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Human Capital Theory and Problem of Optimisation of Labour Cost in Armed Forces

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Abstract:

Human capital refers to the stock of skills and knowledge embodied in the ability to perform labor so as to produce economic value. The article deals with a practical application of this theory into armed forces. The core of its application is wage motivation of a soldier to leave military service if his/her salary is not increasing. The problem is explained by comparison between the age structure of UK Army and Czech Armed Forces. The age structure of UK Army is shaped by the career scheme selecting majority of soldiers out of service before their age of 40. By way of this selection, labour cost is automatically optimised. It is a proof of impact of human capital theory on armed forces that is usually ignored in Czech Forces. The author hopes that poor economic situation in our country ironically helps to optimise Czech army structure.
Published in Strategic Management
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Lt.Col. Ing. Bohuslav Pernica, Ph.D., born in 1973, Military University of the Ground Forces (VVŠ PV) at Vyškov, among others he served as a chief of the finance management of antiaircraft missile regiment, 1998-2007 lecturer and senior lecturer both at the University of Defence Brno and the Military University of the Ground Forces (VVŠ PV) at Vyškov, where he obtained Ph.D. degree in national defence economics. From 2007 till 2009 he was a planner and a system analyst at the Ministry of Defence and the General Staff; in 2010 he worked at the Training Command Vyškov-Military Academy as the chief of division. On December 1, 2010, he became an advisor to the first deputy of defence minister. He is involved in economic aspects of running and financing professional armed forces, namely the question of their position on the labour market, problems of preserving their personnel structures, the place of armed forces in public finances. Author of several vocational books and publications, e.g. Phenomenon of Alternative Service 2007, Professionalization of Armed Forces 2007.

Country: Czech Republic

21/11/2013

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