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The dynamics of human capital and the world of work

Towards a common market in contemporary tertiary education

Author - Aidan Kenny


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11 Towards an analysis

The emerging tertiary policy agenda is extremely complex. While there is significant political and ideological diversity inherent in policy narratives there also seems to be convergence in certain areas. As an actor in the field of tertiary education and training, divorced from the policy formation process, having direct experience of the impact of policy implementation in the tertiary education and training workplace, I endeavour to ‘make sense’. The objective is to interpret and develop understanding from an ‘insider’ perspective, in order to provide insights and develop a context for further discourse. The analysis framework is non-numeric, seeking to explore the ‘claims, issues and concerns’ from a subjective position. While the positions of some supranational organisations and the European Union will be considered, the main focus of the analysis is confined to the Irish context, and items which have relevance to human capital and the world of work.

Within the policy narrative the world of work has changed and will change more rapidly in the future. Some of the main characteristics of the changing nature of the world of work are the reduced expectation of a one career for life, employment insecurity, multiple career routes, reorganized contract of employment, mobility within regions and between nation states, the demand for worker flexibility and adaptability. To cope within this new world of work, workers need to continuously update their skills levels and enhance their employability potential. While credentials are still important in order to gain employment, the relevance of credentials needs to be monitored and gaps need to be addressed through further training and upskilling. Credentialism seems to have been replaced by lifelong learning (formal, non-formal and informal) and the process of human capital accumulation. The concept of ‘human capital which was originally proposed by Schultz (1961) and Becker (1964) is now widely used in tertiary education policy documents. The principle ‘claim’ is located in the assumption that actors are free to make ‘rational decisions’ on the type and scope of investment they want to make in relation to their human capital, based on their current knowledge and resources (social and financial). A clear distinction is made between the tangible resources as evident in production, goods and finance and the intangible resource of human capital which is located solely in the person. Human capital as an intangible resource is accumulated over time by the actor through investment in schooling, access to information, training and health options. It is claimed that the return on this investment is manifest in increased employment opportunities, rate of earnings commanded by the actor, and productivity gains. The accumulated outcome of mass (population) investment in human capital directly contributes towards national economic growth and development. The OECD (1998: 8) defines human capital as ‘the knowledge, skills, competences and other attributes embodied in individuals that are relevant to economic activity’. There is significant convergence in the reviewed policy documents towards a position that increased investment in education and training initiatives will encourage actors to engage in human capital accumulation (upskilling), resulting in long-term economic growth as the knowledge economy/society evolves. The intent is to develop a critical mass of ‘knowledge workers’ within nation states to drive entrepreneurial activities, innovative developments and smarter productivity. There seems to be an underlining assumption that human capital accumulation can meet head-on the challenges that globalisation presents for developed countries. Mainly, competition for manufacturing and low-skilled work from developing countries due to lower labour costs, lower production costs, less labour market regulation and attractive tax incentives for multinational corporations. The emphasis is on moving from manufacturing to the new services economy.

Moore (2004: 9) locates this type of process as a move from a ‘Fordist’ labour force based on the notion of mass production, automation and standardisation to a ‘post-Fordist’ position of ‘flexibalisation’, creativity and higher level enterprises. The intent behind both the NDP and ‘Towards 2016’ policy initiatives is to build capacity of human capital accumulation within the Irish labour force in order to position Ireland as a leading knowledge economy, in order to act as both an attractor for foreign high-skilled work and a stimulator for the creation of indigenous entrepreneurial activities and high-skilled job creation.

The concerns within the policy narratives seem to focus into three clusters: 1) how to increase human capital in an effective, efficient and relevant manner, 2) how to recognise human capital accumulation and 3) how to guarantee the standard or currency of human capital. Let us address the first point. Policy (NDP, ‘Towards 2016’) cites the formal education and training system(s) as the key vehicle for the production of human capital, recognizing the positive contribution that formal tertiary education and training has made in human capital capacity building over the last two decades. There is however an unease in the policy narrative relating to tertiary systems operations, questioning the quality of operations, the appropriate and efficient use of resources, effective management and structures of tertiary education and training. There seems to be a contradiction between the reform narrative proposed by policy on the one hand and the claim that education and training has contributed to economic advancement over the last two decades. The policy narrative seeks to expand education and training throughout the lifecycle, increasing the output of high-level graduates, while simultaneously seeking ‘rationalisation’ of systems that have a proven track record in the production of human capital. The modernisation agenda inherent in policy narrative displays a ‘mistrust’ of the traditional practices (and even values) intrinsic to contemporary education and training systems. The education and training system(s) that have evolved in Irish society over the century are perceived to be inefficient, underperforming and unaccountable. The policy intent seems to lean towards the economic imperative and the logic of the free market, deregulation of national barriers while increasing regulatory mechanisms and performance compliance processes at provider level.

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