What is the role of health in human capital formation?

Down with fever? You need to visit the doctor immediately to recover from it. You invest heavily in your health as a healthy body is where a peaceful soul rests. Today, being healthy and fit is a new buzz. People have realized the importance of being healthy. You will be able to create and enjoy wealth only if you are healthy. Health is wealth, as minting money requires hard work and brainstorming, which is not possible if you are unwell. The role of health in human capital formation is immense, let us study how and when?

What is human capital formation?

Human capital means human resources which if maintained in healthy condition will form human capital. Human means we people and capital means resources in the form of assets that can be utilized to get monetary gains. The role of health is huge in human capital formation. Human capital is the only capital that has its own brains. Innovation has been the offspring of an amazing idea out of someone’s brain which has made history be it companies like Apple, or Infosys, or Zerodha. Human capital formation is extremely difficult when it comes to selecting, training, and retaining people. A company is formed for people, with people, and by people. It’s always wise to invest in human capital formation be it in the form of health coverage or skill development of employees.

what is the role of health in human capital formation
what is the role of health in human capital formation

What is the role of health in human capital formation?

Health is all the wealth you have. If you are healthy, capable of thinking, then minting money is not a problem. Humans will become valuable capital assets only if you invest in health and take care of them. The question as to what is the role of health in human capital formation is answered below:

  • A healthy body is where a healthy mind resides
  • A healthy body will be full of energy, positive vibes, thinking capabilities to work hard to earn money.
  • The health insurance company is becoming so popular because of the fact that health cannot be ignored.
  • Companies are collaborating and investing in health insurance providers for human capital formation.
  • Human capital formation is also dependant upon the kind, type, and facilities one receives from the employers and health is always the priority.
  • Good working conditions, flexible leave policy, work from home facilities is provided by the companies in order to retain the human capital formation.
  • Being fit, the importance of a healthy diet, and exercise is what helps in human capital formation.
  • Organic products in trend are organic food materials or organic vegetables all are in high demand because of the need to stay healthy.
  • Companies dealing in health products like Ayurveda example Patanjali who has witnessed zooming profits is simply because people want to live a healthy life and health is prioritized.
  • If you invest today in your health, the money invested can be easily recovered by working hard. So, invest now to reap fruits later.
  • Any health problems may land you in a situation where deteriorated health may not allow you to work to earn money. Thus, taking care of your health comes first, while the rest of the things follow later.
  • Term insurance of paying a few dollars or rupees as low as Rs 100 per month has been the highest-selling hot cake. It is because people want their family’s health security at any cost if they are no longer with them.
  • Being healthy and investing in yourself will slow down the aging process.
what is the role of health in human capital formation
what is the role of health in human capital formation

Thus, health plays an important role in human capital formation, rather say it lays down the very base or foundation of human capital formation.

How important is the role of health in human capital formation for the companies?

Companies create job opportunities for the employees. Due to cutthroat competition, even companies have lost their monopoly power. Today companies want to hire the best employees, while employees also have the choice to choose the best companies possible. In order to attract well-experienced or highly qualified employees, or retain the existing employees, they invest a lot in human capital formation. They have realized the role health plays in human capital formation. Below are steps were taken by the companies to ensure human capital is formed and preserved at all costs, creating employee satisfaction as a priority metric.

  1. Health insurance for employees – Collaborating with best possible health insurance providing companies, to cover employees as well as their family’s health insurance absolutely free of cost with maximum possible benefits.
  2. Health insurance for employee’s parents – Providing health insurance coverage for employee’s parents irrespective of their age, medical conditions with certain terms and conditions at the lowest possible premium charges.
  3. Working conditions -Flexible and conducive working conditions.
  4. Leave policy – Flexible leave policy ensuring good work-life balance. Allowing leaves on the occasion of festivals. While some companies have started providing mandate leaves which should be taken by the employee every month. In some companies, mensural leaves for working women are provided every month to empower women’s workforce.
  5. Maternity/ Paternity leaves – Maternity leaves for six months as mandated by the government along with other benefits. Paternal leave ranging from a week to 6 months is being provided by certain companies though it’s not mandated by any government laws. This is done to promote a good work-life balance.
  6. Hire HR Professionals – Companies investing in hiring best-skilled HR professionals who will be hiring valuable candidates to contribute towards the company’s success.
  7. Hire best employees – Companies invest hugely in developing tests to screen employees, so as to choose the best while leaving the rest.
  8. Health Helplines – Companies have invested in health helplines to take calls or chat with their employees 24 x 7. This would encourage people to open up on any health issues they have be it mental health or suicidal tendencies etc.
  9. Medical online consultation – Video consultation from experienced doctors for the employees is another step taken by the companies. This was a necessary call during the covid situation which still persists. Thus, getting medical help from home, would in a way help the employee to be more productive at work.
  10. Covid awareness – Covid kits consisting of medical equipment like thermometers, goodies, health tonic, sanitizers, masks were distributed by many companies for the welfare of the employees and their families. May companies sponsor the covid vaccines for their employees as well as their families free of cost.
  11. Promotions, Bonus pay-outs – Companies will offer promotions to their existing employees. When a company performs well, then it also declares bonuses to its employees. The main motive is to retain experienced employees.
  12. Educational awareness – Companies invest in developing software, contests, and certification courses to encourage the skill development of employees. A healthy body is reflected in a healthy mind. Providing learning opportunities will help to improve an employee’s overall skillset while helping him climb up the career ladders.

