Philippines - Vocational Training Project

Document of The World Bank X" L ,1 FOR OFFICIAL USE ONLY Report No. P-3378-PH REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THY EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO $24.4 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A VOCATIONAL TRAINING PROJECT August 26, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may no otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Peso (P = 100 centavos) P 1.00 = US$0.120 US$1.00 = P 8.3 GLOSSARY AND ABBREVIATIONS ADB - Asian Development Bank BLE - Bureau of Local Employment ILO - International Labor Organization MEC - Ministry of Education and Culture MOLE - Ministry of Labor and Employment MOT - Ministry of Trade and Industry MSSD - Ministry of Social Services and Development NMYC - National Manpower and Youth Council ONFE - Office of Nonformal Education PMU - Project Management Unit RMTC - Regional Manpower Training Center UNDP - United Nations Development Program UNIDO - United Nations Industrial Development Organization SMI - Small and Medium Scale Industry FISCAL YEAR January 1 to December 31 SCHOOL YEAR July - April  FOR OFFICIAL USE ONLY PHILIPPINES VOCATIONAL TRAINING PROJECT Loan and Project Summary Borrower: Republic of the Philippines Amount: $24.4 million (including capitalized front-end fee of $0.4 million) Term: The loan would be for a term of 20 years including 5 years grace with interest at 11.6% and a commitment fee of 0.75% p.a. on undisbursed amount. Project Description: The proposed project is an integral component of Bank assistance in support of the Government's industrial devel- opment program. It would support the regional diversifica- tion strategy, address the needs of medium and small-scale industries and broaden and strengthen the infrastructure of the national industrial training system. In particular, it would reorganize the structure and procedures and expand the staff of the National Manpower and Youth Council (NMYC) and establish a system of contracting for sector specific training in seven priority industrial and service subsectors ('between 1982 and 1986), for 76,000 employees. This would meet 13% of the need for apprentice training, 10% of the need for training adult workers, and 43% of supervisor upgrading needs. Employers would participate in the organization, financing and management of training, and a strategy of on-the-job training would be promoted. In addition, the trade testing and certification system would be expanded on a national level. The success of the proposed project depends on the employer perception of the benefits to be derived from training and the adequacy of the financial incentives incorporated in the training contracts. It is expected that large and medium-sized enterprises would be willing to participate. Employers in the smaller enterprises may be less eager to participate, however, because of the cost and their unfamiliarity with the potential benefits. This risk has been reduced by government financing of some costs, particularly in the first years of the project, and by an improved flow of information. Other risks relate to NMYC's difficulties in retaining competent staff. Should key personnel continue to seek better paying employment elsewhere, project implementation could be impaired. Project risk is also increased somewhat, as NMYC is undergoing This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - institutional changes and the proposed new project implemen- tation unit will have had no experience in implementing Bank projects. In order to minimize these risks, technical assistance would be provided to NMYC, and the Government would provide sufficient incentives to ensure the retention of NMYC staff. Estimated Cost: Local Foreign Total /1 ----- ($ million)