Estimation of Human Capital Developmant in Ukraine

Hanna Zasorina

and Andrii Karpenko

Department of Management and Behavioral Economics, Vasyl’ Stus Donetsk National University, 21, 600-richya str.,

Vinnytsia, Ukraine

Economy and Custom Department, “Zaporizhzhya Polytechnic” National University, 64, Zhukovsky Street, Zaporizhzhia,

Ukraine

Keywords: Human Capital Development, Estimation of Human Capital, Post-Industrial Economy, International Indices,

Investment in Human Capital.

Abstract: Human capital is one of the important elements in the formation, competitiveness, and development of the

state. The modern leadership of the developed industrial countries of the world is ensured mainly by the

available human capital and powerful technologies and equipment. Therefore, timely assessment of the level

of human capital development makes it possible to make effective management decisions on the formation of

a competitive economy. The purpose of this article is to study the level of human capital development in

Ukraine using international indices and available statistics. To achieve this goal, the most widely used and

recognized indices measuring human capital (Human Capital Index, Human Development Index, Social

Development Index, Global Competitiveness Index and Global Talent Competitiveness Index) and statistics

from the State Statistics Service and international organizations were used. The results of the study showed

that modern indices of the level of human capital do not reflect its quality. Most often, they show only a

superficial description of human capital in the form of quantitative indicators. Depending on the index, the

assessment of human capital also changes, which leads to different conclusions. In particular, Ukraine

occupies a high position on certain components of human capital, but there are still many unresolved issues

that are destructively reflected in the level of development of the national economy.

1 INTRODUCTION

Most countries are moving to a post-industrial

economy and beginning to form a post-industrial

society. With the socio-economic development of the

state, there is a change in the role of humans.

Understanding the importance of human capital

development is paramount, so there is a redistribution

of investment within the state: more emphasis is

being placed on increasing investment in health,

education, science, social development, and quality of

life. Because these investments are now of the

greatest socio-economic importance: they depend on

the formation, accumulation, and development of

human capital, improving the quality of human

capital, expanding economic opportunities and

improving their quality of life. Today it is very

important to develop human capital. Because it

https://orcid.org/0000-0001-6066-9302

https://orcid.org/0000-0002-5717-4349

affects not only the economic development of the

state or firm but also increases the competitiveness of

the state (Porter, 1990).

As emphasized in the materials of the report on

the human capital development index for 2019 (The

World Bank, 2020c), although fact that human capital

is one of the main factors in sustainable growth and

poverty reduction, legislatures often cannot justify the

need to invest in human capital. The community is

inclined to accept better construction of roads and

bridges, which can bring economic and political

benefits in a much shorter time, compared to

investing in human capital (including children), the

impact of which is less clear in the current period.

However, over time, developed human capital can

bring much more economic benefits to the state and

the population than infrastructure development and

maintenance.

Zasorina, H. and Karpenko, A.

Estimation of Human Capital Developmant in Ukraine.

DOI: 10.5220/0011347200003350

In Proceedings of the 5th International Scientiﬁc Congress Society of Ambient Intelligence (ISC SAI 2022) - Sustainable Development and Global Climate Change, pages 197-207

ISBN: 978-989-758-600-2

197

Therefore, government officials need to

understand the level of human capital development in

the country. It is customary to use international

indices for this, but they do not provide a

comprehensive understanding of the level of human

capital. Depending on the index, the assessment of

human capital also changes, which leads to different

interpretations (characteristics) of human capital. The

purpose of this article is to analyse the level of human

capital development based on international indices

and to substantiate the completeness and correctness

of the assessment of human capital development in

the country.

2 RESEARCH METHODOLOGY

The study proves that current international indices for

the assessment of human capital do not reflect the

completeness and breadth of data on the quality of

human capital. Depending on the index, the

assessment of human capital also changes, which

leads to different characteristics of human capital.

International indices such as the Human Capital

Index, the Human Development Index, the Social

Development Index, the Competitiveness Index, and

the Talent Competitiveness Index were used in this

study. Currently, these indices are the most widely

used and used in the assessment of human capital.

There were also some limitations in this study.

They were mainly manifested in obtaining statistical

information. Also, these indices do not describe

qualitative indicators in the assessment of human

capital. Therefore, we tried to supplement the

indicators of the indexes and explain the destructive

processes with the available statistical information.

Represented statistical information obtained from the

data of the State Statistical Service of Ukraine

(periodic surveys of the population of Ukraine) and

international organizations.

