Human resources planning basically involve making conscious decision in context to education and training in order to facilitate future actions for participation of human resources in economic development. The natural question which arises is that should policy planners make any of decisions? Can the market mechanism which is involving employers as users of human resources and students and their parents as suppliers of human resources, not
These are very significant questions, which must be answered.
Any market mechanism has to involve interactions between profit maximizing, producers and utility maximizing consumers. In a perfectly competitive market economy, each of the participants among the producers as well as consumers is endowed with perfect knowledge about the market forces. The interactions between producers and consumers result in a set of prices, which guarantee optimum allocation of resources, provided certain conditions, are met. Allocation effectiveness of resources is considered optimum when it is not possible to improve welfare of anyone of the participants in the market without impairing the benefit of at least one of the participants in the market. Benefit of each participant is viewed here from the point of view of individual's perceptions of choices and preferences according to his or her own standards. This is the standard definition of optimality given by Pareto.
The conditions, which must be fulfilled to achieve Pareto's optimality in resource allocation, are: absence of internal economies of scale in production, informed consumers absence of externalities either in production or in consumption, and absence of public goods.
Failure to fulfill any one or more of the above conditions leads to market failure in effecting optimum allocation of resources and justifies state intervention to effect necessary corrections through policy decisions.
It should also be remembered that the parental influence is a decisive factor in the educational achievements and choice of careers of children. Parental ignorance caused by either lack of adequate knowledge about the market for educated or perceptions based on their career experiences rather than based on the career challenges ahead of their children or both are often viewed as the basis for state intellection in education. State sponsored vocational 'guidance programs and the stress on generating employment market information in developing nation's bear's evidence to state intervention. This intervention is essential to make up for consumer ignorance or lack of adequate and proper knowledge.