Human Capital
The Lisbon Council recently published, “The European Human Capital Index: The Challenge of Central and Eastern Europe.” This report takes stock of the human capital endowment (parental education, school education, higher education, adult education, and on-the-job training) in the Central and Eastern European countries. The results are rather bleak. Slovenia tops the charts with a human capital endowment close to that of Greece and Portugal, however Bulgaria, Romania, Slovakia and Turkey aren’t fairing as well. The report states, “Their low public investments in education and consistently poor showing on international educational achievement comparisons suggest that they won’t be showing improvement in this area in the near future.” The human capital utilisation, which assesses how much of the country’s human capital is actually being deployed, is “exceptionally” low, as it falls 7% lower than the EU-14. The human capital productivity, measures the output of human capital, resulted in nearly the opposite of the human capital utilisation results. “This is due to the fact that human capital deployment suffers from diminishing returns, and thus there is an inherent trade-off between utilising as much human capital as possible and deriving high productivity returns from it.” Finally, the human capital demography of this region is grim; all of the countries, with the exception of Turkey, have the lowest birth rates in Europe, and the human capital is migrating out the region to attain better work opportunities.