CE  Vol.10 No.12 , November 2019
Educational Theories and Issues in Human Capital Development
Abstract: The reformation of education has moved towards the fourth industrial revolution (IR 4.0). The development of a nation focuses on the quality of education. Education is seen as a panacea to solve issues relating to human capital development. In Malaysia, human capital development is much emphasized, as a successful human capital development will gear the nation towards being a developed country. Malaysia aims to be one of the developed countries with the aspiration that the human capital will drive the aspiration to be successful. However, there are issues arousing from human capital, where education is said to be the main cause of these issues. Limited research focuses on the issues in human capital development. Thus, this paper aims to discuss the educational theories and issues related to human capital development. The macro, micro and human capital theories are among the important theories to be looked into as they help in guiding the education towards its aim. The issues related to the human capital are a lack of 21st-century skills, a decline in English language proficiency and deteriorating moral and ethical values in employees. Implications and recommendations are also provided to curb those issues. Overall, these educational issues need to be addressed and inhibited for a smooth journey towards being a developed country.

1. Introduction

The ever-changing world is moving towards the fourth industrial revolution (IR 4.0). All industries are paving their way to cater to the 21st-century demand in relation to IR 4.0 (Hashim, 2018). It is undeniable that all professional working industries demand employees, who can contribute back to their own organizations and society. With that, the educational industry comes into view as every individual needs to receive adequate and proper education before moving to the working field. Education is viewed as a stepping stone for all industries. Most of the professional job demands employees with a good educational background (Mohammad, Ghazali, & Hashim, 2018).

In Malaysia, the education system has been geared towards promoting the working skills required by employers in this 21st-century era. Referring to the Sustainable Development Goals (SDG), the fourth aim is to provide a quality education for all. Malaysian education system aims to provide quality education with five system aspirations and six student aspirations as stated in the Malaysian Education Blueprint (MEB), which includes the type of education that Malaysia aspires to achieve by 2025 (Malaysian Education Blueprint, 2015). All the aspirations are important in ensuring that Malaysia will be able to move towards being a developed country.

The reformation of education is aimed to solve issues arising from the current individuals in the workforce. Education is closely related to the working field as education prepares students to be efficient employees. However, the issues surrounding employees are rising. Employees who are well equipped with the knowledge and appropriate skills are of demand (Rasalingam & Embi, 2018). Yet, many employers said that most employees or graduates do not have adequate skills for the 21st-century workforce (Malaysian Education Blueprint, 2015). Skills such as critical and creative thinking, problem-solving and social skills are lacking in graduates (Hirsch, 2017). Plus, graduates also have low proficiency in using the English language, whereby most of the jobs require employees with good English proficiency (Jalal, 2016).

There is also the problem of graduates or employees who do not possess moral and ethical values in a working environment (Schooley, 2017). All these problems are related to the educational system, whereby it is said that a good education will be able to produce a good individual for the workforce (Speringer, Goujon, & Jurasszovich, 2018). There is limited research focusing on the issues in education for human capital development. Most of the research focuses on the issues within the educational institutions and systems (Wan, Sirat, & Razak, 2018; Majid et al., 2018; Muhammad, Ramdas, & Rassiah, 2018; Sumintono, 2015). Hence, this paper aims to discuss the educational theories and issues, which affect the human capital development

2. Educational Theories

2.1. The Macro Theory

There are various educational theories related to the aim of education. Education is said to be the main milestone, which could provide for better development of the society, economic and nation as a whole (Speringer et al., 2018). A good education will ensure a better development of the country in the future.

It was stated in the macro theory that education aims to fulfil the needs of everyone. The theory is seen as a whole and provides depth, where everyone should be included for the benefits of education (Preston & Green, 2003). The term macro means the bigger proportion of a social system, whereby the aim of education is to make positive changes to the larger systems or communities (Bricout, Pollio, Edmond, & Mcbride, 2008). There are two sub-theories in the macro theory which are the functionalism and the conflict theories (Speringer et al., 2018).

First, the functionalism theory is a theory which shows how education is able to produce individuals to contribute to a better society. In this theory, the education system aims to create productive individuals, who can change their status in the society with education by returning what they have learnt for the betterment of the society as a whole (Speringer et al., 2018). In the functional theory, the importance of having an abundance of specializations is deemed important because there are various occupational demands to suit the current changes in society (Collins, 1971). For instance, a good engineering school produces a good engineer, who can build good roads for the greater good of society. A failed education system will cause inconvenience to society (Speringer et al., 2018).

