Investing in Human Capital

An authored article of Sumit Kumar in World HR Diary talks about importance of on-the-job training in Human Capital.
In 1964, Gary Becker, a Nobel laureate, emphasized the importance of on-the-job training in Human Capital. His research specified that in spite of recognizing how productivity is affected by the job itself, it invariably ignores the effect of productive process on employee productivity.

Though the world over has made a substantial progress in achieving Becker’s goal of fully incorporating the role of on the job training into economic growth. Indian employers are still reluctant to take a plunge into apprenticeships. Only 28500 organizations out of 63 million enterprises in India resort to apprenticeships resulting in sub 3 lac apprentices in country. Many do so because the Act is a gun on the temple which needs to be complied with, only few are true to apprenticeships’ objective of human capital development.

Employers resorting to apprenticeships have realized its actual potential. Not only it builds future pipeline of workforce but also enhances the productivity leading to better output in three broad ways

1. Bridging the skill gap: education leads to qualifications and not capabilities to do a job. 90% of the students passing out of school have knowledge but no skills thus adding to un-employability. Industry can upskills these fresh students through on the job training as per their needs and bridge the scarcity of skilled human resources. An interesting aspect of on the job training is the distinction between general and specific training. While all training increases the productivity of the worker at the organization providing the training, generic training enhances the capability of person to work in any organization in the industry. On the other hand, specific on the job training provided by an organization leads to building of capability only for that organization. Under NETAP, on the job training program by TeamLease Skills University, emphasize on both by giving a practical exposure under an employer topping up with employability skills applicable to any organization in any industry.