ON-THE-JOB TRAINING IN INDIA: ACCESS, DETERMINANTS, AND THE IMPACT ON EARNINGS

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Workplace training or on-the-job training (OJT) is important from the point of view of both the organisation and the employees.It affords new skills, learning opportunities, and career mobility to the workers.From the employers' perspective, OJT helps in increasing productivity and efficiency of operations.However, in the context of India, very few studies have looked into the determinant factors behind OJT by firms, their perspective on the importance of OJT, and the challenges they face with regard to the provision of OJT.Similarly, studies on the access to OJT by the workers and impact on their earnings are largely absent.The present paper touches upon some of these aspects using the Enterprises Survey of the World Bank (ES 2014) and the Period Labour Force Survey of National Statistical Organisation (PLFS 2017-18).The study finds that in India there exists a strong association between the provision of formal training by the firms and the size of the firms, their inclination to innovation, and quality certification by international agencies.In the manufacturing sector government enterprises still provide the best opportunities for training.On the other hand, individual worker level data reveals that access to the OJT is associated with the place of residence, educational level, sector, age, and gender.Although OJT improves the earnings of the workers, there exists a wide gender inequality in earning even among the OJT trained workers.
Key Words : On-the-job training, skill development, formal training at the workplace, employer-provided training

INTRODUCTION :
Skill Development is essential to remain at the forefront of innovation, efficiency, and competitiveness in an increasing knowledge driven global economy.Mehrotra (2014) identified four forms of vocational Education and Training (VET) in India.The first three are vocational education offered as part of school curricula at secondary and higher secondary levels, vocational training at industrial training institutes (ITIs) which require at least 8 years of school education, and provision of short term training courses through private operators affiliated by National Skill Development Corporation.The forth form is in-house skill development of the workers by organised segments of the Indian industry confined mostly to medium and large enterprises (ibid .).
All-India data from the Periodic Labour Force Survey  shows that only 11.3 percent of the workforce in the age group of 15-59 years have received some form of VET and share of formal VET is just 2.39 percent.Rest of them acquired skills through various informal ways including hereditary transfer of knowledge, selflearning or taught informally on the job by traditional craftsmen or masters.Bulk of India's workforce work in the unorganised sector in low paid insecure jobs, less access to education and very little opportunity for pre-employment skilling but there exists a strong willingness among them to take up additional training (Sodhi 2014).
Education and training enables both workers and organisations improve efficiency, productivity, and adapt to fast changing environment to achieve desired goals (Lindsley 1998).On-the job training is often used as a significant means to provide domain specific skills and knowledge (Ramasamy & Mani 2016).The development of high potential workers through continuous training and retraining is seen as a core element in building competitive advantage of the firms (Jain & Jain 2016).According to Truitt (2011), organisations need to strengthen or expand their knowledge base, skills, and abilities for their employees to innovate continuously, grow sustainably, cope with the rapid changes in external environment.OJT is important for another reason-bridging the skill mismatch.Our trainees in the vocational education system including Industrial Training Institutes (ITIs) often lack employable skills and the skill sets imparted in the training institutes do not match requirements for the job.To address is gap between existing skills proficiency of the workers and employers' expectation OJT is necessary.
But, however important workplace training is or the demand among worker to upgrade their skills, in the developing economies of Asia, a common problem in promoting workplace training is low-skill investment of the industries (Martinez-Fernandez & Choi 2013).Analysing World Bank data Mehrotra (2014) found that only 20 percent of all Indian firms provided any form of training which is much lower than other emerging economies and developed economies.According to Mehrotra and Ghosh (2014), despite the importance of training in raising firm productivity, many enterprises do not provide in-service training because of market failure caused by "moral hazard" combined with a "free rider" problem.The National Commission for Enterprises in Unorganised Sector headed by Arjun Sengupta noted that that companies are not willing to invest in their employees for fear of being poached by competitors (GoI 2009).
The paper has twin objectives-first, to study the importance, availability, and challenges of formal workplace training from the perspective of the employers and secondly, to study the factors associated with access to OJT by different categories workers' OJT and the outcomes of OJT in terms of their wage/earnings.Specifically, it asks the following questions-how firm-level characteristics influence the provision of worker training?How important is workers' training from the firm's perspective and what are the challenges?What are the factors associated with different categories of workers' access to OJT? What impact does OJT have on the wages/ earning of different categories of workers?The paper is divided in 4 Sections-Section 1 describes the data sources and methodology, Section 2 is on a firm-level study of the provision of workers training by the establishments using ES 2014 data, Section 3 is on workers' access to OJT and its impact on the earnings.Section 4 concludes the paper and discusses some issues for future research.

