The correct option is 1 and 3 only.
Explanation
On-the-job training is a significant source of human capital formation. It refers to the training provided to employees while they are engaged in productive work, aimed at enhancing their skills and efficiency to increase overall productivity.
Statement 1 is Correct
On-the-job training can take various forms. It may involve training workers within the firm itself under the supervision of a skilled worker, or it may involve sending workers for off-campus training to specialized institutions. Both methods are utilized to upgrade the technical skills of the workforce.
Statement 2 is Incorrect
Firms do not incur expenses on training as an act of charity. Instead, this expenditure is treated as an investment. Firms incur these costs with the expectation that the returns-in the form of increased labor productivity-will exceed the cost of the training.
Statement 3 is Correct
Since firms invest resources in training, they aim to recover these costs through the enhanced productivity of the worker. Consequently, workers are often required to sign a bond or contract agreeing to work for the firm for a specific period after the training is completed. This ensures the firm benefits from the investment made.
Key Takeaway:
On-the-job training is an economic investment in human capital designed to boost productivity; it is cost-intensive, and firms mitigate the risk of losing this investment by mandating a minimum service period.