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Big issues and ELT 3: Human Capital Theory

September 21, 2014

Earlier this year, Sir Ian Wood, one of Scotland’s leading business figures, was commissioned by the Scottish Government to produce a report about Scotland’s education system and how effectively it prepares young people for the workplace. The report, which I’m about to start quoting heavily from and which you can read in full here, points to high levels of unemployment among young people in Scotland and states that the purpose of the commission was:

“…to make recommendations towards Scotland producing better qualified, work ready and motivated young people with skills relevant to modern employment opportunities, both as employees and entrepreneurs of the future.”

In setting the context, the Sir Ian explains that:

“There is nothing more important to Scotland’s medium term economic future than getting the skills of its young people in tune with the very fast changing skills, technology and knowledge requirements of the modern world.”

The report states quite clearly that this is not happening at the moment:

“We are simply not preparing or equipping these young people for the world of work. There must be much more focus on providing them with the skills, qualifications and vocational pathways that will lead directly to employment opportunities.”

With this in mind, Scotland therefore needs to develop:

“…a high quality intermediate vocational education and training system, which complements our world-class higher education system [and] can be developed to enhance sustainable economic growth with a skilled workforce.”

So, we are talking here about making changes to secondary and further education to ensure that young people are better prepared for the jobs that the Scottish economy needs them for. The report goes on to make 39 recommendations, many of which focus on strengthening links between colleges and employers, encouraging employers to engage directly with colleges to ensure the education and training they provide is in line with industry needs.

To me, this is a clear example of Human Capital Theory being applied on a national level. Human Capital Theory (HCT) developed from Adam Smith’s idea that economic benefits can be gained through investing in the education of people, in the same way that they can be gained through investing in machinery. A nation can therefore develop its economy by ensuring that its people are educated in a way that allows them to contribute to the economy. The basic tenets of HCT are summarised nicely by Angela Little:

“…the skills that people acquire are a form of capital, human capital; that these are acquired through deliberate investments in education; that skills are the capacities that contribute to economic production; and that earnings in the labour market are the means by which a person’s productivity is rewarded.” (Little 2003: 438).

This all seems reasonable enough then. If you educate people appropriately, you’ll produce a workforce that benefits the economy, and the people in turn benefit from having jobs that they were educated to do. In the second half of the 20th century, economists like Theodore Schultz worked out ways to calculate the economic return of investment in education, allowing HCT to become a key factor in the development of education policy across the world. When Tony Blair said “Education is the best economic policy there is”, this is what he was talking about.

It isn’t difficult to relate Human Capital Theory to English language teaching. The ability to use English allows people to participate in globalized industry, facilitating economic development through international communication. A look at some of the research done by David Graddol (2014) demonstrates the impact of English on national and international economies, and vice-versa. Many governments are really pushing the teaching of English within their education systems, and English-medium colleges and universities are becoming increasingly prevalent in non-English speaking countries. In addition to this, private language schools benefit from the common perception that English increases an individual’s worth in terms of human capital; the motivation comes from the individuals who want to benefit financially from their contribution to the economy, as well as from governments who want to use human capital to drive their economy forward. Whether they work for the state or in the private sector, I’m sure that any English language teacher around the world will be able to recognize the role they play in the economic development of the nation they work in.

Having said all that, I have a bit of a problem with Human Capital Theory. The thing is that it regards education as a commodity that is to be used for economic gain. It also regards human beings as commodities, whose key purpose is to do what is required to drive industry forward. The idea that people exist in order to develop the economy, rather than the economy existing in order to develop human society, seems a bit sinister, does it not? We all start to become cogs in a machine, and any benefit that we gain from this setup is incidental; the real beneficiaries are the billionaires running global corporations.

Let’s look at the Wood Commission report again. Apparently it is quite acceptable that a businessman, with no background whatsoever in education or education policy, is now directing the course of secondary and further education across Scotland. His recommendations pretty much allow the demands of industry to dictate what people learn. This inevitably prioritises those areas of education that prepare people for the jobs that businesses need to fill, so we’re looking mostly at vocational qualifications and apprenticeships. That’s all very well, but what about the areas of education that are less directly applicable to the workplace? What about the humanities? (See Nussbaum 2012 for more on this). What about creativity? (See Ken Robinson’s TED talk for more on this). What about, in short, the areas of education that develop us as people, rather than as drones?

Naturally, my concerns about the impact of the Wood report relate to my own subject area as well. Many (perhaps most) ESOL learners in Scotland are already in work. They already have some technical skills that allow them to be employable. A lot of them are in fact over-qualified for the jobs they do – I teach psychologists who pack boxes in factories, accountants who wash dishes in restaurant kitchens, and archaeologists who clean offices. They often work in teams with members of the same language group, and the level of English required for them to do their job is pretty low. Their motivations for learning English aren’t related to their current job, but are more about giving them the language skills to achieve their potential as professionals and citizens in this country. They want to work as psychologists, or accountants, or archaeologists. They also want to be able to talk to their neighbours, help their kids with their homework and perform all the other tasks that allow them to integrate effectively into society.

However, their personal motivations don’t match the economic drivers. Scotland’s economy needs packers, dishwashers and cleaners, and it needs them to work for minimum wage. If HCT is the driving force behind education, the need for ESOL in the current Scottish economy is not particularly great, despite the clear benefits to the individuals, and society in general. In fact, developing the English skills of this sector of the population can actually be counter-productive for their employers, as it makes them more difficult to exploit. I have heard plenty of anecdotes about migrant workers on zero hour contracts, or being paid below the minimum wage, or being forced to work more hours than they can legally be required to work. There seems to be little sense of corporate social responsibility either. In many cases, employers put a single migrant worker in charge of a team. In others, employers have chosen to train one of their local staff to speak Polish rather than provide English lessons for their employers. English then ceases to be a requirement at all for these team members. This limits the horizons of employees, both socially and professionally, beyond their current workplace, making them more reliant on their employer and therefore prone to exploitation.