DATA SOURCES AND METHODOLOGY :
The study is based on microdata of two all India level surveys-Enterprise Survey (2014) of the World Bank and Periodic Labour Force Survey (PLFS 2017-18) of the National Statistical Office.The latest round of Enterprise Survey was conducted between June 2013 and December 2014.The primary unit of enumeration in this survey is a factory/ establishment.The stratified random sampling design was used for the selection of enterprises with three levels of stratification-industry, establishment size, and region.Two different versions of questionnaires were used for three categories of business-manufacturing, retail, and other services/ nonretail.The sample frame used for manufacturing enterprises was taken from the Annual Survey of Industries (ASI 2013) which is an annual survey of registered enterprises by the Central Statistical Office and for services establishments, industry associations lists were used.Enterprise surveys collect information covering a wide spectrum of variables related to firm performance, firm structure, perceptions on the business environment, obstacles to growth, etc.Some important aspects on which the survey collects data is the availability of formal training programmes for employees, firms' perception on the importance the workers training and other factors for business growth, and the principal reasons for lack of formal training programme.One limitation of the present study is that since ES uses the ASI sampling frame its coverage is limited only to the factories that are registered under the Factories Act 194811For a detailed discussion on the coverage of ASI see National Statistical Office (2018).Hence, the informal manufacturing industry is mostly unrepresented in the survey.Furthermore, the ES did not collect data from micro-enterprises i.e. less than five employees.Hence, our analysis of the facilities of OJT in establishments, their perception or reseasons for the absence of formal OJT is limited to registered enterprises only.Similar is the case for services and retail establishments.Since ES only covers those retail and service enterprises that are members of associations a large number of unorganised enterprises are out of the ambit of this survey.
The access to OJT and its impact on workers' income has been studied using unit-level data of PLFS 2017-18.PLFS is a nationwide sample survey carried out between July 2017 and June 2018.The survey collected a wide range of information on labour market indicators including earnings, education, skills training, type of job contacts, and access to social security benefits of the population.Each member of the sampled household aged between 15 and 59 years was asked whether they have received any vocational education or trainingformal or informal.To those who received/receiving formal training, detailed questions were asked on the type of training i.e. on-the-job, full time, or part-time.Additional informal was collected on the duration, field, and source of funding for the training.
The study is divided into two parts.In the first part, we analysed the availability of formal training programmes in enterprises in the manufacturing, retail, and service sectors.Apart from the descriptive analysis we estimated the following logit regression model to study the determining factors behind the existence of such training programmes in the establishments.
Where P i is the probability that the establishment provides formal training to its permanent employees and X i is the set of explanatory variables.We have estimated this equation separately for manufacturing, retail, and service enterprises.
The second part of this paper uses unit-level data from PLFS 2017-18 to study the access of workers to OJT and its impact on earnings.We have primarily used tabular analysis to study the level of access to OJT, determinants of access, and effect on the earnings of trained workers as compared to the others.Side by side we have used regression analysis to gain a better understanding of a variety of socio-economic factors behind the access to OJT and the labour market outcomes.The factors behind access to OJT is studied using a logit regression analysis.Earnings of workers who received OJT has been compared with those with other forms of formal vocational education and training (VET) and unskilled workers at different levels of education across gender.We have estimated the Mincer wage equation to study the impact of the OJT on the earnings of workers. ln Where lnW i is the log of earnings of an individual i; X i is a vector of personal and background characteristics of individual i, Vi is the individual i's educational attainment, and e i is the random disturbance term.