On the other hand, conflict theory is a theory whereby education brings conflicts to society. This means that with education, more systems are changing and the structures invoke a rise in injustice, which could result in violence among society (Psaltis, Carretero, & Čehajić-Clancy, 2017). This is because, educated individuals will gain a better socio-economic status, which causes the uneducated to be shunned away. The problem of being injustice may happen due to the structure in the system (Curl & Lesnick, 2017). This theory looks at the other perspective of education, which is to see education as the main cause of arising conflicts of inequality in society.

Regardless of the two contradicting theories, both theories are similar in a way that education is a contributor to a better society, economically and politically (Speringer et al., 2018). The functionalism theory sees the inequality as a need, to classify society based on their educational status, while the conflict theory sees inequality as an issue which comes from different educational statuses (Speringer et al., 2018). Thus, both theories view education as a part of creating a better society.

2.2. The Micro Theory

The micro theory is a smaller view of education, whereby education is aimed at fulfilling the needs of the local community (Bricout et al., 2008). This theory does not look into the society as a whole, but it is aimed at solving the problems in the local community before looking at the bigger picture. Usually, the micro-level in the education system lies in the district and school level, which is much more focused on by policymakers (Johnson, 2013). The sub-theory related to this micro theory is the interactionism theory (Carter & Fuller, 2016; Speringer et al., 2018).

The interactionism theory means that individuals interact meaningfully to fulfil the needs of the local community (Carter & Fuller, 2016). It is necessary to communicate and address issues in the local community in this theory. The needs of the local community are identified through interaction and reality, to ensure that the local community’s needs can be further enhanced with the help of education (Carter & Fuller, 2016; Handberg, Thorne, Midtgaard, Nielsen, & Lomborg, 2014). Using this theory, education is a platform for individuals to gain insight into the issues faced by local communities through repeated communication and interactions (Carter & Fuller, 2016).

2.3. The Human Capital Theory

The human capital theory shows how education is able to provide for a better working environment. This theory emphasizes on investing in education for better productivity of individuals (Olaniyan & Okemakinde, 2008; Psacharopoulos & Patrinos, 2018). The human capital theory, which is investing in education for the greater good of an organization has been estimated to be in application since the 1950s (Psacharopoulos & Patrinos, 2018). With a good investment, employees will gain more skills and return the benefits to the organization by providing a better service, which could bring up the organization. An organization which is well-managed will gain more profit. In return, profitable organizations will also benefit the employees in terms of increasing salaries or giving incentives. Both parties are said to be able to gain benefits based on this human capital theory.

Additionally, as an individual, the human capital provides educational benefits and skills attainment at the same time, which are both beneficial (Mellander & Florida, 2012). The human capital theory is important nowadays, as the world is changing rapidly. The advancement of technology demands more skills and human capital is a significant contributor to economic growth (Mutia, Doris, & Roziana, 2018). Thus, many new skills are required in order to be a well-developed industry in this competitive world, which can be enhanced with the aid of various organizations (Mutia et al., 2018; Yusof, 2018).

3. Issues in Education

With regards to the various theories discussed, it can be seen that most theories emphasized on the importance of education in developing a better society and nation, in terms of economics and stability (Carter & Fuller, 2016; Mutia et al., 2018; Speringer et al., 2018). This means that education should be focused on developing individuals, who can bring change to the country when they are in the working field. However, there are issues concerning graduates or employees, who are not up to par with the current advancement and these issues are closely related to the problems in the educational system.

3.1. Lack of 21st-Century Skills

Undeniably, even with education, many employers said that graduates who started to join the workforce lack in 21st-century skills (Malaysian Education Blueprint, 2015; Schooley, 2017). One of the reasons, which contribute to the lack of 21st-century skills among graduates is because education is more focused on academic achievement, rather than the development of skills (Hirsch, 2017). The 21st-century skills as mentioned by the Partnership for 21st-century skills (P21) are categorized into three domains, which are learning and innovation skills, information, media and technology skills and life and career skills (The Partnership For 21St Century Skills “P21,” 2009).

Graduates lack in learning and innovation skills. In the fast-paced world, changes are made rapidly, especially in the working field. Skills learnt within three to five years in tertiary education might be outdated once graduates enter the working field (Hossain et al., 2018). Due to that, employers said that graduates do not have the proper skills to work (Soulé & Warrick, 2015). Yet, it is important for both the employers and employees to learn new skills to suit the current job demands (Yunus, 2018). The innovative skills, which are also lacking in graduates has been a worrying view of the education system. The education aspires to produce graduates who are job creators instead of job seekers (Malaysian Education Blueprint, 2015). This shows that graduates need to be able to produce something for the benefit of the society and nation (Speringer et al., 2018). However, current graduates are seeking for easy jobs and they are working for their own benefits, without the need to contribute back to society (Taneri, Gao, & Johnson, 2016).

