Perhaps the most well known proponent of the Human Capital Theory is the Nobel prize winning economist T. W. Schultz (1961; 1981). In the sixties, dissenting with then popular doomsday scenarios proposed by scientific groups such as the Club of Rome, Schultz heralded the advent of a new age in economics. He objected to the Malthusian view of ever diminishing resources, and of a world doomed for lack of unlimited natural capital. He did not subscribe to the entropic view of human economics, where human survival was linked the direct exploitation of the finite resources of the natural world. Instead, Schultz (1981) proposed that the key to economic growth lay in the “quality of the population” that comprised the economic unit. In Schultz's view, human beings themselves represent the greatest potential for economic prosperity. p. 1

“Increases in the acquired abilities of people throughout the world and advances in useful knowledge hold the key to future economic productivity and to its contributions to human well being (…) Investment in population quality and in knowledge in large part determines the future prospects of mankind”. (Schultz, 1981:31) p. 2

Seven Assumptions of Human Capital Theory p. 3

Assumption #1: Human capital is an investment for the future. p. 3

Training as a response to future needs, however very difficult to predict. p. 3

Assumption #2: More training leads to better work skills. p. 3

In recent years, we have been moving from “task specific” definitions of training needs, to more inclusive, or “generic” views of employee qualifications. Since it has become increasingly difficult to predict the direction of future shifts in technology and the economy, it seems more advantageous to target competencies that can be transferred across a wide range of tasks, rather than those that can only be applied to specific work environments. The question is, which competencies? p. 3

The notion of “generic skills” is not a novel idea, and it has evolved over the past two centuries. During the Industrial Revolution, workers were required to perform low skill p. 3

job related tasks, such as operate a machine, or otherwise assist in machine based industrial processes. The need for formal education was low, and the most sought after “generic” competencies were experience based. For example, being “handy with tools” or “mechanically inclined”, were valued employee attributes. p. 4

Later, with accelerating industrialization, there was a need for higher level abilities among employees. p. 4

Valued employee traits included “being bright”, and to display “problem-solving” abilities. p. 4

Employees are expected to be responsive to technological changes, to be interested in seeking out flexible organizational alternatives, and to share with their employers a sense of autonomy and responsibility for the job. It is no longer satisfactory for employees to perform well, they must now also want to. They are expected to be proactive and to display an eager willingness to confront change with innovative ideas. The “generic skills” have moved from an experiential, to a cognitive, to a cultural/affective dimension (Schutze, 1992). p. 4

Assumption #3: Educational institutions play a central role in the development of human capital. p. 4

- Learning on the job: Many job specifications change so quickly that by the time instructional programs are put together, their content may have become obsolete. p. 4

In short, schools, colleges and universities must change their role from being “dispensers of knowledge”, and become places where people learn how to negotiate the paths of fluidly changing information and meaning. p. 5

Assumption #4: Employees need to improve their skills. p. 5

The technological revolution is often cited as the most pressing reason why education and knowledge are becoming valuable economic commodities. However, in the context of computerization, robotization, and mechanization, the development of new technologies often has produced an opposite effect. For example, just a few years ago it was believed that computer programming would be a universally required skill in the ominously computer ridden future. Consequently, computer language programming was taught to school children, as it was generally accepted that learning Fortran or other basic programming languages was a prerequisite for accessing tomorrow's technology. p. 5

Another problem associated with the “improved skills” theory is that no matter how much training a person receives, the possibility of applying that knowledge is directly dependent on the opportunities found in the job market. In the words of Berg and Gorelick (1971), ”…there can be problems in countries that educate a stratum of the population whose occupational expectations are well beyond the opportunities the economy may provide in the short or even the long run.” p. 5

Assumption #5: Training enhances employability. p. 5

Rubenson (1987, 1992) has described as the simultaneous “upskilling” of a small part of the work tasks, with the simultaneous “deskilling” of the larger portion. p. 6

According to recent surveys (Canada, 1995), the largest growth in job opportunities has been in the service sector, in areas such as food preparation and retail sales. p. 6

Assumption #6: Training can compensate for skill shortages. p. 6

way to bridge the gap between offer and demand by providing the needed human capital. However, the problem of matching jobs to individuals is not solely based on the non-availability of specific skills; it can also be attributed to the difficulties encountered in matching those individual skills with the expectations of their potential employers (Haughton, 1993). The problem is presented as one of skills “mismatch” rather than skill “shortage”. Typical barriers to matching fall into three categories: p. 6

(1) labour market dynamics; (2) structural discrimination; and (3) employee self-selection. p. 6

Another factor is the decline in the numbers of youth entering the labour market for the first time. This demographic occurrence deprives the market of a traditionally cheap source of labour, thus exercising an upward pressure on wages. In this instance, to attribute labour shortages to “low skills” may be in fact a way of transferring low-wage expectations to other (i.e. older, more experienced) segments of the workforce. p. 7