3 LITERATURE RESEARCH

The gradual transition of countries from industrial to

post-industrial economies is closely related to the

increasing importance of human capital in the

economic and social development of the country. In

the 21st century, the leading positions are occupied

by those countries that have better and better human

capital than natural resources. Interest in the

importance of man in the state and economy began in

ancient Greece. Aristotle drew attention to the

different complexity of work, the level of skills and

abilities of workers. He believed that the higher the

value of the good, the more skilled labour was spent

on its production (Trofimchuk, 2016). He introduced

the concept of ability and began to separate the

abilities related to the capabilities of the organism and

the abilities that a person acquires during practical

implementation. He also noted that a person's creative

qualities are influenced by the conditions of his life,

upbringing and education (Voloshyna, 2014). In his

treatise The Republic, Plato described his vision of an

ideal state and noted that man is a value. He stressed

the responsibility of the state to teach people

according to their skills and talents, which led to the

creation of Plato's education system (Ahmad, 2012).

Attention to the place and importance of man was

paid in the Middle Ages. The thinker of the Arab East

Ibn Khaldun draws attention to the labour origin of

value, based on the fact that most of the accumulated

and directly useful to man is equivalent to the value

of human labour (Trofimchuk, 2016).

Significant development of the theory of human

capital began in the late XIX - early XX century with

the beginning of capitalism. This period is

characterized by attempts to interpret man, his

knowledge, skills, and abilities as capital. Proponents

of the theory of three factors of production considered

it contradictory because individuals themselves

cannot correspond to the category of capital. Instead,

human knowledge, skills, and the ability to work

correspond to the category of capital. Another

direction in economics is the work of researchers who

attribute man himself with his natural qualities to

capital (Vasylchenko et al., 2005). From the

beginning of the concept of "human capital", it was

considered only a social factor of development and

one that required only costs. Only in the first half of

the twentieth century, human capital and man began

to be seen as the centre of the reproductive process

(Khesin, 2019).

The founders of the theory of human capital are

T. Schultz and G. Becker, who received the Nobel

Prize in 1979 and 1992, respectively. T. Schultz

considered human capital as an additional source of

income based on human knowledge, skills and

abilities (Schultz, 1961). Becker saw human capital

as a store of knowledge, abilities, and motivation of

each person. Investing in human capital consists of

schooling, on-the-job training, medical care, vitamin

intake and the acquisition of information on the

economic system. (Becker, 1962).

Shasti and Weil wrote about the importance of

health care. As they noted, this could increase the

income gap between countries by one third (Shastry

& Weil, 2003). Miyamoto wrote about the impact of

foreign investment on human capital formation and

coherence of human capital investment policies

(Miyamoto, 2003).

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Thus, the value of man in the modern economy is

growing and it is becoming more important than

natural resources and accumulated wealth of the

country. Because a person can generate new ideas that

can be capitalized, it is the person who becomes one

of the main indicators in the competitiveness of each

country. There is still no single definition of "human

capital", so scientists interpret this concept

differently. Early interpretations of the concept of

"human capital" are aimed at defining the material

aspect through investments in health and education,

which will have an economic effect in the future.

Modern understanding of human capital is based in

addition to internal and external motivation.

Summarizing the work of modern researchers, we

can identify the following important features that are

inherent in human capital: 1) human capital is an asset

that consists of innate qualities (physical,

psychological, intellectual) and acquired qualities

(from education and the environment); 2)

accumulation and development of human capital

requires significant investments from the state,

company, individual; 3) over a period of time, human

capital generates income (Khesin, 2019).

That is, when studying the level of human capital

development, it is necessary to consider the impact of

accessibility and quality of medicine and education,

the level of public and private sector investment in

these areas, the level of human resource motivation

and so on. As world practice shows, all successful

countries began with the advanced development of

the components of national human capital.

However, the national level of human capital is

not exhaustive in research. Often human capital is

considered at the enterprise level. Because initially

the theory of human capital considered human capital

at the macroeconomic level and studied its

development and improvement to increase economic

benefits for the enterprise. Although the main

investment in the preservation, reproduction and

development of human capital comes from the state.

Even though human capital has a long history of

formation, there are still many unresolved issues.