FORMAL TRAINING PROGRAMME FOR WORKERS IN ENTERPRISES :
We begin by examining the availability of formal training facilities for permanent employees at different enterprises.One of the criteria used in the ES for stratification of the establishments was the size of the enterprise in terms of the number of permanent employees.Three classes were formed-small (employs 5-19 workers), medium (employs 20-99 workers), and large establishments (employs more than 99 workers).There is a direct relationship between the size of the enterprise and the provision of formal training programmes for full-time permanent employees.Nearly 60 percent of the large enterprises provide formal training to their employees as against only 25 percent in the case of small establishments.The opportunities for formal training are higher in the case of organised retail and service industries as compared to the manufacturing establishments.About 40 retail and service establishments provide formal training which is higher than manufacturing enterprises.
If we look across various industries within this three broad sectors of manufacturing, retail, and services we find that among manufacturing industries electronics (45.9 percent), leather (44.5 percent), garments (41.4 percent), and precision instruments (42.2 percent) enterprises provides highest opportunities for OJT.Some of the industries which offer the least opportunities for OJT are food (20.1 percent), paper (25.6), publishing, printing and recorded media (25.6 percent), non-metallic mineral products (25.1).In the service sector, IT companies (50.9 percent) offer the highest opportunities for OJT and wholesale trade (11.27) has the least proportion of firms that have formal training programmes for its employees.There is a difference in the perception of the importance of worker training in increasing domestic sales.As can be seen in the above Table only 13.8 percent of the manufacturing enterprises feel that worker training as the first or second major business activity to increase domestic sales.The proportion is 40.7 percent in the case of retail establishments and 44.3 in the case of service enterprises.However, there is not much variation between different size of firms and their opinion on the role of worker training to increase domestic sales.Around 28 percent of small and medium firms feel worker training as their first or second most important business activity.The proportion is a little higher in the case of large farms (34.7 percent).
Looking at different sub-subsectors within these three broad sectors, we find that the hotels and restaurants industry has the highest proportion of establishments that think workers training as the first or second most important business services to increase domestic sales (39 percent).The construction industry has the second-highest proportion of such establishments (36.25 percent).IT (32.2 percent) and transport (31.4 percent) industry have almost the same proportion of establishments that rank workplace training either first or second important business service.In the manufacturing sector, however, the proportion of such firms who ranks workplace training highly among all other business services is very less.This is the highest among leather manufacturers (8.5 percent).If we look at the principal reasons for not having a formal training programme for the employees, we find that 58 percent of the enterprise who do not provide any formal training feel that there is no need for such programmes.This percentage goes up to 85 percent in case of manufacturing enterprises.In the retail sector 48 percent of enterprises without formal training programmes feel there is no need for such programmes.The second most important reason for the absence of such training is the high cost of training programmes (13 percent).This is more a serious hindrance for retail and service sector enterprises.Around 7.7 percent of the enterprises feel that there is a lack of external agencies that can provide training.This is particularly true for service enterprises.Nearly 14 percent of service enterprises feel the absence of external training agencies acts as a constraint to start on-the-job training to their employees.
Going deeper into the distribution of reasons for not having a formal training programmes for fulltime permanent employees across different size classes of enterprises we find that irrespective of the sector a high proportion of small establishments feel there is no need for such programmes.On the other hand, interestingly, a high proportion of large establishments cutting across sectors have identified a high cost of training programmes as the reason for the absence of workplace training.A little more than one-fourth of service establishments have said that they are not aware of such training programmes.
The relation between firm characteristics and provision for formal workplace training in case of manufacturing enterprises is shown in the following regression analysis.As shown in descriptive Tables, there is a positive and significant relationship between the size of the firm and the formal training programme for the employees.Opportunities for formal workplace training is higher in the firms that encourage their employees to try out a new approach or idea and the firms that launched new products recently (in the last three years).Firms that have higher international exposure through direct or indirect exports are more likely to give formal training to their workers.As compared to the firms that sell their products merely in the local market, the probability of worker training in higher in firms that sell mainly in national and international markets.Opportunities for on-the-job training is lower in proprietary firms relative to the other forms of ownership.Next, we analyse the factors that influence the provision of formal training programmes for employees in retail firms.Here also the possibilities of on-the-job training increase with an increase in the size of the firms.But unlike the manufacturing firms where facilities of OJT are higher in older