Structural discrimination is another phenomenon that accounts for a portion of skills mismatch in the job market. When selecting employees, many employers admittedly apply criteria that are linked to cultural norms, such as physical appearance, language, even family background and address of residence p. 7

Third, employee self-selection can be described as the limitations that social-economic groups impose upon themselves for various reasons. For example, social conditioning may be responsible for some women's reduced or stereotyped job expectations. p. 7

Assumption #7: Employment and unemployment are economic concepts. p. 7

There is a fundamental error in considering the labour market as a market just like any other, with offer and demand as the principal balancing factor. The dynamics p. 7

of employment and unemployment also include the mediating social factors that account for their fluctuations. Rather than simply juxtaposing the notions of labour market and labour policy as the two contributory forces shaping the employment landscape, we should consider social issues such as demographics, culture, diversity, segmentation along race, gender and class lines, trends in employment status, and perhaps most importantly, the “new values” affecting the distribution of wealth in society, in order to derive a real understanding of the forces that shape, and are shaped by employment and unemployment in Canada. p. 8

The need for critical analysis p. 8

What do we mean by the word, “employment”? p. 8

Also, retraining of current employees may not seem profitable when it is cheaper to hire new trainees from programs of other sources, many of them government funded. This could be the real incentive behind employers' sudden interest in the virtues of school based or government based certification. In this perspective, it may not be that needed skills are hard to come by, but simply that they do not come as easily or as cheaply as employers would find advantageous p. 8

High competition for available jobs, combined with the widespread use of educational attainment as a measure of employability, has resulted in a trend towards educational inflation. It seems that the more “educational capital” one acquires, the more one needs! p. 9

The function of ideology p. 9

For numerous critics, among them members of the editorial staff of the conservative British publication The Economist , the claims that training is the key to economic prosperity and that it is one of the best ways to get people “off the dole”, are simply not supported by observation or analysis. In short, the argument for increased investments in human capital does not seem to serve any particular social or economic purpose. Why, then, all the hype? p. 9

Two of the distinctive functions of ideology are reification and legitimization . p. 10

Our government's eagerness to subscribe to the idea of “training-as-panacea” can be seen as an attempt to reify (“to confer an aura of authority upon”) its view of the economic order. If we can be made to believe that the prevailing climate of economic hardship can be remedied through job related training, then we are only a step away from believing that a new prosperity is within reach, providing we acquire appropriate educational capital. The implication here, of course, is that the only reason why this “new prosperity” remains elusive, is that we have failed to take appropriate steps to attain the required levels of training. p. 10

The ideology of training can also be seen as serving a function of legitimization. The traditional view of education as a necessary requisite for affluence, freedom and democracy has been criticized by sociologists such as Pierre Bourdieu (1968), and Bowles & Gintis (1977). According to their view, education serves primarily to reproduce the existing social order, and to legitimize its power structure. The mechanics of this process are quite evident in the rhetoric surrounding the training issue. As we have seen, a person becomes unemployed only when s/he desires to work, thereby confirming that wage labor is, in that person's view, a legitimate form of economic organization. In the same way, people become “employable” by seeking further training, thereby subscribing to the logic of more training for more jobs. Unfortunately, training is a scarce commodity - much like the jobs it is supposed to give access to! Thus, the focus shifts from the lack of jobs to the lack of training. In other words, using that logic, it is quite legitimate for employment to be unavailable for people who do not have the requisite amount - or the right kind of - training. p. 10

The roles of adult educators p. 10

Malcolm Knowles (1980), with his usual keen insight, believed that adult educators functioned within three distinct professional spheres of influence and responsibility. It would seem appropriate to review these roles and obligations in light of our perplexing quandary. p. 10

First, the responsibility of adult educators lies with individual learners, in helping relationships aimed at facilitating self-actualization. This is in line with the humanistic p. 10

roots of adult education, put forward by proponents of lifelong learning such as John Dewey and Eduard Lindeman. From that perspective, learning is an empowering process through which individual learners gain access to the instruments of their own advancement. In the context of generalized economic double-speak, it seems particularly important for adult educators to be watchful of corrupt rhetoric, and to direct their practice toward the emancipation of learners rather than their renewed servitude. This can be achieved through the critical analysis of the educational situations one is involved in, and by keeping a vigilant eye on interests that are in opposition to those of the learners. p. 11

Second, adult educators play a central role in the workplace. Here, the scope of their responsibility expands with the awareness of the task at hand. In order to reconcile the divergent needs of the individuals and the organizations that employ them, adult educators should avoid viewing themselves as simple executants in the corporate agenda. p. 11

Third, adult educators have a social responsibility that entails a commitment to certain basic values such as equity, tolerance, cooperation, and recognition of the diversity of human experience. p. 11