COUNTRIES may be losing the battle to build their future workforce long before people begin looking for jobs.

That is the central message of a new World Bank report titled ‘Building Human Capital Where It Matters’, which finds that gaps in skills, productivity and workforce readiness are taking shape early in life — in homes, communities and the structure of work itself — rather than in the labour market alone.

The finding comes at a moment when economies, including Jamaica’s, are facing persistent labour shortages, growing complaints from employers about the scarcity of skilled workers, and rising concern over declining birth rates and the long-term capacity of the workforce.

The report argues that human capital — the skills, health and capabilities that drive productivity and growth — has stalled in many developing economies, even as demand for skilled labour continues to rise. Differences in human capital account for a large share of income gaps between countries, making it one of the most important determinants of long-term economic performance.

Presenting the findings on Thursday, World Bank chief economist Norbert Schady said progress in building human capital has slowed across several dimensions, raising concerns about productivity and future income growth.

“Human capital is critical. The most recent economic estimates are that about two-thirds of the differences across countries in their per capita GDP are accounted for by human capital, and human capital also explains vast differences in incomes across people within countries, because very often human capital is the only form of capital that poor people have,” Schady said.

He pointed to troubling trends in education outcomes, noting that increased school access has not translated into stronger learning.

“Despite the fact that there has been an increase in the coverage of education systems around the world, children and young people in developing countries now are less likely to be able to read with comprehension, are less likely to be able to do simple math problems than they were 15 or 20 years ago. This should shock us all,” he said.

The report highlights workforce participation — particularly among women — as a major constraint on human capital formation. In many developing economies, large segments of the working-age population remain outside the labour force, limiting both productivity and economic output.

World Bank researchers noted that in low- and middle-income countries, about half of women are not participating in the workforce, often due to barriers such as childcare responsibilities, safety concerns and limited job access. The absence of women from the labour market, the report argues, represents a significant loss of productive potential.

Schady said the lack of progress in female labour force participation has been striking, particularly in poorer economies.

“The opportunities for women to acquire human capital at work are no better now than they were 40 years ago in the poorer countries,” he said, pointing to the long-standing structural weakness.

Policies such as expanded childcare, safer transportation and targeted/flexible employment programmes were identified as among the most effective ways to increase participation and strengthen human capital.

Beyond participation, the report raises concern about the nature of work itself, warning that many jobs are failing to build skills over time. According to the findings, a large share of workers globally are employed in what researchers describe as “low-learning jobs” — roles that provide limited opportunity for skill development and productivity growth.

Schady noted that while work has the potential to strengthen human capital, in many cases it does not.

“A lot of human capital can be acquired on the job, but it often isn’t. There are vast differences across countries in how much human capital is acquired at work,” he said.

This, the report suggests, may be placing a ceiling on productivity growth in many developing economies, as workers remain trapped in low-skill, low-learning employment over long periods.

A central argument of the report is that the foundations of human capital are formed early in life, well before individuals enter the labour market. Research presented by the World Bank indicates that gaps in learning and cognitive development emerge in early childhood and often persist into adulthood, shaping long-term productivity and income outcomes.

Economist Alaka Holla, one of the report’s authors, said early environments play a decisive role in shaping future workforce capacity.

“The home is where human capital begins. When children are very young, they are completely dependent on their families for early nutrition, early stimulation, their cognitive skills, and keeping a safe environment,” Holla said, noting that differences in early development can have lasting economic consequences.

The report also finds that economic resources alone are not enough to close these gaps, pointing to the importance of caregiving, learning environments and social conditions in shaping outcomes.

The findings come against a backdrop of slowing population growth in several countries, including Jamaica, where declining birth rates have raised concern about the size of the future workforce. Combined with migration and skill shortages, demographic shifts could intensify labour market pressure in the years ahead.

Economists warn that if human capital formation continues to weaken, countries may face a shrinking and less productive workforce, with implications for growth, competitiveness and long-term economic stability.

Schady said while recent trends are concerning, they are not irreversible.

“These levels of stagnation and decline are not our destiny. There are countries that have really made huge progress in investments in human capital. Rwanda outperforms countries with vastly higher income levels in terms of human capital. Chile increased female labour force participation by 15 percentage points over about 20 years. Peru increased learning levels dramatically, and Indonesia reduced stunting significantly. These things can be changed,” he said.