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Human capital in the UK increased to 18.22 trillion pounds in 2014

Staff writer ▼ | August 26, 2015
Between 2004 and 2007 the value of the UK’s human capital stock increased steadily, at an average of 2.6% per year, the Office for National Statistics (ONS) reported.
UK workers
Data   The Office for National Statistics:
This was driven by an increase in both the employed working-age population and the skills level of the population. Another important driver of the increase in the value of the UK’s human capital stock was earnings growth, which generally grew in real terms between 2004 and 2007.

Growth in employed human capital slowed into 2008 (0.1%) before falling slightly in 2009 (-0.6%) beginning to reflect the effect of the economic downturn on the UK’s human capital stock.

In 2010 the employment rate and level of employment for those aged 16-64 fell1. This, alongside falls in real earnings2, contributed to further falls in the value of the UK’s human capital stock in 2010 and 2011 (of -1.9% and -2.4% respectively).

Following these substantial falls in 2010 and 2011, the value of the UK’s human capital stock began to stabilise in 2012 and 2013.

In 2014 the value of employed human capital was £18.22 trillion. This is an increase of £220 billion, or 1.2% from £17.99 trillion in 2013. The rise in employed human capital is a result of the earnings used to value human capital increasing faster than inflation, as well as an increase in the level and employment rate of 16-64 year olds over the period.

The value of the UK’s full human capital stock (including the unemployed) was 18.95 trillion in 2014. Both employed and full human capital show similar trends between 2004 and 2014.

Between 2007 and 2011, the decline in the UK’s full human capital stock was not as severe as the decline in the UK’s employed human capital stock, resulting in the gap between the two widening. This reflects the impact of higher unemployment on the estimates of employed human capital.

However, between 2011 and 2013 the gap between employed and full human capital remained fairly stable. In 2014 the gap was £0.73 trillion, slightly less than the £0.79 trillion in 2013. The slight narrowing in the gap between full and human capital reflects the increase in the employment rate seen over the period.