Picture: SUPPLIED
Picture: SUPPLIED

SA’s investment in its human capital has barely improved in the past 25 years, undermining its prospects of economic development, a study published in The Lancet on Tuesday has found.

South Africans work for just seven years at peak productivity, compared to 28 years in Finland, and the country slipped to 144th out of 195 nations in 2016, down from 129 in 1990. SA scored just behind the Solomon Islands, and ahead of Sao Tomé and Principe

“Our findings show there is an association between investments in education and health, and improved human capital and GDP, which policy makers ignore at their own peril,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation (IHME), which conducted the study on behalf of the World Bank.

Human capital is defined by the World Bank as the sum total of a population’s health, skills, knowledge, experience and habits. It recognises that the quality of workers — and therefore their contribution to economic development — can be improved by investing in them. The World Bank has called for annual reporting of human capital to track and motive investments in health and education.

“Measuring and ranking countries by their level of human capital is critical to focus governments’ attention on investing in their own people,” World Bank president Jim Yong Kim said. “This study from IHME is an important contribution to the measurement of human capital across countries and over time.”

The researchers determined the number of productive years an individual could be expected to work between the ages of 20 and 64 years, taking into account years of schooling, learning, functional health and life expectancy. Finland ranked first, with a score of 28.4 productive years, followed by Iceland, Denmark, the Netherlands and Taiwan. Bottom of the pile were Mali, Burkina Faso, Chad, South Sudan and Niger, which had just two productive years.

SA scored seven, which although a slight improvement on its 1990 score of six, was not enough to see it rise through the ranks. Only 18 countries saw their human capital score improve by less than two years, and SA is among a group of just 68 countries that scored below 10.

While South Africans are spending two more years in school and scoring better on education quality than they did in 1990, their health status has deteriorated, the study found. SA’s “functional health score” — which was based on the prevalence of seven conditions — fell from 60 to 54, out of a possible score of 100. These conditions were wasting, stunting, anaemia, cognitive impairment, vision loss, hearing loss and infectious disease prevalence.

The researchers found countries with greater improvements in human capital tended to have faster growth in per capita GDP. Those countries in the top quartile for improvements in human capital saw a 1.1% higher median yearly GDP growth than countries in the bottom quartile.

South African Cochrane Centre director Charles Wiysonge, who was not involved in the study, cautioned that South African data before the end of apartheid in 1994 was likely to be incomplete. SA’s human capital development in 1990 was therefore likely to be overstated.

“It is necessary to continue strengthening data collection in order to inform policy and investment decisions,” he said. “Nations more advanced than SA in their human capital rankings and our ability to discern associations between investments into human capital and economic outcomes illustrate the value of this analysis,” he said.

kahnt@businesslive.co.za

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