China - Technical and vocational education development

Report No. 6789-CHA Sector Report Tecl nical/Vocational Education for China's Development August 7, 1987 Projects [)epartrnent Fast Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Document of the World Bank 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 he disclosed without World Bank authorization.  CURRENCY EQUIVALENTS The Chinese currency is called Renminbi (RMB) It is denominated in Yuan (Y) US$1.00 = Y 3.70 Y 1.00 = US$0.27 (1986) FISCAL YEAR January 1 - December 31 ACADEMIC YEAR September 1 - August 31 ABBREVIATIONS MOLP Ministry of Labor and Personnel NCCVTE = National Coordinating Committee for Vocational and Technical Education PEdC = Provincial Education Commission SEC State Economic Commission SEdC State Education Commission SPC State Planning Commission STC Secondary Technical School SVS Secondary Vocationel School SWS Skilled Workers School TVE Technical/Vocational Education  FOR OFFICIUL USE ONLY TECHNICAL/VOCATIONAL EDUCATION FOR CHINA'S DEVELOPMENT Table of Contents Page No. CONCLUSIONS AND RECOMMENDATIONS ... o**OO* e o.. .oooooo.vii-xix INTRODUCTION AND SUMMARY *O* . I. TECHNICAL/VOCATIONAL EDUCATION IN CHINA: ITS ECONOMIC SETTING 000000000000000000l A. The Macro-Economic Situation.00obee400000......00000000, 1 B. The Labor Market 0000000 000000000000 Labor Market Reform o 000 0 00 0 00 0o0oo0oe00 3 Educational Structure of the Labor Force ooooooo-ooooo 3 The Iron Rice Bowl 000 0 8 0 0 0 0 e 0 v 0 * 0 V e 0ooooe4 Labor Mobility *000 Job Assignment 00000000000000 Wage Differentials 00 000000 0 00 000.0.00 000000.6 Youth Unemployment 0*00o0 0oo0. 0.ooo.0 00oooooooo0oo0o7 C. Summary .......00o... 7 II. SYSTEM FOR PROVIDING TECHNICAL/VOCATIONAL EDUCATION AT THE SECONDARY LEVEL .0000.000000 000000000000 A. The Secondary System O Secondary Technical Schools (STS) .. 8 Skilled Worker Schools (SWS) *00e0ea0000o0ooo000e000x 10 Secondary Vocational Schools (SVS) 0000000000 0000000000 10 Other Forms of Training . e0000000000000000000eoo0000000o0 11 The System Management 0 0000000 00 00000 00 00 o001 Provincial and Municipal/Prefecture Level 00000ooo00oo0o00 12 B. Proposed Reform of Technical/Vocational Education in China ooo*oo ... eoa6oo*ooo914 C. China's Enrollments Relative to Other Countries ....000000 17 D. Summary and Conclusions 00 000000 0 0000 0 00 0000e000 19 III. ACHIEVING THE OBJECTIVES OF TECHMICAL/VOCATIONAL EDUCATION IN CHINA 00000000000000000000000000000 A. Objectives of Technical/Vocational Education .00....060060 20 B. Identifying and Fulfilling Manpower Needs *00o00oo0oooo0 21 Planning 0000000eeeoeo000QO0 The Actual Process of Planning and Placement in China *0000000o00oooo.oo..ooeo0eo0o022 C. Evaluating the Effectiveness of the Chinese System of Technical/Vocational Education 000000000ooooo.ooo 25 D. Alternative Forms of Training: A Comparative Perspective0. 27 E. Summary and Conclusions 000000000 0 0 O 0 O 0 O O 0e000 00 e0031 This document has a restricted distribution and may be used by recipients only in the perfomance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Page No. IV. THE QUALITY AND INTERNAL EFFICIENCY OF CHINA'S TECHNICAL/VOCATIONAL EDUCATION SYSTEM ............. .t, ... 34 A. Curriculum and Training Methodology ...................... 34 The Importance of General Education in TVE ............ 34 Broad vs. Narrow Vocational and Technical Training .... 35 Course Design and Curriculum Development .s9o9..o.oeooo 35 Time Dimensions of Instruction ..............,........ 36 Instructional Methodology 9o09999 ...... oo.... 990006400 37 Counseling and Guidance of Students ................... 37 Textbooks and Instructional Materials *99999,90990999.. 38 Industrial Inputs *o ..ee.. ...@....e.e .99.9.38 Course Offerings 09990009 9 49, 99999 3 B. Teaching Staff and Other Personnel *9999909@999.0999999090 40 Teachers and Instructors Quality ...................... 40 The Quantity of Teachers . 41 School Administrative Personnel *9999990999999090*909* 42 C. Facilities and Equipment .................. e 44 Adequacy and Utilization of Equipment ................. 45 D. Summary and Conclusions 999999999909900990999990999999999 45 V. COST AND FINANCE OF TECHNICAL/VOCATIONAL EDUCATION IN CHINA 48 A, Recurrent Costs 9 * 9 09*09*899**99 99.48 B. Cost of the Proposed Expansion **9999990*******999*9**999* 51 C. The Financing of the System .............................. 57 Sources of School Financing ......................... 