Additionally, technology-savvy students do not possess the proper information and technology (IT) skills. The graduates might be hooked up with their gadgets all day, but when it comes to applying their technological knowledge and skills to solve a problem in an organization, they could not do it. The skills they possess are inadequate and inappropriate for the working field, which is why employers demand better graduates in terms of 21st-century skills (Soulé & Warrick, 2015). There is no doubt that employers want their organizations to be up-to-date and can contribute to the development of the country (Nordin & Norman, 2018). In order to do so, employers need to hire well-equipped employees to adhere to the aim of producing 21st-century organizations (Rafiq & Hashim, 2018; Rasalingam & Embi, 2018). Nevertheless, employers can also contribute by providing training for employees, who need to be trained (Poel, Dyk, Gasiorek, & Blockmans, 2015; Qing & Adamson, 2015). This will make the employees better and able to work efficiently as mentioned in the human capital theory.

Life and career skills are also skills in 21st-century skills. These skills are also seen to be lacking in graduates. Most graduates do not possess life skills which can help them to lead a better life. There are indeed a lot of issues regarding teenagers and young adults taking their own lives by committing suicide (Prajapati, Sharma, & Sharma, 2017; World Health Organization, 2017). The depression rates among youths are also increasing with time (World Health Organization, 2017). The reason for this is because most youths do not possess life skills. Life skills are skills which can help an individual to overcome his or her problems in a positive manner. However, with the ever-stressing environment and the rapid changing world, graduates are getting stressed out with the workloads and they could not cope with the stressful working environment (Venkatesha, 2016; Vranda & Chandrasekhar, 2011). This shows that they do not possess life skills to handle those problems. Plus, they also do not have career skills, which can be seen that most graduates are unemployed in today’s world. The graduates are choosy, whereby they do not want to work in a stressful environment, so they decided to be unemployed (Hossain et al., 2018). In return, this will become a loss for the nation as youths are the main pillars for the development of the country.

One of the five system aspirations as mentioned in the MEB is access (Malaysian Education Blueprint, 2015). This aspiration can be the first step in overcoming the issue of lack of 21st-century skills. In this aspiration, it was stated that more opportunities will be created for individuals to further their studies at the tertiary level. This means that more institutions will be created by 2025, such as the technical and vocational education and training (TVET), private higher institutions and online education. TVET is one of the solutions to educate students in terms of soft skills. Regardless of that, proper development of the curriculum is necessary to ensure that the graduates are fully prepared for the future workforce.

3.2. The Declining of English Language Proficiency

One of the most discussed issues is the decline in English language proficiency among graduates and employees (Mustafa, Nordin, & Embi, 2017). This is a serious issue in the educational field in Malaysia as most of the industries demand employees with good command in English (Jalal, 2016; Misbah, Mohamad, Yunus, & Ya’acob, 2017). Undeniably, many technologies are widely used in various working industries, which requires employees with good proficiency in English (Mona & Yehia, 2017). In order to communicate with the machinery from other developed countries, it is crucial for employees to be well-equipped with the English language (Fitzpatrick & O’Dowd, 2012). Malaysian education aims to produce graduates, who can compete globally with other developed countries. To be able to make Malaysia a developed country, it is important to have individuals who can use the international language, which is the English language. When an individual has a high proficiency in English, he or she is able to bring the nation’s name worldwide, as they are able to promote the strengths of the country (Arumugam, Xavier, Dass, & Maniam, 2014). Due to that, the importance of educating students and equipping them with proper English language skills is the first step in curbing this issue.

In the current Malaysian education, the English language is emphasized. The curriculum is reformed and currently, the Common European Framework or Reference (CEFR) is implemented in primary schools (Malaysian Education Blueprint, 2015). CEFR is aimed at younger students as the learning of language should begin at a young age. As mentioned by (Azman, 2016), CEFR is a curriculum, which is expected to bring a natural English learning environment for students, so that they are able to be proficient in using the English language up to the tertiary level. With CEFR, it is hoped that the students are able to use the English language proficiently. Undeniably, even with education, many employers said that graduates who started to join the workforce lack in 21st-century skills (Malaysian Education Blueprint, 2015; Schooley, 2017). One of the reasons, which contribute to the lack of 21st-century skills among graduates is because education is more focused on academic achievement, rather than the development of skills (Hirsch, 2017). The 21st-century skills as mentioned by the Partnership for 21st-century skills (P21) are categorized into three domains, which are learning and innovation skills, information, media and technology skills and life and career skills (The Partnership For 21St Century Skills “P21,” 2009).

