gains of the past 40 years in improving the number of children at school and mortality rates. But it said countries now needed to focus more on the outcomes for children or risk millions of young workers having few skills for the modern workplace.

World Bank Group president Jim Yong Kim said even the poorest countries could put in places measures to improve life chances, dismissing critics who claim that many nations lacked the means to implement reforms to improve children’s life chances.

He argued that it was clear that handing developing world countries extra funds was not the answer, but offering better ways of teaching, parenting and providing healthcare was equally important.

“For the poorest people, human capital is often the only capital they have. It is a key driver of sustainable, inclusive economic growth, but investing in health and education has not gotten the attention it deserves,” he said.

“This index creates a direct line between improving outcomes in health and education, productivity, and economic growth. I hope that it drives countries to take urgent action and invest more – and more effectively – in their people.”

The index is based on three components. Survival rates and in particular mortality rates at five years old. The quality and quality of education, which Kim said reflected new work at the World Bank to harmonise test scores from major international student testing programs into a single measure of learning outcomes. Third is a measure of healthy growth among under-fives.

[Infant mortality rates and quality of Education. Not (as Oxfam would have it) how much money you take from rich citizens and how much money you give to poor citizens.]

Kim described Nigeria, which appears in the bottom 10 countries, as an example of an oil-rich country that neglected its education system.

He said the west African country less than 4% of GDP on education and much of these funds came from the World Bank and other donors, with only a small amount from the finance ministry.

[Note: SG also spends about 4% of our GDP on education. However, our results are better. This puts paid to Oxfam methodology.]

Kim Said: “Too many African countries say they are working hard to get rich and then they will spend on health and education. What we are saying is that they need to focus on health and education now.”

Latin America is an area where spending on health and education has risen , but we haven’t seen the dramatic improvements we would expect to see, so it is not just about money. It is about how you spend it”

Singapore, a city state of 6 million people, hit the top spot despite being ranked in the bottom 10 countries on Oxfam’s inequality index earlier this week. The aid charity focused mainly on low health spending, a lack of workers’ rights and a regressive tax system that charges a 22% top rate of tax.

[As commented above, Oxfam is concerned mainly with "optics" - what looks good, what looks right, rather than what works, what is effective, and what has impact.]

Kim, following a theme in the World Bank report, said health spending was low but an innovative insurance system produced high standards for most citizens.

The bank, which provides development loans to poorer countries, has come under fire following publication of its Doing Business Index, which critics say rewards nations that keep corporate taxes low and cut regulations, leaving finance ministries without the tax revenues needed to boost investment.

Best Countries

South Korea
Hong Kong


South Sudan

[Now this is the news report (by Channel News Asia and also by TODAY that drew my attention to this development. Now some Singaporeans would criticise our local papers for being biased, or pro-Singapore or even pro-PAP.

Which is why I check the non-Singapore news as well.

Why can't the other skeptical Singaporeans do the same? I can't answer for them. Maybe they have not mastered Google Search. Or maybe they don't want any other information to undermine their Conspiracy Theory that Singaporeans are being mind controlled. Or maybe they just need to feel persecuted and martyred. Maybe they can't think.

I don't know. "Stupidity is its own explanation." Don't ask, why are people stupid.

Anyway, this (and the Today's article) is the news article Singaporeans would have woken up to on Thursday 11 Oct.]

Singapore tops World Bank 'human capital' rankings based on health, education


11 Oct 2018

NUSA DUA, Indonesia: Singapore topped the World Bank Group's newest index which ranks 157 countries based on the productivity of the next generation's workers.

The bank's Human Capital Index was released on Thursday (Oct 11) at the World Bank and International Monetary Fund annual meetings on Indonesia's Bali island.

The rankings, based on health, education and survivability measures, assess the future productivity and earnings potential for citizens of the World Bank's member nations, and ultimately those countries' potential economic growth.

Singapore had an index standing at 0.88 followed by South Korea, Japan and Hong Kong. China was placed 46th, Malaysia at the 55th spot and Thailand at 65th.

Chad, South Sudan and Niger took the lowest three spots.