57 STS Financing ..., , 57 SWS Financing 90 * SVS Financing 9096999990099990909960 System Finance D. Issues in Financing 990 09999 99999 9999909999 9.62 E. Summary and Conclusions 99 9900 99999999999 0999 909999999999 65 BIBLIOGRAPHY APPENDICES ANWEX TABLES  - iii - This report is based on a plannirg mission to China in June 1986 and a main mission in October 1986. During the period between June and October the SI;ate Education Commission and the Ministry of Labor and Personnel executed a survey of technical/vocational schools in Liaoning, Hubei and Shaanxi Provinces. The main mission was led by Susan Cochrane, Senior Economist, (AEPED), and was composed of Robert McGough, Technical/Vocational Educator, (AEPED), John Middleton, Senior Educator, (EDT), Chialing Yang, Researcher, (EDT), Clifford Gilpin, Deputy Division Chief, (AEPED) and Kazuko Ogawa, Loan Officer, (AEACH) and two consultants, T.P. Leung, Te hnical/Vocational Educator, and Harold Noah, Economist. Desk support for the mission was provided by Robert Drysdale, Senior Economist (LCPED), and Roland Osterlund, Technical/Vocational Educator (AEPED). The report draws on five working papers: "Planning and Labor Market Linkages in Chinese Secondary Vocational and Technical Education" by Harold Noah and John Middleton; "Internal Efficiency of Vocational and Technical Education" by Robert McCough, Susan Cochrane and T.P. Leung; "Notes on Issues in Designing a Cost Effective System of Technical and Vocational Education" by Robert Drysdale; "China: Technical/Vocational Education Financing" by Chialing Yang and Kazuko Ogawa; and "Technical/Vocational Teacher Education" by Robert McGough and Chialing Yang .  - iv - TABLES IN TEXT Table 2.1 Characterisics of Secondary Technical and Vocational Schools Table 2.2 Proposed Expansion of Secondary Education in China in Seventh Five-Year Plan Table 2.3 Distribution of Students in Upper-Secondary Education (Full-time and Part-time enrollments): Cross Country Comparisons Table 3.1 Placement of Graduates of SVS in Four Provinces Table 3.2 Participation Rate of 17 year olds in Education and Training: Cross Country Comparisons Table 3.3 Length of Industry-Based Training Assignment Table 4.1 Curriculum Content: Percenu of Required Subjects in Various Types of Schools Table 4.2 Average Number of Teaching Specialties per School Table 4.3 Student-Teacher Ratios (Full-Time) Table 4.4 Average Class Size Table 4.5 Teachers as a Pevcentage of Total Staff Table 4.6 Percentage of Required Lab and Workshop Exerci.ses That Can be Performed in Existing Facilities Table 5.; Unit Recurrent Cost of Upper Secondary Education, Full-Time Table 5.2 The Costs of Proposed Expansion of Technical/Vocational Education Table 5.3 Estimates of Recurrent Costs in Technical/Vocational Education 1986-1990 Table 5.4 Estimates of Capital Costs of Technical/Vocational Education 1986-1990 Table 5.5 Total Cost of Various Scenarios for Technical/Vocation Education 1986-1990 Table 5.6 Sources of Finance Percentage of Revenue from Various Sources (1984) Table 5.7 Percentage of Revenue From Various Sources, 1985 CHARTS IN TEXT Chart 1 China: Draft Organizational Chart - Vocational/Technical Education Chart 2 Provincial Technical/Vocational Administration: Hubei  - v LIST OF APPENDICES 1. The System for Providing Technical/Vocational Education at the Secondary Level - History of Enrollments in Upper Secondary Education 2. The System for Providing Technical/Vocational Education at the Secondary Level - Restructure Secondary Education and Vigorously Promote Vocational and Technical Education 3. Planning in Liaoning e-rovince 4. Considerations in Planning Training 5. A Review of Other Countries' Experience with Technical/Vocational Education 6. Technical/Vocational Teacher Education 7. The Costs and Benefits of Sources of Revenue  - vi - LIST OF ANNEX TABLES 1. Provincial Gross National Product and Proportion of GNP by Major Sectors 2. Urban Unemployment Levels and Rate, 1982 3. Sector of Employment of Working Population ty Province, Municipality and Autonomous Region 4. Occupational Status of Working Population by Province, Municipality and Autonomous Region 5. Employment by Occupation and Level of Education, 1982 6. Enrollments in Secondary Education 7. Number of Schools of Various Types 8. Provincial Enrollments in Secondary-Level Technical/Vocational Education, l^2 9. Enrollments in Agricultural and Vocational Schools (SVS) 10. Distribution of Curriculum Specializations by Type of School and Sectoral Relevance 11. Percent Ranking of Important Problems by Schools 12. Curriculum Content 13. Full-Time Teacher Qualifications 14. Part-Time Teacher Quaiifications 15. Full- and Part-Time Teachers' Level of Teaching Experience 16. Teaching Load - Average Hours Taught Per Week 17. Teachers' Work Experience 18. Organization of Typical Technical/Vocational Education School 19. Recurrent Unit Cost of Technical/Vocational Education in China and Other Countries 20. Other Countries - Recurrent Unit Costs of Technical/Vocational Education  - vii - TECHNICAL/VOCATIONAL EDUCATION FOR CHINA'S DEVELOPMENT Conclusions and Recommendations i. China has evolved a complex system of technical/vocational education (TVE) at the secondary level that is rich in its variety, local inputs and employer linkages. Building on these strengths, expanding a properly designed technical and vocational education (TVE) system can contribute substantially to China's economic development. The Educational Reform of May, 1985 recog- nizes the importance of TVE and sets forth many well considered reforms. This report of the World Bank Technical/Vocational Education Sector mission has drawn several conclusions from reviewing secondary technical vocational educa- tion and has several recommendations to make with respect to its expansion. ii- The main conclusions are as follows: (a) the policy on TVE stated in the Education Reform needs to be elaborated to encompass the question of the types of education that should be best conducted through the various secondary schools, short-tetm preservice training, in-service training and postsecondary technical training; (b) the planning and evaluation of TVE to meet labor market needs is underdeveloped; (c) the curriculum of specialized courses is too narrow and the integration of general education in TVE is not well developed; (d) quality and efficiency suffer because schools are small and programs within schools are often uncoordinated; (e) instructional quality saffers because of a shortage of management skills, specialized teachers, equipment and facilities; (f) the costs and financial implications of the proposed expansion have not been well explored and it is essential to recog- nize the risk of cost escalation of TVE when considering expansion; (g) exist- ing teachers, facilities and equipment, mostly general in nature, are under- utilized by international standards; and finally; (h) some labor market char- acteristics inhibit the efficient development and use of skills for economic development. iii. The report proposes severat recommendations. Broadly, it recommends that before policymakers expand the existing system and convert more general secondary schools, they should improve the existing programs and increase their efficiency. Furthermore, enrollment levels by schools and by specialty should depend on local labor market needs, the quality of the schools, the division of programs between various types of schools and school size and local priorities for educational expenditures. Expansion should occur only where high quality programs combine with substantial demand for program graduates. This implies that the pace of development of TVE should depend on local conditions and differ among provinces: rigid adherence to the 50/50 rule will produce inefficiency. iv. Specific recommendations fall into groups relevant to policy and planning, quality, and efficiency.  o viii - Policy and Plannin The National Coordinating Committee for Vocational and Technical Education (NCCVTE) should work with the National Committee on Wozkers Education, the National Committee on Enterprise Management and appropriate technical ministries to establish procedures for developing standards and testing for skilled workers and technicians. -- This will permit identifying the training that might be needed. NCCVTE should elaborate the policy of TVE stated in the Educational Reform to give guidance on the types of education and training best conducted through various secondary schools, short-term pre-service training, in-service training, and post-secondary school technical training. -- Only with this information in hand can China determine the extent to which it should channel additional resources into TVE as opposed to other types of job training. SEdC with the collaboration of NCCVTE should establish evaluation plans, including data collection and test procedures, for alternative training systems. -- This will permit choosing among alternative training modes. SEdC with the collaboration of NCCVTE should provide guidance to local (provincial) levels on (a) judging broad employment trends in local areas, (b) conducting employer surveys to help guide schools in determining enrollment levels in various specialties and (c) coordinating enrollment planning between the three types of schools. -- This guidance is