Proceedings of the 3rd European Conference on Intellectual Capital

The Investment in Human Capital Development in Public
Administration in Latvia
Maria Simonova
University <strong>of</strong> Latvia, Latvia
S_Marija@inbox.lv
Abstract: The Article examines and evaluates <strong>the</strong> investment in <strong>the</strong> development <strong>of</strong> employees <strong>of</strong> public
administration or <strong>of</strong> human capital in <strong>the</strong> conditions <strong>of</strong> economic downturn in Latvia, as well as determines <strong>the</strong>
subjects <strong>of</strong> investment and evaluates <strong>the</strong> role <strong>of</strong> each subject. At <strong>the</strong> end <strong>of</strong> <strong>the</strong> Article <strong>the</strong> conclusions about <strong>the</strong>
main shortcomings in this sphere are given and solutions are <strong>of</strong>fered. The research is based on <strong>the</strong> analysis <strong>of</strong>
existent (secondary) researches and on <strong>the</strong> monographic method.
Keywords: human capital, project, public administration, human capital development, investment in human
capital
1. Introduction
The main resource <strong>of</strong> <strong>the</strong> public administration institutions as intellectual organisations is <strong>the</strong>
personnel or human capital, whose knowledge, skills, abilities and attitudes, as well as motivation and
loyalty, is a crucial factor for efficient operation <strong>of</strong> <strong>the</strong> public administration.
Upon deterioration <strong>of</strong> <strong>the</strong> economic situation in Latvia, in public administration several measures have
been carried out by a gradual abolishing <strong>of</strong> various social guarantees, thus diminishing <strong>the</strong> differences
between <strong>the</strong> civil servants and employees, and <strong>the</strong> public service has lost <strong>the</strong> “priority” status granted
in its initial formation stage: management contracts, bonuses, material incentives have been annulled,
types <strong>of</strong> additional payment have been limited, personnel assessment system has been altered and
<strong>the</strong>re exist o<strong>the</strong>r restrictions, which adversely affect <strong>the</strong> motivation <strong>of</strong> employees to increase <strong>the</strong>ir
work efficiency. Thus, in conditions <strong>of</strong> economic downturn it is particularly important to find a solution
how to prevent <strong>the</strong> drain to foreign countries or to <strong>the</strong> private sector <strong>of</strong> civil servants and employees
who have gained experience in public administration. One <strong>of</strong> such solutions might be increasing <strong>the</strong>
level <strong>of</strong> employee motivation with <strong>the</strong> help <strong>of</strong> investment in human capital development at institutional
level.
Human capital development means ensuring to <strong>the</strong> employees <strong>the</strong> possibility <strong>of</strong> learning and career
progress, by planning, organising and evaluating it in appropriate manner. According to P. Taylor, <strong>the</strong>
personnel training or development <strong>of</strong> human capital (human resources) development is any
systematic process used by an organisation for perfection <strong>of</strong> knowledge <strong>of</strong> <strong>the</strong> employees or change
<strong>of</strong> <strong>the</strong>ir behaviour or tendencies to increase <strong>the</strong> contribution into achievement <strong>of</strong> <strong>the</strong> organisation’s
goals.
In order to enhance <strong>the</strong> satisfaction level <strong>of</strong> employees with <strong>the</strong> work and <strong>the</strong>ir loyalty, certain actions
should be made to help replace <strong>the</strong> outdated pattern <strong>of</strong> awareness <strong>of</strong> one’s pr<strong>of</strong>essional growth by a
new one, which would be oriented not to <strong>the</strong> repetition <strong>of</strong> ano<strong>the</strong>r employee’s path, but to acquiring <strong>of</strong>
unrepeatable pr<strong>of</strong>essional experience, going through <strong>the</strong> cyclic path <strong>of</strong> career development within <strong>the</strong>
organisation or outside it ( Dubra 2004).
Consequently, <strong>the</strong> objective <strong>of</strong> <strong>the</strong> Article is to evaluate <strong>the</strong> opportunities <strong>of</strong> investment in human
capital development in public administration in Latvia. The tasks to be performed for achievement <strong>of</strong>
<strong>the</strong> objective are: to explore <strong>the</strong>ories concerning <strong>the</strong> human capital and promotion <strong>of</strong> human capital
development (investment in human capital), to examine <strong>the</strong> obstacles to human capital development
in public administration, to analyse <strong>the</strong> results and propose solutions.
2. Essence <strong>of</strong> <strong>the</strong>ories on human capital development
In <strong>the</strong> recent years <strong>the</strong>re exists a viewpoint that <strong>the</strong> pr<strong>of</strong>itability <strong>of</strong> development in a contemporary
state to a large extent depends on <strong>the</strong> amount <strong>of</strong> money which it invests in its people. Without this
investment <strong>the</strong> state cannot ensure its gradual development. Thus, in America, according to some
calculations, <strong>the</strong> portion <strong>of</strong> investment in human capital is bigger than 15% <strong>of</strong> <strong>the</strong> GDP, which
exceeds <strong>the</strong> total sum <strong>of</strong> investment in private capital, factories, equipment etc.
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