Incentives and Disincentives to Invest in Human Resources

The Memorandum on lifelong learning invites to increase investment in human resources as, at an individual level, the acquisition of skills and knowledge increases a person’s productive value, an idea that is grounded in human capital (HC) theory, and which still informs much of the debate in adult education today. This chapter critically examines the arrangements that European governments have put into place to encourage employers to invest in education and training and reflects on the potential benefits and limitations of the HC paradigm. The main argument presented in this chapter is that higher investment in the education and training of workers, although important, is not sufficient. Accordingly, it is suggested that institutional or legislative arrangements that favour human resource management strategies built on a shared social commitment towards employee development are the most beneficial not only to encourage employer expenditure on employee training but also to enable individuals to gain a better return on investment in education and training.