essential to assure that the pace and direction of TVE meet development needs in an efficient manner. Quality of TVE SEDC should address the issues of appropriate curriculum for TVEo -- It should determine whether the existing curriculum of specialized courses is too narrow thus limiting workers later ability to improve their skills on the job or change jobs. It should determine how general courses within TVE might best be designed to support the specialized curriculum and provide a foundation for the acquisition of further skills and new technology. SEdC should establish standards for the qualifications of special- ized teachers, the pedagogical training needed for teachers recrui- ted from industry and the training and industrial experience required for general teachers who are to become specialized.  ix - -- This is an essential step in addressing the lack of experience and skill of specialized teachers. Further investment in specialized equipment should occur in the vast majority of the schools to allow the appropriate teaching of existing curriculum and for the broadening of the content of specialized courses. -- The equipment shortage for specialized courses was one of the main problems observed in TVE. SEdC should establish training courses for managers and principals of TVE schools to acquaint them with the unique needs for planning and management in TVE. -- This is particularly important given that most managers and principals come from general education. Efficiencyof TE SEdC should establish staffing standards that reduct the non- teaching personnel relative to the teaching staff. -- TVE in China has very high ratios of nonteaching staff by international standards and these unnecessarily raise costs. SEdC should guide local schools on scheduling classes to utilize labs and workshops in both morning and afternoons. -- Under current practicep substantial waste occurs as classes use expensive equipment and facilities only in the afternoons. SEdC should recommend larger teaching loads for teachers. -- Current teaching loads, very low by international standards, significantly raise costs. Efforts should be made to increase school size to achieve economies of scale and coordinate programs within schools to help achieve economies of scale with specialized equipment. Experimentation with training centers may provide alternative ways of increasing utilization of specialized equipment in some circumstances. -- Small school sizes and uncoordinated programs produce major inefficiencies. Increased size, however, will require coordination of planning across school types and aeross geographical boundaries.  -x- TECHNICAL/VOCATIONAL EDUCATION FOR CHINA'S DEVELOPMENT Introduction and Summary 1. China is undergoing rapid growth with substantial structural change and economic reform, although the pace and type of change differ greatly between urban and rural areas and among provinces. This places enormous demands on the education and training system to respond to the range of human resource needs. Only a portion of these needs can be met through the formal, school-based education system. Others must be met through short-term training and retraining. The Government of China has identified upper-secondary education as bearing a major burden in the preparation of technicians and skilled workers. This report focuses on the functioning and proposed expan- sion of this system of technical/vocational education (TVE), mainly in urban areas, within the context of the existing and evolving economy. To make an assessment of the policy an TVE at the secondary level, it is necessary to evaluate the existing system with respect to its external efficienc- and planning, its internal efficiency and management and its costs and financing. It would also be desirable to provide detailed comparisons of the cost and efficiency of alternative forms of training to determine the optimal strategy for education and training for employment. This, however, was not possible given the limited time and resources available to the mission and the lack of data on these alternative systems available in China. The Report 2. This report is composed of five u-ibstantive chapters. The first chapter reviews the economic environment, the current situation and the proposed economic reforms, and discusses how these 2ffect TVE. The second chapter describes the current systems of TVE and its proposed reforms. The third chapter discusses the objectives of TVE, how well these are met by the existing system and how the system's effectiveness might be improved and provides comparative information on how TVE is organized in other countries, and contains recommendations for improving external efficiency. The fourth chapter discusses the quality, efficiency and management of the schools and includes recommendations for improvement. The fifth chapter examines the cost and financing of the system and the cost implications of the proposed expansion. The present introductory chapter summarizes the findings of each of these chapters and the recommendations following from those findings. 