On-the-job training
Topic: Human Capital: Education, Health and Demographic Dividend · NCERT: Class 11, Ch 4 "Human Capital Formation in India"
Meaning
On-the-job training is training that a firm gives its own workers to raise their skills. It is given in two ways: in-house, under the supervision of a skilled worker, or off-campus, by sending the worker to an outside course. The firm bears the cost. So it insists that the worker stays for a specific period of service, during which the firm recovers its cost through higher productivity. It is a source of human capital formation because the return, which is higher labour productivity, is more than the cost.
Example
An IT company in Bengaluru trains new recruits for three months. In return they sign a bond to serve the company for two years. During those two years, the company earns back the training cost from their higher output.
Don't confuse with
- Formal education: education is usually paid for by students, parents or the state before a person starts working. On-the-job training is paid for by the employer after hiring, for the needs of that job.
- Apprenticeship: an apprenticeship combines on-the-job training with classroom learning and pays the trainee a stipend. In India it is governed by the Apprentices Act 1961.
Related concepts
- Human capital formation
- Investment in education
- Health expenditure
- Training
- Labour market information