establishments, in the retail sector opportunities of OJT are higher in newer establishments.Firms that encourage innovation in services, business processes, management, or marketing are more inclined to provide formal training to their employees.Like manufacturing firms, in the case of retail also instances of OJT is less frequent in sole proprietorship as compared to other forms of ownership.Interestingly, firms that have a higher share of foreign entities in private shareholdings and firms that have a higher share of direct exports in their total sales have fewer instances of formal training programmes for employees.Services enterprises show more or less similar patterns as retail enterprises.However, a major difference with retail firms is that in case service sector firms that have a higher share of direct exports have more chances to provide formal training to their employees.Here also age is negatively related to formal workplace training, meaning that newer firms in the service sector have more frequent instances of OJT.Like retail, in the service sector also a higher foreign investment in shareholding does not imply higher opportunities for workers' training.Workplace training is more common in firms that are inclined to innovation in service delivery or other business activities including management and marketing.In this section, we analysed access and determinants of OJT and its impact in terms of earnings.As PLFS is an economy-wide survey of the labour force, our analysis covers all the sectors-agriculture, manufacturing, and services.Unlike the previous section where our analysis was restricted to the registered manufacturing and organised service sector firms, the worker level data include all types of workers including self-employed and casual labourers besides regular wage employed.As we have explained several studies have found that OJT is important for the career progression of the workers, it is worthwhile to at the factors behind access to OJT among all sections of workers.Overall, the proportion of the workforce who received formal vocational education and training is very low in India.Access to OJT is even lower among this working population who have access to any kind of formal VET.Opportunities for OJT is higher among regular wage employed than self-employed or casual labourers.Interestingly, among the regular wage employed, female workers have higher access to OJT than their male counterparts.(Table 7) The proportion of workers who received OJT in three broad sectors is shown in the following Table 8.As can be seen, access to OJT is very low across all the sectors and within these overall low levels, the tertiary sector has a relatively higher availability of VET qualified workers than the other two sectors.This is true for OJT and other forms of formal training.This result is not at all surprising if we remember what we have seen earlier that a higher proportion of firms in the service industry have formal training programmes for fulltime permanent employees.What is more interesting is that female workers in the tertiary sector have better access to OJT in particular and formal training in general.access to OJT is lowest among works in the primary sector.However, if we see Appendix Table A1, it will be clear that the proportion of formally trained women who received OJT is highest in two fields security and aerospace.Except for security in all other fields proportion of women who received OJT is almost invariably less than their male counterpart.Next, we analyse the determinants of access to OJT with the help of a logit regression model where the dependent variable takes the value of 0 or 1 depending upon the person has received OJT or not.The independent variables included in the model are the place of residence, gender, age, marital status, general education, technical education, sector, and enterprise type.The proportion of workers having these attributes who received OJT are shown in Appendix Table A3 and the results of the regression analysis are shown in Table 9.
Place of residence has a significant influence on access to OJT and so are the personal attributes of a worker like gender, age, or marital status.Opportunities for OJT is significantly higher for the urban workforce than rural workers.Interestingly, as we have observed in the case of descriptive analysis, female workers have a higher probability of OJT than male workers.The probability of receiving OJT improves with an increase in age.
As can be seen from the following Table 9, the educational background has a strong positive association with access to OJT.As the general education level rises, the odds in favour of receiving OJT increase.A similar trend is observed in the case of technical education also.The probability of receiving OJT is higher among technical degree holders.
The chances of receiving OJT is higher in the secondary and tertiary sectors of the economy as compared to the primary sector.Government bodies/ public sector enterprises, autonomous, public/ private companies than proprietary/ partnership enterprises.Source : Author's calculation from unit-level data of PLFS 2017-18 As we have mentioned there are not many studies in the Indian context on access to OJT.Few authors have studied the factors associated with access to vocational education and training.Kumar et. al . (2019) studied the determinants of access to formal training based on Employment and Unemployment Survey 2011-12 data using a logit model.Their results show opportunities for OJT are higher in the urban sector, and for females and higher educated persons.These results support our findings, except in the case of age and marital status.Kumar et. al. (2019) found the single persons and those belonging to lower age have higher access to formal VET.In contrast, our results show opportunities for OJT are higher for married workers and increases with the age of the workers.This implies the probability of reskilling/ up-skilling is better for experience employees and opportunities for formal training of new entrants in the job market.