3. The report is based on discussions at the national level with the State Education Commission (SEdC), the Ministry of Labor and Personnel (MOLP), the Ministry of Machine Building, the Ministry of Electronic Industries, the Ministry of Metallurgy, the State Planning Commission (SPC) and the National Committee on Workers' Education in the State Economic Commission (SEC). Meetings at local levels took place with provincial education, planning and labor officials in Liaoning and Hubei and with municipal officials in Shenyang, Anshan, Wuhan and Shashi. In addition, questionnaire surveys were made of the three types of technical/vocational schools (about 80 schools) in urban areas in three provinces of Liaoning, Hubei and Shaanxi and a paraltel  - xi - survey was made of 30 general upper secondary schools. The mission was al able to draw on preliminary results of a research project covering about 10bY schools in Shanghai. These survey data were supplemented by visits to 9 schools in Liaoning and 15 schools in Hubei. Several enterprises were als,l visited, but it was not possible to visit a representative sample of ernplo:t- nor was it possible to visit a significant number of teacher training institutions, labor service companies, or polytechnics. Thus, whil.e the report recognizes the importance of these institutions vis-a-vis secondary TVE, recommendations on their precise roles have not been made. The missi wishes to express deep appreciation to all those who assisted in this effo;t and hopes this report will prove helpful for the development of human resources in China. Economic and Educational Reforms 4. In the environment of management reform in China, employment anid labor market issues are attracting a great deal of attention. The Governlfo;, is concerned about the employment of youth in urban areas, improvement of labor productivity and the suitability of the labor force for proposed development. The goal of achieving the four modernizations in industry, agriculture, science and technology and national defense as well as the requisite changes in employment outside the state sector will demand improvements in education and skills and a shift in orientation towards greater risk taking for both employers and the labor force. To address tho.c problems, China has recently introduced several new policies. The first al.; most sweeping is the change in the labor regulations for state enterprises, The second is the policy to reform and expand technical/vocational educati . (TVE). The critical link between labor policies and TVE education has bee. emphasized in China by Wan Li. "Reasons for the slow development of vocational and technical education are multiple. The inappropriateness of the labor employment system is an essential reason. Unless the relevant system of labor employment is reformed, it will be impossible to reform the existing seconidary education structure, and there will be no room for vocational and technical education to develop. Thus, even if we operated many vocational and technical schools, there would be no way of placing the graduates in jobs. It is not that they are not needed. Under the existing system, units which are in need of the graduates are unable to accept them, because the posts are already occupied by people with no training. (Wan, 1985, writer's translation) From Cheng, 1986, 262. 5. The Education Reform of 1985 covered all areas of education, but PIVE was perceived as the weakest link in the chain and received special atten- tion. The policies introduced with respect to TVE were: (a) to attain a gcl of 50% of alL entrants to upper-secondary enrollments in TVE by 1990 (the 50/50 rule); (b) to strengthen TVE to meet the needs of social and economic development; (c) to link general education with the specialized courses in TVE; (d) to give "full play" to the initiatives of enterprises in developinfg TVE; (e) to develop programs to correct the serious shortage of specialized  - xii - teachers in TVE; and (f) to develop advanced, postsecondary TVE. These reforms were designed to be coordinated with new labor-market hiring policies, which include general regulations for the establishment of standards for employment and regulations on training to reach these standards before employ- ment. Of these reforms the 50/50 rule has received the most attention. The proposed reforms have implications for the system as a whole, the individual schools and the economy. 