3.1 The Concept of Human Capital

To date, there is no single definition of "human

capital". The definition of this concept depends on the

period of development of economic theory. Early

attempts to interpret human capital were aimed at

determining the place of a man in production. The

modern understanding of human capital is not very

different from early interpretations and some of them

are based on internal and external human motivation:

 Becker noted that investing in human capital

includes schooling, on-the-job training, health care

and vitamin intake, and knowledge of the economic

system. Thus, improving physical and mental abilities

increase real income (Becker, 1962)

 Schultz viewed human capital through the

prism of human investment. He considered investing

in education, health and internal migration for better

employment to be the main areas of investment

(Schultz, 1961)

 Knowledge, qualifications, skills and other

qualities that the individual has and that are important

for economic activity (OECD, 2001)

 Human capital is the knowledge, skills,

competencies and attributes embodied in individuals

that contribute to personal, social and economic well-

being (OECD, 2009)

 Formed and developed as a result of

investment and accumulated a certain amount of

health, knowledge, skills, abilities, motivations,

which is purposefully used in a particular field of

economic activity, increases productivity and thus

affects the growth of income, profits and profits

national income (Kolot et al., 2009)

Each of the above mentioned scientists in his

definition draws attention to certain components: the

functional side of human capital, its ability to

generate income, the essential characteristics as a

form of the personal factor of production, etc.

(Davydiuk, 2008). Early interpretations are aimed at

determining the material aspect through investments

in health, education, which will have an economic

effect in the future. That is, they focus on the

knowledge, abilities and skills of human capital.

Modern definitions of capital have a broad

interpretation. Here, scientists focus on the potential

knowledge, abilities and skills of human capital and

the possibility of obtaining them. The importance of

stimulating and motivating employees to personal

development and employment is noted. However,

gradually this category is filled with additional

qualitative characteristics: psychophysiological,

socio-psychological and business (Davydiuk, 2008).

Thus, it can be argued that human capital is an

asset that a person has in the form of innate qualities

(physical, psychological, intellectual), as well as

abilities that a person acquires during life

(knowledge, skills, abilities, motivation) that need

significant investment and generate income over a

period of time (Kompaniets, 2008).

4 BASIC METHODS OF HUMAN

CAPITAL EVALUATION

In modern conditions, the issue of conducting a

comprehensive assessment of human capital at the

Estimation of Human Capital Developmant in Ukraine

199

macroeconomic level remains relevant. In most cases,

national human capital is calculated based on

indicators related to education, science, and health.

But the assessment of human capital should be based

not only on the above three indicators. The

methodology of human capital assessment should

reflect not only the quantitative characteristics of

human capital, but also qualitative.

Today, the main method of estimating human

capital is international indices. The development of

indices and their calculations are mainly done by

international organizations: the World Economic

Forum, the Organization for Economic Cooperation

and Development, the European Bank for

Reconstruction and Development, the United

Nations, and others. All indices can be divided into

those that measure individual components of human

capital (Human Development Index, Global

Competitiveness Index, Social Development Index,

Global Talent Competitiveness Index), and those that

measure human capital (Human Capital Index).

In addition to these, other indices can indirectly

assess human capital and its productivity: the

knowledge economy index, the prosperity index, the

crime index and more. However, the most accepted

indices for assessing human capital are the Global

Competitiveness Index, the Global Talent

Competitiveness Index, the Social Development

Index, the Human Development Index, which until

recently was considered the mainstay of human

capital assessment, and the Human Capital Index.

4.1 Human Capital Index

The Human Capital Index (HCI) has been calculated

by the World Bank since 2018. The purpose of the

index is to show the economic losses, the amount of

lost income and the long-term consequences of

insufficient investment in health care and youth

education (Corral et al., 2021; The World Bank,

2020c). This index shows the quality of mobilization

of economic and professional potential of the

population (The World Bank, 2020c). The index

consists of three main indicators: survival (share of

children over 5 years of age), school (quantity and

quality of education) and health (adult survival rate

and healthy growth among children) (The World

Bank, 2020c).

The Human Capital Index quantifies the

importance of health and education for next-

generation productivity. Countries use it to determine

how much of their income they lose due to human

capital shortages, and how quickly they will turn

those losses into achievements if they act without

delay. The results of the new PISA survey were taken

into account during the review. The index is a total

indicator of the level of human capital that a person

can accumulate today from birth to 18 years, taking

into account the risks associated with low levels of

health and education in the country in which he lives.

An important feature of the index is that, based on

thorough microeconometric studies, it measures the

contribution of health and education systems to the

productivity of individuals and countries.