"By paying sustained attention to human development, Singapore is now among the world’s highest performers on learning and in the Human Capital Index," said the report.

The new system of ranking countries is an effort to prod governments to invest more effectively in education and healthcare.

According to the report, a child in Singapore who starts school at age four can expect to complete 13 years of school by his or her 18th birthday.

"In Singapore, 98 per cent of students reach the international benchmark for basic proficiency in secondary school; in South Africa, only 26 per cent of students meet that standard," said the report.

"Essentially, then, all of Singapore’s secondary school students are prepared for a post-secondary education and the world of work, while almost three-quarters of South Africa’s young people are not."

Students in Singapore scored 581 on a scale where 625 represents advanced attainment and 300 represents minimum attainment, according to the report.

The report also showed that children born in Singapore had a survival rate of near 100 per cent, and 95 per cent of 15-year-olds are likely to survive until the age of 60.


World Bank Group President Jim Yong Kim said he hoped the new index would encourage governments to take steps aimed at moving up the rankings, much as they seek to with the bank's popular "Doing Business" survey, which ranks countries based on ease of doing business, with low-tax, low-regulation economies faring better.

[See, this would be what Oxfam would complain about. They think countries having low taxes for companies are pandering to companies and diverting tax dollars that could be collected, and could be used for social programmes. This is why there is MORE inequality, they would say.

It is impossible for them to consider that attracting business to our shores, means employment opportunities and a better future for the employees, and that this is a better way, a more dignified way to escape poverty for the employed. 

The purpose of low taxes and other measures to "pander" to businesses, is that we see businesses as the goose that lay the golden egg (jobs). And we neither want to scare away the golden goose (with a tough business environment), nor kill it with taxes. But Oxfam has a severely blinkered perspective.]

Mr Kim acknowledged that the rankings would be controversial, but told reporters that the need for more and better investment in people was "such that we couldn't shy away from making leaders uncomfortable".

"This is about drawing their attention to a crisis that we think is real. This is connected to productivity, this is connected to economic growth," Mr Kim said.

He said there was "unanimous" acceptance among World Bank member countries and the bank's board.

In Chad, the lowest country ranked on the list, the World Bank said productivity and earnings potential would be only about 29 per cent of what their potential would be under ideal conditions there.

In Singapore, the earnings potential was 88 per cent of potential, while in the United States, ranked 24th between Israel and Macau, productivity and earnings were measured at 76 per cent of potential.

Mr Kim said there were 28 countries, from Indonesia to Lesotho to Ukraine, who signed on as "early adopters" of the index to work with the World Bank to devise plans to improve their investment in health and education.

The bank has warned that a wave of automation and artificial intelligence will eliminate many low-skilled jobs in coming years, making it harder for people with low levels of education and poor health to compete for work.

The index showed that a country ranked at 50 per cent, such as Morocco and El Salvador, would lose 1.4 percentage points of annual GDP growth compared to its potential under ideal health and education conditions.

Source: Reuters/CNA/ad(cy)

[Then there is this:]

Global Human Capital Report 2017

in which Singapore is ranked 11 out of 130 countries in the World Economic Forum report.]

In their report on East Asia and the Pacific, the report reads as follows:
"The best-performing countries in the region, such as Singapore (11), Japan (17), and Korea, Rep. (27), are global strongholds of human capital success, while countries such as Lao PDR (84), Myanmar (89) and Cambodia (92) trail the region despite their very high degree of human capital utilization across the Deployment subindex. By contrast, ASEAN economies such as Thailand (40) are managing to complement high Deployment scores with skill-intensive utilization of their human capital potential as evidenced by its strong performance on the Know-how subindex. Vietnam (64) and Indonesia (65) have made remarkable progress in educational attainment among their younger generations and have a correspondingly solid outlook for building their future human capital potential across the Development subindex. Malaysia (33) performs ahead of the rest of ASEAN other than Singapore, with strong scores across Capacity, Development and Know-how, but is held back by its Deployment subindex performance, due to considerable employment gender gaps."
[Okay, that sounds impressive. I hope you understand it better than me.]

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