Employed human capital, which represents the estimated future earnings of all people in jobs in the UK, increased to £18.22tn in 2014, having remained flat between 2011 and 2013. This equates to an estimated £448,358 per person of working age (16-64) in the UK, a rise of £4,623 on 2013.
The total value of women’s human capital is £6.82tn, compared with £11.4tn for men. This difference is mainly due to a gender pay gap and to women spending less time in paid employment.
Full human capital, the wider measure which includes unemployed people, was £18.95tn in 2014 – £0.79tn higher than employed human capital.
What is ‘human capital’?
The Office for National Statistics (ONS), which produces the figures, defines human capital as a measure of “individuals’ skills, knowledge, abilities social attributes, personality and health attributes”. All of these feed into people’s ability to work and therefore are a good source by which to calculate their economic value.
It may seem crude to put a price on how much people are worth but there is a rationale behind its usefulness. The figures from the ONS reveal important trends such as the likely trajectory of people during the course of their life.
For example, those with low qualification levels are more likely to be unemployed (and earn less) in future. People educated to degree level provide 36.1% of employed human capital despite making up only 27% of the population. Almost one in 10 people of working age have no qualifications but that group provides only 5.1% of employed human capital.
Employed human capital grew at an average of 2.6% between 2004 and 2007, due to an increase in the working-age population. Growth slowed in 2008 during the financial crisis and then the total dipped over the following couple of years.
The ONS put last year’s rise of 1.2% down to earnings rising faster than inflation and to an increase in the employment rate.