3.3. Deteriorating Moral and Ethical Values

Many employees lack the moral and ethical values in working. Basic working ethics such as being punctual and discipline are uncommon anymore in the current working environment (Chowdhury, 2016; Schooley, 2017; Taneri et al., 2016). Compared to other developed countries like Japan, the employees are extremely disciplined and they are very punctual. The Malaysian Prime Minister, Tun Dr Mahathir Mohamad has once introduced the “Look East” policy in 1981, whereby Japan and Korea are set as examples for Malaysian employees (Overtoom, 2014). However, as the time passed, this policy has been viewed as unsuccessful (Overtoom, 2014) as many Malaysians find the policy to be too burdening to be applied in the country (Talib@Khalid, Sulaiman, Isa, & Saad, 2013). This issue is a big issue to be looked into, as the basic ethical values are important in ensuring the success of an organization or an individual. Additionally, this scenario does not only happen in the working field but also in educational institutions such as schools and universities (Schooley, 2017). Many students are not punctual to class and their discipline is wearing off.

Other than the basic ethical values, moral values such as respect and love are not practised anymore in the workplace and schools (Taneri et al., 2016). Most employees do not have any respect for their employers and other employees. The society has become individualistic, whereby everyone is looking after their own problems without thinking of others’ feelings, especially in this globalized era (Taneri et al., 2016). In terms of love, most individuals do not care about other people’s problems, which will result in broken relationships. Looking at the bigger picture, without love, the unity among Malaysians can be broken as well (Egharevba & Aghedo, 2016). Plus, the value of being respectful is not a commonly practised value anymore (Bandu, Ahmad, & Awang, 2015). Without respect, the nation’s unity will also be at stake. In order to be a developed country, Malaysian citizens need to have ethical and moral values so that Malaysia can produce a better workforce with the aid of various skilful individuals. As the saying goes “United we stand, divided we fall” which clearly means that if there is unity among the people, they can achieve greater outcomes for the country and vice versa (Kee & Nie, 2017).

Recently, the Ministry of Education has introduced the humanistic concept in education. There are three elements in this concept, which are love, mutual respect and happiness (“Kasih sayang, saling hormat kunci kukuhkan sistem pendidikan,” 2019). These elements are hypothesized to be able to develop individuals rich in humanistic values. With the humanistic concept, education is aimed to develop values in individuals, as mentioned in the third paradigm of Malaysian education (Malaysian Education Blueprint, 2015).

4. Implications and Recommendations

Human capital development is important as it puts emphasis on developing the nation to be a developed country. Malaysia is moving towards being a developed country, but certain issues have to be addressed first. The issue of lack of 21st-century skills among graduates will affect the productivity of the workforce. Each individual should have appropriate skills so that they are able to effectively work and benefit the organization, as well as contributing to the nation’s economic growth. In order to curb this issue, education should not be at the institutional level only, but it should also be at the workplace level as well. Employers can invest in preparing the graduates, who lack in 21st-century skills by sending them for training. This condones to the human capital theory, whereby investments in education are profitable for the organization, too.

Other than that, the decline of English language proficiency among graduates should also be addressed. In relation to human capital development, employees with good English language skills are important because English is an international language. With the use of the English language, an organization can further expand their companies internationally. This will not only benefit the organization, but also the country, whereby the country’s name will be recognized worldwide. Consequently, the economics in the country will expand, too. Thus, to further overcome this issue, graduates should enroll themselves in English courses, either face-to-face or online learning. There are various open learning platforms for each individual to gain new skills without paying, such as the Massive Open Online Course (MOOC), which offers an array of courses for free.

Finally, moral and ethical values are important for human capital development as well. A developed country needs to have citizens, who are rich in moral and ethical values. Plus, without ethics, such as discipline and punctuality, it is difficult to move towards being a developed country. Hence, to solve this issue, everyone should put forward a helping hand. The individual himself should always practice values, whereas parents and teachers can be the role model for younger children. Media also plays a significant role in curbing this issue, as the evolvement of media will be able to produce a much bigger impact in educating values in citizens. Educating values should not only be in the hands of the school, but also in the hands of everyone.

Overall, this paper has discussed the theories related to education and the issues relating to human capital development. The theories act as a guideline for policymakers to design policies based on the aim of education. As policymakers, it is important to know the purpose of education, either to solve issues in the community or to produce individuals who can contribute back to society. In Malaysia, the importance of education is to provide a better nation for everyone. However, it is crucial to note that formal education in schools should not be seen as the only panacea to solve all issues relating to the human capital development, as informal education is also as important as a formal one.


This research was supported by the grant from the Faculty of Education, Universiti Kebangsaan Malaysia GG-2019-017 and PP-FPEND-2019.

Cite this paper: Rafiq, K. , Hashim, H. , Wahab, J. and Yunus, M. (2019) Educational Theories and Issues in Human Capital Development. Creative Education, 10, 2689-2700. doi: 10.4236/ce.2019.1012195.

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