Benefits of investing in human capital formation?

Are companies really worried about the health of their employees? Why would they pay attention to the role of health in human capital formation? The answers are mentioned below:

  1. Brand loyalty – A company is formed with, by, and for people. Employees are part of the company and keeping them happy and satisfied matters. When the companies take care of the health of the employees and their families then employees feel valued. A happy employee is deemed to talk good about his company. Words of mouth go a long way in creating brand loyalty amongst people.
  2. Productive workforce – Relieving the employees from the cost of managing health issues for themselves as well as for their families is a huge support. The employee feels valued which reflects in its productivity. A happy workforce is a productive workforce.
  3. Employee-oriented – Companies do want to get the tag of being the most employee-friendly or employee-oriented company of the year. This buzz does attract a lot of good professionals towards the company thus increasing its demand in the job market.
  4. Retain employees – Employees will be retained if a company invests in them in any way. Experienced employees will always prefer to stay with a company offering health coverage as compared to others. The Labour turnover rate will be very low for such companies.
  5. Growing Profits in the long run – If a company invests in employees’ health today. They are sure to reap benefits tomorrow. Employees will value the relationship between them and the company and will work more productively. This will result in optimum utilization of human resources which in turn will result in higher profit margins in the long run.
  6. Innovative ideas – When employees do not have to worry about their health or their family’s health issues then they have more time for brainstorming. Innovative ideas are the outcome of such brainstorming sessions. In today’s fast-changing world, an innovative idea is enough to give a competitive edge to any business.
what is the role of health in human capital formation
human capital formation


  1. Elon Musk – Entrepreneurial and Technical Expertise:
    • Elon Musk, the CEO of Tesla and SpaceX, exemplifies human capital through his entrepreneurial and technical skills. Musk’s background includes degrees in physics and economics, providing him with a strong foundation. His hands-on experience in building and leading technology companies showcases his ability to innovate and take calculated risks. Musk’s human capital, encompassing both education and practical experience, has been crucial in founding and leading successful ventures.
  2. Oprah Winfrey – Communication and Media Skills:
    • Oprah Winfrey, a media mogul and philanthropist, has built her human capital around communication and media expertise. Starting as a local news anchor, Oprah developed exceptional interviewing and communication skills. Over the years, her ability to connect with audiences and create influential content has made her an icon in the media industry. Oprah’s human capital lies in her communication skills, emotional intelligence, and understanding of audience dynamics.
  3. Warren Buffett – Financial Acumen and Investment Skills:
    • Warren Buffett, one of the most successful investors in the world, has built his human capital around financial acumen and investment expertise. With a background in business and a keen understanding of financial markets, Buffett has made sound investment decisions that have led to substantial wealth. His ability to analyze businesses, assess risks, and make informed investment choices demonstrates how specific skills in finance contribute to human capital.
  4. Malala Yousafzai – Advocacy and Educational Leadership:
    • Malala Yousafzai, a Nobel Prize laureate, exemplifies human capital through her advocacy for girls’ education. Despite facing adversity, Malala’s resilience, courage, and commitment to education have made her a global symbol for activism. Her expertise lies in educational leadership and social change, showcasing how passion, knowledge, and the ability to communicate effectively can form a powerful human capital for social impact.

These real-life examples illustrate how individuals develop and leverage their human capital, combining education, skills, experience, and personal attributes to achieve success in various fields.


In South Asia, a ban on child marriage is suggested as a way to build strong human capital along with inclusive growth.

What do you think is the role of health in human capital formation?

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