Expanded Summary

Capital is valued for its useful functions in the creation on wealth. Its use increases the efficiency of production and the productivity of all the factors with which it’s used. One of the prominent forms of capital is human capital.

Efficient use of human capital and taking care of its quality in the global labour market is becoming more and more priority.

This article is an attempt to transfer basic view about human capital and its use in the labour market.

Human capital is a combination of labour skills, education and opportunities, the level of development of which depends on the success of the state, its ability to produce, effective implementation of productive process and revenue growth.

Thus human capital is one of the main sources of economic and social progress of the country and therefore education and science are priority areas of long-term development.

Education this is a business product that can be realized with high returns. Knowledge and education significantly change the world, as education has a major impact on community development and employment. Many studies have been conducted to determine the relationship between education and employment, which has shown that higher education is an important factor driving the growth of income and employment rates in Georgia.

The first section of the article informs us views of human capital, formulate the theory of human capital and its modern approach.

After human realized his/her productive capacity, its importance in transforming the world and  in economic progress, many thinkers tried to identify and evaluate the qualities of the creative power of human, which  gradually become more and more systematic.

Consequently, the concept of human capital (productive skills, technical knowledge. Education, labor experience as a factor of capital production) has always been main in discussions of capital theory. Its active scientific study has begun  in the twentieth century.

Human capital’s contribution to the company’s success is crucial. Although it’s difficult to determine quantify human capital, most companies are aware that  employee’s  working can be improved by obtaining education, professional education, continue receiving high  education,  improving health programs etc. Many companies invest in employee’s development, because this investment  improves productivity of working and growth of company’s revenue.

Next section of the article   reviews increasing role of human capital in the development of technological progress under limited resources.

As the developed countries of the world example shows the competitiveness of the national economy is directly related to the development of innovative technologies used both as directly in production as in the organizational setting and management. The effectiveness and perfection of this depends on the development of human resources.

 The third section of the article examines development of higher education system   in Georgia, as one of the most important features of human capital.  On the reforms, undertaken in recent years in the higher education system, its results and shortcomings. How educational processes are going in our time and how well they correspond to the contemporary standards. What problems and challenges are ahead of the contemporary educational system and how it should be in the era of development of technologies so that our country is able to form highly-qualified workforce and to follow the contemporary standards.

Priority of education as an important factor is enhanced by the fact, that Georgia aspires to occupy a place in the large European family, which requires accessing and receiving  high standard of education. It’s much easier for an educated person adopt new technologies and social changes. Human capital strengthens the position of workers in the labor market and assists in further advancement and development.

Following chapter overview of the Georgian labour market and its connection to the higher education system. To what extent the higher education system in Georgia is relevance with labour market demands and problems.

Data from various surveys show that there is an increasing demand of qualification resources in  the labor market. However, unemployment remains as an one of the main problem. The analysis of Geostat’s data shows that the unemployment rate is gradually declining, but significantly (as of 2018 data   unemployment rate is 2.3 times) above the natural level. The main barrier that arise for employers is the lack of  qualification level for  potential staff.

From all of the above mentioned we can say, that long term economic growth increasingly depends  on improvements in human capital. An  educated and creative workforce can improve  labour productivity and economic development.

The article concludes, with a discussion of the appropriate policies need to strengthen the linkage between the labour market and higher education system and the incurred costs fully correspond with the outcome for which the costs are incurred.