6. The labor assignment system, the narrow wage differentials, the sex composition of the unemployed, the increased growth rate of urban population and the structure of rewards for improving skills within one stream versus shifting streams of employment all affect both the demand for and efficiency of utilization of trained manpower. In addition, the functioning of local labor markets is not well documented, but is essential for guidance of local planning of TVE. Additional World Bank sector work on these issues would help inform the Government of China on labor market reforms and the proposed development of TVE. The System of Technical/Vocational Education 7. Upper-secondary education carries the dual responsibility of prepa- ration for higher education and the provision of terminal education for the world of work. It also occupies a pivotal position between near universal basic education and very restricted access to higher education. Consequently, secondary education has been subject to political pressures in the past which have led to rapid expansions, contractions and shifts in philosophical direc- tion. In addition, uncertainties of manpower supply have stimulated each entity to attempt to supply its own manpower needs internally. There has thus evolved a complex system of TVE with three types of schools, executed by a wide variety of technical ministries and bureaus, local labor and education bureaus and enterprises. The system has thus benefited from close linkages with employers, local planners and has received substantial enterprise support. 8. The three types of upper secondary technical/vocational schools in 1985 absorbed about 35% of the total upper secondary students: the Secondary Technical Schools (STSs) enrolled 1.1 million; the Skilled Workers Schools (SWSs) enrolled 0.7 million; and the secondary agricultural/vocational schools (SVSs) enrolled 2.7 million. All three types of school were begun prior to the Cultural Revolution. They were then disbanded and have been subsequently revitalized during the last decade. The purposes, management and finance of the schools differ. 9. The STSs under the general administration of the State Education Commission (SEdC) are managed and financed by central technical ministries, local technical bureaus and state-owned enterprises and thus have close ties to employers. These schools were originally designed to enroll mainly upper secondary graduates to be trained as cadre/technicians who were guaranteed employment after graduation by the labor assignment system. They have recently been instructed by SEdC in many cases to enroll more lower secondary graduates. For those students, they have lengthened the previous two- to three-year programs to four or five years. The programs as previously  - xiii - administered were intended to graduate qualified technicians, but in these schools basic and theoretical courses take over a large proportion of the curriculum and too little room remains for practical courses. Some specialties are narrow and therefore graduates from those do not have wide placement options nor do they have the flexibility to move between jobs. 10. SWSs under the general administration of the Ministry of Labor and Personnel (MOLP) are managed by central technical bureaus, local labor bureaus, and enterprises, with about half their resources coming from enter- prises. They thus have close linkages with employers and generally have substantial internships in industry for their students prior to graduation. These schools enroll lower secondary graduates who are to be trained as skilled workers at entry levels two or three in an eight-grade scale. They are guaranteed assignment upon graduation. The purpose and operation of these schools have not changed in recent years. The program produces competent workers in most cases, but like the STSs, the SWS graduates are too narrowly specialized. 