4.2 Human Development Index

The Human Development Index was established by

the United Nations Development Program and was

first published in 1990 (UNDP, 1990). The Human

Development Index is an indicator of achievement on

the following indicators: long and healthy life, access

to knowledge and a decent standard of living (UNDP,

2020). These indicators are measured as life

expectancy at birth, the average level of schooling for

adults aged 25 and over and the expected years of

schooling for school-age children, GDP per capita

(Human Development Index (HDI), 2020).

Although the Human Development Index and the

Human Capital Index are very similar at first glance

and consider human abilities as a key condition, the

methodology of calculation in them is different, they

complement each other. The Human Development

Index is the total measure of the average values of

indicators (high life expectancy and healthy lifestyle,

high level of awareness and decent standard of

living). The Human Capital Index links individual

results in human capital development to productivity

and income levels. It is a predictive measure of the

impact that current health and education outcomes

(including a new methodology for measuring school-

based learning) will have on the productivity of the

next generation of workers.

4.3 Social Development Index

The Social Development Index has been calculated

by the American non-governmental organization

Social Progress Imperative with the support of

Deloitte since 2011 (Deloitte, 2019; Michael et al.,

2020). This index is based on non-economic aspects

of social activity (Michael et al., 2020). The Social

Development Index is a tool that measures the

satisfaction of people's needs: comfortable housing,

satisfactory nutrition, a sense of security, level of

communication and attitude towards people

depending on their race, gender, sexual orientation.

The main goal of the index is to improve the quality

of people's lives (Social Progress Index, 2020). This

Index provides a detailed analysis of citizens' access

to a wide range of opportunities, including the

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provision of basic services, social opportunities,

health, education, housing, law enforcement,

protection of personal rights and freedom from

discrimination (Indeks sotsialnoho rozvytku, 2015).

In total, the index takes into account 50 indicators,

which are grouped into three main groups: basic

human needs, well-being and opportunities («Social

Progress Index 2020», 2020).

The Social Development Index is likely to show

the level of human capital development in each

country. It reflects the qualitative characteristics of

the conditions in which human capital is formed and

developed. The higher the social development of the

population is, the higher the well-being of each

citizen. With favourable living conditions and a

decent income, a person can afford to buy and

accumulate more wealth, and therefore has more

opportunities for personal development and

investment in their human capital.

4.4 Global Competitiveness Index

The main idea for calculating this index has belonged

to Klaus Schwab since 1979. This index was

published at the World Economic Forum from 2005.

Xavier Sala-y-Martin and WEF developed the Global

Competitiveness Index (Schwab, 2015). The

methodology for calculating the index has changed

several times: in 2007, in 2018 (Schwab, 2015, 2018).

After the change in the calculation methodology,

not only the macroeconomic indicators of the country

are taken into account, but also some indicators

related to human capital and its ability to increase the

level of competitiveness of the state. The index takes

into account the following indicators: institutions,

infrastructure, ICT adoption, macroeconomic

stability, health, skills, commodity market, labour

market, financial system, market size, business

dynamism, innovation opportunities (Schwab, 2019).

In 2020, the WEF suspended calculations of the

Global Competitiveness Index. Instead, ways to

rebuild and transform the economy during the

COVID-19 pandemic were suggested (Schwab,

2020).

4.5 The Global Talent Competitiveness

Index

This annual study is prepared by the INSEAD

International Business School in partnership with the

Adecco Group and the Singapore Institute for Human

Capital Leadership (HCLI) (Balland et al., 2015) .

It examines the impact of technological change on

the competitiveness of talent and confirms that

despite the trend of crowding out jobs at all levels by

technology, technology is also creating new

opportunities. The key skills that are key to success

are the ability to work with both new technologies and

people, flexibility and collaboration (Balland et al.,

2015) .

The total index is calculated on the basis of the

arithmetic mean of six criteria: market and regulatory

conditions in the labour market; career opportunities;

opportunities for employers to attract talent from

around the world (Talent Attraction Index); ability to

retain qualified personnel; production skills of

employees and global knowledge (INSEAD, 2018).

5 ESTIMATION OF HUMAN

CAPITAL DEVELOPMENT IN

UKRAINE

5.1 Human Capital Index

According to the Human Capital Index, Ukraine

ranks above average (World Bank, 2020). The results

that were in 2010 and in 2020 have not changed and

are 0.63 points (fig.1) (The World Bank, 2020c,

2020b). On the one hand, this means that the

Ukrainian government has not implemented

significant reforms in the last 10 years, and on the

other hand, the first returns from investing in human

capital can be felt in more than 10 years.