This ghettoization of immigrants may be an unintended consequence of HCT, but it is real nonetheless and it concerns me a lot. Scotland doesn’t just need its immigrants to be packers, cleaners and dishwashers. It also needs them to be socially involved, to contribute actively and positively to the multicultural society that is inevitable in a globalized world. Sir Ian Wood is concerned with ‘Scotland’s medium-term economic future’, but what about the societal future? How are people going to integrate and interact with each other, on a local, national and international level? Surely that’s important too, and surely education should be playing a key role in shaping the country’s social future as well as its economic development. When I started working as an ESOL teacher in Scotland, I thought that I was making a positive contribution to society. Now it seems that I, along with everyone else working in the education sector, am expected to make a positive contribution to big business.

I’m curious to know how other people working in ELT around the world feel about Human Capital Theory. Can you see the direct benefits to your learners’ lives, through the provision of a sought-after commodity like English? Is it OK that ELT is popular because of the economic impact it can have? Or are you concerned that HCT is focusing education too narrowly on subjects that benefit corporations, or that the motivation for learning English is too caught up with financial gain for your learners to see other benefits. Maybe you don’t see any impact of HCT in your context at all. Whichever, I’d welcome any comments.


Graddol, D. (2014), Plenary session at IATEFL conference 2014. Available from: [last accessed 21/09/2014].

Little, A. (2003), ‘Motivating learning and the development of human capital’, Compare: A Journal of Comparative and International Education, 33:4, 437-452

Nussbaum, M. (2012), Not for profit: why democracy needs the humanities, Princeton: Princeton University Press.

Robinson, K. (2007), Do schools kill creativity? Available from: [last accessed 21/09/2014]

Scottish Government (2014), Education working for all! Commission for developing Scotland’s young workforce: final report. Available from: [last accessed 21/09/2014].

  1. Great site you have here.. It’s difficult to find high quality writing like yours these days.

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  2. A very interesting and well written post, thank you. In Korea people learn English because it helps to pass tests so you can get a good job (even jobs where you don’t need English really value it here). The tests are pretty badly designed, so there’s a situation where pupils are really good at answering multiple choice grammar questions, but struggle if they have to have a conversation or do a piece of extended writing. A lot of this relates to seeing education as a way of making people more profitable and I think it’s pretty sad sometimes.

  3. Hi Timothy,
    It’s very interesting how you describe the situation in Korea. It sounds like English Language Teaching is motivated by Human Capital Theory, in that people learn it to makes themselves more employable and employers value it as a skill. But the way in which English is taught/assessed means that it doesn’t actually develop their employability at all. Is that a fair assessment? Perhaps if assessments required candidates to write reports, or hold meetings, or conduct a role-play on a work-related topic, English Language Teaching could focus more on developing the skills that the Korean economy actually needs.
    I would argue that even this is a very narrow focus for ELT. My concern is that English is only being used as a means of developing economies, and perhaps more of a focus needs to be put on using it as a means of allowing people to become effective and active global citizens. In any case, an ability to answer multiple choice grammar questions isn’t going to help people to be effective contributors in any meaningful context which, I agree, is sad.
    Thanks for giving your perspective!

  4. Bob permalink

    i Steve,

    An interesting post – thanks – you’ve given me lots to thick about as usual.

    I understand your point about education being more than just providing workers for industry. Even if this path is followed, I guess one potential unintended consequence of following it is likely to be that it could be backward facing when as teachers we should be preparing learners for their futures rather than our pasts (King, 2014). So, precisely which industry to focus on would be a huge gamble. Besides, shouldn’t industries be training the workforces they want?

    If the complaint in the report is ultimately that students are being exposed to the wrong type of education, unless it is related to King’s (2014) point, then it’s difficult to see what type of education would not benefit people, some of whom make up the workforce. That is linked to what Ken Robinson wrote in Out of Our Minds (2011) – his whole point is that creativity should be encouraged and if people follow their passions and are allowed to be creative, they will not only be able to earn a living from it but be happier and more productive by pursuing their interests and likely earning more. That sounds as though he is an advocate of HCT – or have I misconstrued HCT?

    As for English being learned for employability, Timothy’s post seems to indicate that what happens in Korea also happens in Japan. English test scores are used by employers to differentiate between job applicants even when the employers are filling posts where no English is required. This really happens and is not linked to HCT in that English is not seen as having any economic benefit but rather as a way of choosing (and rejecting) job applicants in countries with many more graduates than graduate positions.


    • Hi Bob,
      Thanks for your interesting thoughts on this. I think Ken Robinson does advocate HCT, but he sees it in a very positive light. His take is that economies in this (post)modern society need people who are creative, so if people happen to follow their dreams and be creative (something that modern education tends to stifle) then they will not only be happier, they will also develop their human capital in a way that benefits the economy. An alternative view is that global postmodern economies only need a small number of people to be creative – if you consider how iPhones are built in China by teenagers, the need for a creative, artistic or imaginative workforce isn’t perhaps as great as Ken Robinson wants us to believe.
      It’s interesting how you describe the situation in Japan and Korea, where employers use English qualifications as a way of selecting employees. In the UK, now that the number of people accessing higher education is far greater than it used to be, degree-level qualifications are used in a similar way. So people with degrees are selected over people without degrees, even for jobs where a degree is not particularly useful. I’m not sure what you’d call that – it doesn’t really tie in with HCT unless the skills acquired through getting a degree (or through passing grammar-based English assessments in the case of Japan and Korea) are generic and transferable enough to be used in these jobs. Maybe they are..?

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