IMPACT OF OJT ON WORKERS' EARNINGS :
The most common way to study the impact of OJT on labour welfare is to compare the wage/earnings of OJT workers before and after training or compare the wages between groups of workers who received OJT against those who have not.However, the present dataset does not permit the first type of comparison.Instead, we have compared the average earnings of workers who received OJT with those who attended other types of training or have no training.We begin with the self-employed persons.PLFS 2017-18 collected data on the monthly earnings of the workers whose current weekly status is self-employment.It can be seen in the following Table 10 that workers who received OJT earn much higher per month (Rs.27143) than the average earning of all workers (Rs.16341).But the gender difference in earning is higher among recipients of OJT than all other categories.Male workers earn nearly double (Rs.31390) on average than their female counterparts who received OJT (Rs.27143).Moreover, women workers in this category earn even less than other types of formal training.PLFS 2017-18 gathered data on the monthly earnings of the workers who are self-employed by current weekly in the regression, their expected signs, and average earnings across different levels are shown in Appendix Table A4.Mincerian wage equation expresses the earnings of individuals as a function of experience, years of education, and other professional and background variables.We have taken age as a proxy for experience and the highest level of educational attainment as a proxy for the number of years of schooling, as PLFS does not separately ask for the experience or the number of years the respondents spent in education.Results are shown in the following Tables 13-15.In the case of self-employed persons, OJT has a positive and significant impact on monthly earnings (Table 15).The associated coefficient of the dummy variable representing OJT is significant at one percent level.Coefficients of all other independent variables bear the signs as expected.Source : Author's calculation from unit-level data of PLFS 2017-18 In the case of regular wage earners, the regression analysis shows OJT has a positive and significant impact on the monthly earnings.This confirms our earlier findings in descriptive analysis.Even after controlling for other important factors that influence the earnings of workers, the impact of OJT shows a positive sign (Table 14).In the case of casual labourers, receiving OJT does not impact their daily earnings much (Table 15).The coefficient of the dummy variable for OJT is positive but not significant.Coefficients of all other variables bear the expected signs.Casual labourers are the most vulnerable economic groups either in rural or urban areas and the majority of them have very scant access to training or skill-building.The fact that OJT hardly has any impact on their earnings calls for serious introspection on the post-training follow-up support or handholding.ensure training in broad skills of potentially transferable kind and makes it attractive to young people (ibid .).
In the case of the manufacturing industry, opportunities of OJT are higher in establishments where the government has a high stake.Also, the facilities of OJT are less in newer units.Given the recent trends towards privatization and contraction or divestment of government shares the proportion of manufacturing output contributed by the private sector is expected to expand in the future.Thus stress should be given for the creation of workplace training capacity in the private enterprises and units that are set up newly.Our analysis has found a strong association between firms' inclination towards innovation and the provision of formal training to workers.Not only that, in order to achieve self-reliance in industrial production, but firms also need to remain innovative and for that workers' training is necessary.Mehrotra & Ghosh (2014) discussed the pros and cons of different fiscal instruments like training levies, payroll taxes, and various incentives for financing training of workers.The authors argued in favour of creation of collecting levies from organised sector and medium plus large enterprises for subsidising workplace training in enterprises in unorganised sector or small enterprises.
Opportunities for OJT are least in the case of self-employed persons.Many of these self-employed workers work in their family enterprises as helpers or as own-account workers.The most common way of learning for these workers is the hereditary transfer of knowledge/ skills or self-learning.There needs to be a special effort to bring these workers under a formal skilling network.Similarly, particular focus should be given to the workers residing in rural areas, with less education, or engaged in the primary sector the scope and opportunities for OJT for these types of workers is substantially less.Suitable training programmes should be devised so that all categories of workers including the informal sector get equal opportunities for appropriate OJT courses according to their qualifications, job profile, and interest.
Finally, our analysis has found that OJT has a positive impact on the earnings of regular wage employed and self-employed workers, but not in the case of casual labourers.Given the increasing casualisation of the nature of work and the rise of the gig economy this is an area of concern.Hence special care needs to be taken for this section of the labour force by relevant departments, NGOs in terms of post-handholding such as linking them to an online marketplace where they can offer their services and connect easily with buyers, improving their access to credit, network, and experts' advice such that they can start their enterprise.
Another important finding of this paper is that, despite higher access of women to OJT, there exists a high gender gap in earnings across all categories of workers and all types of training.This shows workplace training alone cannot be effective in equalisation of wages, rather programmes for the enfranchisement of women, improving their access to information, resource entitlements should be carried out in more effective manners.
APPENDIX : Imroved products or services During the last three years has this establishment introduced any new or significantly impro New approach or idea During the last three years, did this establishment give employees some time to develop or t ON-THE-JOB TRAINING IN INDIA: ACCESS, DETERMINANTS, AND THE IMPACT ON EARNINGS 11This paper uses on-the-job training, workplace training, on-site training, in-service training interchangeably22The views expressed in this paper are author's own and does not necessarily belong to the organisation where he works.