Analysing all indicators of the human capital

index, we can see the deterioration of all indicators,

except the Probability of Survival to Age of 5 and

Survival Rate from Age of 15-60 (table 1). Currently,

the average student spends 12.9 years in school before

the age of 18, while in 2010 the student spent 13.1

years before the age of 18. At the same time, the

average years of schooling decreased from 10.27

years according to 2010 data to 9.9 years in 2020.

Source: (The World Bank, 2020b)

Figure 1: Human Capital Index of Ukraine

0,63

0,65

0,64

0,63

0,62

0,625

0,63

0,635

0,64

0,645

0,65

0,655

2010 2017 2018 2020

Estimation of Human Capital Developmant in Ukraine

201

There was also a deterioration in the harmonized

test results of schoolchildren from 490.09 points in

2010 to 478 points on a scale of 625 – high level, 300

– minimum (The World Bank, 2020a). That is,

Ukraine occupies a middle position in terms of the

quality of education. In 2018, a PISA study showed

that the average score of Ukrainian students in

reading is 465.95, in Mathematics – 453.12, and in

Natural Sciences – 468.99 (Mazorchuk et al., 2019).

First, the results of Ukrainian students are lower than

the OECD average in all three fields (the average for

OECD countries in reading is 488.89 points,

Mathematics – 492.03 and Science – 490.78). The

difference in the performance of students in Ukraine

compared to the average values in OECD countries in

Reading is 23 points, in Mathematics – 39, and in

Science –22. This difference is close to the equivalent

of one year of study (Mazorchuk et al., 2019; OECD,

2018). Only 74.1% of Ukrainian 15-year-olds have

reached the basic level of reading literacy, while on

average in OECD countries this figure reaches about

77%, 64.0% of adolescents have reached the basic

level of mathematical literacy, in the OECD – 76%

male and female students, 73.6% – science literacy in

Ukraine and about 78% in the OECD (Mazorchuk et

al., 2019; OECD, 2019).

The difficulty of calculating the human capital

index is manifested in the fact that some indicators

"Fraction of Children Under 5" are not covered at all

due to lack of statistics in Ukraine, and the indicator

"Harmonized Test Scores" in 2020 contained the

results of the Pisa survey for 2018. That is, these two

indicators change the results of the index.

The General Health Services Coverage Index

(UHC) (0 to 100) measures coverage of basic health

services based on follow-up interventions. In

Ukraine, the UHC Index rating is 68 (2017). Social

SafetyNet accounts for 40 percent (2016) of the

poorest quintile covered by social safety nets.

According to the report on the Human Capital Index

in Ukraine (The World Bank, 2020a), 99 out of 100

children live to 5 years; 81% of 15-year-olds will live

to 60 years. In Ukraine, the probability of dying

between the ages of 30 and 70 from cardiovascular

disease, cancer, diabetes or chronic respiratory

diseases is 25 percent (2016 data).

Table 1: Overall assessment of the components of the

human capital index for Ukraine, 2010-2020.

Series Name 2010 2017 2018 2020

Expected Years of

School

13,1 13,0 12,9 12,9

Fraction of Children

Under 5 Not Stunte

.. .. .. ..

Harmonized Test

Scores

490 490 490 478

Human Capital Index

(

HCI

)

(

scale 0-1

)

0,63 0,65 0,64 0,63

Learning-Adjusted

Years of School

10,3 10,2 10,1 9,9

Probability of

Survival to A

e 5

0,99 0,99 0,99 0,99

Survival Rate from

e 15-60

0,77 0,81 0,81 0,81

Source: (The World Bank, 2020b)

For 10 years in Ukraine the efficiency of

education has decreased, the final knowledge, which

is the basis for further accumulation of knowledge

and its use. Thus, Ukraine ranks high in the Human

Capital Index and the Human Development Index not

because of the quality of education, but because of the

duration of education and the number of people with

education.

5.2 Human Development Index

According to the Human Development Index,

Ukraine is one of the countries with a high level of

human development. Since 2010, Ukraine has shown

slow but steady progress in human development.

There was a slight decrease in points in 2015, which

is due to hostilities in the east of the country.

High indicators of the index are achieved through

education, namely the number of educated people and

the number of years spent on education.

