Human Capital Crucial for Economic Growth

   

The government is emphasizing the importance of investing in human capital to ensure better economic growth and to improve competitiveness.

Speaking at a high-level parliamentary meeting on Monday, Finance Minister Sri Mulyani Indrawati said the human capital investment was crucial for a country because it was the key aspect in alleviating poverty and inequality.

“Investing in human capital is the foundation for a country’s prosperity and the key to driving high-income growth,” she said in her special address during a closed-door meeting on Monday evening in Nusa Dua, Bali.

The high-level parliamentary meeting was part of the 2018 International Monetary Fund-World Bank Annual Meetings. During the morning session, Coordinating Economic Minister Darmin Nasution, House of Representatives Speaker Bambang Soesatyo and chair of the Parliamentary Network of the WB and IMF Jeremy Lefroy attended the event, while in the evening session, Sri Mulyani made her remarks.

The WB is slated on Oct. 11 to unveil the Human Capital Index, which will rank countries according to how well they are investing in human capital for the next generation. The index is part of the global effort led by the WB to boost investment in people to improve economic growth.

The new human capital index measures the progress of each country toward the highest standard of education and health.

“Many global studies have revealed that investment in human capital will yield high rates of return,” Sri Mulyani said during a press conference.

“However, many countries underinvest in human capital, or if they invest, their investment is usually not effective,” she added.

Thus, the WB’s new human capital index will help countries learn from each other about successful investment and apply the system in the future. Indonesia, as host country, will become an early adopter of the system.

So far, Indonesia has committed to allocating 20 percent of the state budget for education and 5 percent for health.

Meanwhile, Darmin said the government continued to build both hard and soft infrastructure such as increasing the capacity of human resources and developing the digital economy. “For three years, the Indonesia government has focused on building physical infrastructure. In 2018-2019, we will focus on building the soft infrastructure,” the minister said in a press statement.

Realizing the importance of human resources investment, the government acknowledged the need to create regulations that are able to protect employees and provide decent work, while improving sustainable skills.

The government has drafted a roadmap for vocational development in Indonesia for 2017-2025. This roadmap focuses on improving and revitalizing vocational institutions to connect and match current industry needs. In addition, the roadmap also contains policies to improve the quality of vocational education and training.

“The quality of our vocational institutions needs to be revitalized. One of the efforts will be to adjust the curriculum to suit industry because the current curriculum is not in line with the development of Industry 4.0 and the digital economy,” Darmin said.

He added that legislators also had an important role in helping the nation’s transformation in the digital era. Lawmakers have to be able to spearhead changes and capture opportunities.

———

Source: The Jakarta Post