Table 1 ,
Proportion of enterprises that have a formal training programme for permanent employees Source: Author's calculation from micro-data of Enterprise Survey, World Bank, 2014 Source: Author's calculation from m

Table 2 ,
Proportion of enterprises that reported worker training as the most important business services that help increase domestic sales Source: Author's calculation from micro-data of Enterprise Survey, World Bank, 2014 Source: Author's calculation from m

Table 3 ,
Principal reasons for the lack of training programmes Table3, Principal reasons for the la Source: Author's calculation from micro-data of Enterprise Survey, World Bank, 2014 Source: Author's calculation from m

Table 4 ,
Factors influencing workplace training of workers by manufacturing firms: logit regression estimates Source : Author's calculation from unit-level data of Enterprise Survey 2014

Table 5 ,
Factors influencing workplace training of workers by services firms: logit regression estimates Source : Author's calculation from unit-level data of Enterprise Survey 2014

Table 6 ,
Factors influencing workplace training of workers by services firms: logit regression estimates

Table 7 ,
Access to on-the-job training by different category of workers (PS+SS) Table 7, Access to on-the-job training by d

Table 8 ,
Distribution of workers by access to on-the-job and formal training across sectors Author's calculation from unit-level data of PLFS 2017-18 Source: Author's calculation from unit-level data of PL

Table 9 ,
Determinants of access to OJT: Results of logit regression analysis

Table 10 ,
Monthly earnings of regular salaried/ wage employed persons who received on-the-job or other forms of vocational education and training

Table 13 ,
Impact of On-the-job training on monthly earnings of self-employed persons (dependent variable= log of monthly income)

Table 14 ,
Impact of On-the-job training on monthly earnings of regular wage employed persons (dependent variable= log of monthly income)

Table 15 ,
Impact of On-the-job training on monthly earnings of regular wage employed persons (dependent variable= log of monthly income)

Table A1 ,
Proportion of formally trained workers who received on-the-job training Source: Author's calculation from unit-level data of PLFS 2017-18 Source: Author's calculation from

Table A2 ,
Independent variables used in the regression of determinants of formal workplace training by establishments (YES=1, No=0) List of independent variables Description Size Size of the establishment Age Number of years since the establishment began its operationsMain marketIn the fiscal year 2012-13 which was the main market in which this establishment sold its ma