Recently, the standard of living in Ukraine,

determined by gross national income (GNI) per

capita, has increased slightly: by about 9% in 2015-

2017 education, life expectancy and income among

women and men in different countries.

Source: (Conceição, 2020)

Figure 2: Human Development Index of Ukraine

According to the Constitution of Ukraine, the

population has the right to medical care. Modern

reform of the medical sphere has made it much more

difficult to obtain medical services, and for the most

part encourages people to turn to private doctors or

0,755

0,771

0,765

0,771

0,774

0,779

0,74

0,745

0,75

0,755

0,76

0,765

0,77

0,775

0,78

0,785

2010 2014 2015 2017 2018 2019

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refuse treatment altogether due to significant

financial difficulties and the high cost of relevant

health services. According to the State Statistical

Service in 2019, 98.4% of all surveyed households

sought medical care, of which 24.4% were unable to

receive medical care, purchase medicines and

medical equipment (Derzhavna sluzhba statystyky

Ukrainy, 2021). According to the respondents, the

main difficulty in receiving medical care was not long

queues, but the lack of necessary drugs or medical

equipment or the difficulty of obtaining medical

procedures, hospitalization, and too high cost of

treatment.

Shastri and Weil believe that health care increases

the income gap between countries by one third

(Shastry & Weil, 2003). It can be argued that due to

the existing differentiation of countries in their way

of life and social status, there is a negative or positive

reflection of these factors on the health, energy of the

population, their potential for work. Thus, in

countries with high or above average incomes, the

population has greater opportunities for balanced

nutrition, timely and quality health care, opportunities

to obtain safe jobs that affect life expectancy. Thus,

on average over eight years, the average difference in

life expectancy between Ukraine and Poland was 6.04

years, between Hungary – 4.3 years, Estonia – 5.9

years, and between the EU28 – 8.3 years (the author

on the basis of state Statistics Service, 2019).

Although life expectancy in Ukraine has increased

over the last 10 years, it is still lower than in European

countries and lower than the EU average. This is

mainly due to the premature death of Ukrainians due

to various diseases, especially men who live about ten

years less than women. Today it is not enough to live

a certain number of years. Throughout the life, a

person must remain active and healthy for the

constant development of their human capital.

Therefore, it is necessary to reduce the risk of disease

and change lifestyles. This requires, first of all, good

funding.

5.3 Social Development Index

As for the social development index, compared to

previous years, all indicators remained almost

unchanged. There was a slight improvement in the

indicators "access to information and

communication", "freedom of choice and personal

freedom", "access to higher education". At the same

time, a slight deterioration is observed in the

indicators of "personal security" and "tolerance".

Source: (Social Progress Index. Data base, 2020)

Figure 3: Overall assessment of the social development

index for 2015-2020

The above studies show a close relationship

between the level of development of the state, the

level of investment in the social sphere (human

capital) and the level of development and quality of

human capital of the state. This is because developed

countries have more financial resources to invest in

human capital and improve the socio-economic

environment of the state (education, health,

improving working conditions (creating a favourable

environment)). But, on the other hand, we can

observe the opposite: quality human capital affects

the development of the state (better socio-economic

results): improving the quality of life, creating and

implementing innovations and so on.

5.4 Global Competitiveness Index

With the development of new technologies there is a

need for highly qualified personnel (Bublyk &

Shakhno, 2018). Therefore, there is a change in the

traditional concept of labour. Thus, the importance of

human intellectual abilities increases (World Bank,

2019). Today more than 50% of the GDP of the

largest OECD countries is created in areas that are

based on knowledge (Bublyk & Shakhno, 2018).

Therefore, skills for human capital are crucial.

With the change in the methodology of

calculating this index, there are criteria that assess and

forecast the assessment of human capital: Current

workforce, Skills of current workforce, Future

workforce, Skills of future workforce. In 2019,

compared to 2018, Ukraine improved the results of

100

150

100

2015 2016 2017 2018 2019 2020

Basic Human Needs

Foundations of Wellbeing

Opportunity

Social Progress Index

SPI Rank

Estimation of Human Capital Developmant in Ukraine

203

most indicators. The results of Mean years of

schooling (Current workforce indicator) and School

life expectancy (Future workforce indicator)

remained unchanged: 69.3 and 83.3 points.

