1. Human Capital of the New Generation By Jorah Ramlan ISIS Malaysia

2. Introduction Human capital consists of: Knowledge Skills Abilities Integrity

3. Development of Knowledge Support for scientific research, Private incentive for R&D and innovation, Alternative opportunities for talented individuals Learning-by-doing. (Romer, 1996)

4. Sources of Knowledge Formal education Informal education Family influence Government support

5. Importance of Human Capital Human Capital is very significant to growth/development New Generation is the source for human capital Various types of capital Human capital = Labour force; labour force ≠ human capital

6. Unemployment in Malaysia (Challenge # 1) More than 50 per cent of the unemployment total are young population/new generation (age group 15-29) (MOHR, 2006)

7. Malaysia: Selected Employment Statistics 2006 Population27.2 million 0-1432.3 % 15-6463.4 % 65 and above4.3 % Employment Labour force67 % Annual growth2.6 % Unemployed3.1 % New jobs created1.6 million Inflation2.9 %

8. 220,000 people join the labour force each year 44,000 will possess tertiary qualification

9. Labour Force Participation 2006

10. Quality, Quantity, and Productivity Quality and quantity are important for productivity Quality of human capital refers to education level, formal and informal education, worldwide marketability Quantity of human capital refers to market size, consumer spending Productivity refers to output per person, Total Factor Productivity (TFP),

11. Competitiveness Index (Challenge # 2) (Most problematic factors for doing business in Malaysia) 024681012141618 govmt instability crime and theft tax regulations tax rates inflation access to financing foreign currency regulations inadequate infrastructure poor work ethics restrictive labour regulations policy instability inadequately educated workforce corruption govmt bureaucracy

12. Technology and the New Generation

13. Labour Force and Productivity (Challenge # 3)

14. Education and Human Capital Education levels and totals 2000-2007 Increase/decrease; = effect on human capital

15. Labour Market Mismatch (Challenge # 4) In-demand skills and talents Moving up the value chain From ‘B’ grade workers to ‘A’ grade workers Service on-demand Competitiveness Human capital flight

16. Personal and Economic Requirements Personal Self development Financial independence Social assimilation Economic Leadership development Strategic investment Profitability Productivity

17. Policy Issues (Challenge # 5) Youth development policy Poor coordination among policies and sectors that affect youth and limited accountability for youth outcomes Weak voice of young people in monitoring and providing feedback on the quality of policy and service delivery The paucity of proven successes

18. Developing a coherent framework and integrating it with national policy A coherent national framework for youth Integration with national policy planning and implementation mechanisms Building capacity Role of the education system

19. Listening to young people Maintain an open channel of consultation and feedback between government and young people Monitoring and evaluation Monitoring Evaluation

20. Conclusion Re-evaluation of political, social and economic systems’ incentives and disincentives Strengthen formal institutions, social organisations and family institutions These are the requirements for the development of human capital of the new generation

21. Developing Human Capital Knowledge, Skills,Abilities Values,Beliefs, Attitudes Personality, Intelligence, Behaviour Formal Institutions (Schools, Universities, Workplace) Social Organisations (Peers Groups, Clubs, Networks Family Institution (Parental, Sibling & Extended Family) Political System: Incentives & Disincentives Social System: Incentives & Disincentives Economic System: Incentives & Disincentives

22. Issues and challenges are dynamic for every generation but need to be met for sustainable economic growth The race for human capital will intensify, strategic planning of this resource is essential Gestation period for return on human capital investment may be longer that other investments, hence appropriate measures need to be taken promptly Human capital and new generation: develop it or lose it!

23. Thank you for your attention