As you can see, in one year the degree of

investment of Ukrainian companies in the

development and training of their staff has increased

(Table 3). At the same time, the quality of staff

training and the level of skills of graduates required

for business have slightly increased. Despite small

improvements, Ukrainian companies are in no hurry

to invest in the development of their staff, developing

their skills, interacting with universities and

supporting students. Therefore, this is reflected in the

quality of the workforce and its training (Karpenko et

al., 2021). This is confirmed by the Ease of finding

skilled employees’ criterion, which has hardly

changed this year and in 2019 amounted to 56.7

points. That shows the significant difficulty in

companies in finding staff with the necessary skills.

With the development of Industry 4.0, the

population's need for digital skills is increasing. The

concept of Industry 4.0 is the digitization of the

industrial process (Xu et al., 2021). Thus, there is a

transition of biological and physical systems in

cyberbiological and cyberphysical, the emergence of

the Internet of Things, robotics, artificial intelligence,

eHealth and more. However, it is impossible to

achieve the above and their development without the

development of the necessary skills and

competencies, especially digital (Karpenko &

Zasorina, 2020). According to the Global

Competitiveness Index, the digital skills of active

users are close to average. This means that in 2019,

57.9% of the active population of Ukraine had

sufficient digital skills. Similar results were shown by

a study conducted by the Ministry of Digital

Transformation of Ukraine in 2019 (Tsyfrova

hramotnist naselennia ukrainy, 2019). According to

this study, the digital skills of the population are

below average and only 53% of the population of

Ukraine have digital skills below average (Tsyfrova

hramotnist naselennia ukrainy, 2019).

Table 3: Assessment of skills according to the Global

Competitiveness Index

Criteria 2018 2019

Current workforce

Mean years of schooling 69,3 69,3

Skills of current workforce

Extent of staff training 46,6 50,4

Quality of vocational training 51,5 53,4

Skillset of graduates 52,1 54,5

Digital skills among active population 57,2 57,5

Ease of finding skilled employees 56,3 56,7

Future workforce

School life expectancy 83,3 83,3

Skills of future workforce

Critical thinking in teaching 47,1 52,6

Pupil-to-teacher ratio in primary

education

93,1 92,5

Source: Index (Schwab, 2018, 2019)

Thus, this index showed how poor human capital

affects the level of competitiveness of the country and

the deepening of problems in the labour market.

5.5 The Global Talent Competitiveness

Index

Today, Ukraine ranks middle (Fig. 4) in the global

competitiveness index and is the most efficient

country with below-average incomes and the only

economy in its income group, which is located in the

top half of the ranking (INSEAD, 2021b). Ukraine is

consistently the only country with a below-average

income to be ranked second in the annual rankings.

Other low-income countries are in the third and lower

quartiles of the annual ranking (INSEAD, 2021b).

Source:(Balland et al., 2015; INSEAD, 2018, 2020, 2021a;

Lanvin & Evans, 2016)

Figure 4: The value of the main criteria of the Global Talent

Competitiveness Index for Ukraine for 2015-2021.

100

150

100

120

Enable

Attract

Grow

Retain

Vocational and Technical Skills

Global knowledge Skills

Rank

Sum of countries

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Ukraine shows good results on two indicators:

vocational and global skills and global skills and

growth, 69, 36 and 57 places respectively. These

indicators are due to high performance in high-level

skills (24th place) and formal learning (46th place).

Ukraine's regulatory landscape, access to growth

opportunities, the spread of the foreign property and

the preservation of the brain are the most degraded in

terms of indicators.

6 CONCLUSIONS

To conclude, in this paper we analysed the dynamics

of human capital in Ukraine according to various

international indices: human capital index, human

development index, social development index, global

competitiveness index and global talent

competitiveness index. Insufficient attention to the

development of human capital at the state level leads

to significant social losses: low quality of life, low

incomes, reduced welfare. This is partly due to

insufficient funding (investment) in human capital. In

the leading areas, such as education, health care,

social spending to support the population.

Despite the relatively high level of education of

the population of Ukraine, the quality of knowledge

that they receive and can further apply in the

workplace, corresponds to the average level. This

means that it is difficult for a modern employer to find

a skilled worker who would meet all his needs and

meet the needs of the modern labour market. But

thorough cooperation between employers and

government officials can be remedied. Thus, in

general, the solution to the problems of inefficient

formation and use of human capital can be solved

through close cooperation: initiated by leaders of

education, research and government agencies and

business to develop a common agenda.

The situation is complicated by indicators of

political instability, brain drain, insufficient financial

resources for investment in human capital.

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