11. SVSs, under the administration of SEdC, are managed and financed by local education bureaus and thus have less formal linkages with employers. These links must be built up in order to ensure a market for SVS graduates. These schools were originally established prior to the Cultural Revolution to enroll primary graduates in urban areas for prevocational training prior to assignment to the countryside or as workers in factories and in the rural areas for agricultural training. In the recent revitalization of these schools they have focised on training lower secondary graduates for jobs as skilled workers and technicians, thus competing with both STSs and SWSs. The quality of the graduates of these schools varies enormously. The schools are often underequipped and underfunded for the skills needed in heavy industry and the more highly technical specialties. SVSs seem somewhat better designed and equipped for the provision of lower cost service and commercial special- ties. They, however, face competition in the provision of such training from short-term contract training provided by labor service companies under the direction of MOLP. 12. This complex TVE system was initially designed to train different levels of manpower in different sectors of the economy with different entry levels of education, but is changing into an overlapping system which is directed at upper secondary students. It has the merits of highly decen- tralized management, control and finance with creative and diverse local inputs and STSs and SWS8 have close linkages with employers. The system, however, lacks a sufficiently well-defined central policy to guide local governments on which kinds of skills or specialties are best provided in TVE schools of various types, and which in preservice, short-term training, in- service training or postsecondary short-term universities (polytechnics). Nor is there guidance to SVSs on which skills and specialties they should select to avoid duplication and overlap with other schools. The problem is particularly severe with respect to the overlap between SVSs, which are expanding, and existing SWSs where there is excess capacity. Resolving this problem will require closer coordination between SEdC and MOLP. As a conse- quence of lack of coordination, schools are small, and the programs within schools are even smaller and uncoordinated. In addition, there is wasteful  - xiv - overlap between programs in different types of schools or even within the same type of school. There is also possible confusion over the role of STSs vis-a- vis emerging polytechnics which could create similar problems of small size and overlap at the postsecondary level. i3. The mission recommends that the further elaboration of TVE policy be developed and that it should involve examining all the alternative ways of providing skills, preparing youth for employment and upgrading and retraining existing workers. SEdC and MOLP are essential actors in the evolution of this policy, as are technical ministries, employer representatives and workers. As a beginning it is recommended that the recently established National Coordinating Committee for Vocational and Technical Education, the National Committee on Workers Education and the National Committee of Enterprise lManagers begin discussions which include procedures for establishment of skills and technician standards and testing and identification of appropriate modes of training to attain such standards. The alternative ways of reaching standards should include the existing schools and their appropriate role vis- a'-vis each other, the emerging polytechnics, labor servico company training and initial, in-service short-term training, apprenticeships and training for upgrading of workers. The External Efficiency of the System and the Desirabilit of the Proposed Reform i4. While the broad elements of the proposed reform of TVE are endorsed by the mission, the specific proposal to expand TVE to reach a 50/50 balance between general upper secondary and TVE throughout China within five years is more controversial. It cannot be judged solely on the basis of other countries' experience, given the very wide range of choices that have been made on TVE throughout the world. A review of the history of technical vocational education, the existing skills deficits and the current economic and labor market situation suggests that while there are important skills' deficits, part of the solution must come about through the improved upgrading of existing workers, improvements in the labor allocation system, gteater wage differentials and broader training. This finding suggests that further labor market reform is needed, that greater emphasis be given to the upgrading of existing workers, that training be broadened through revised curricula in specialized courses and that improved linkage be made between the general curriculum of TVE schools and the specialized programs. 150 A review of the Seventh Five-Year Plan clearly suggests that some ezpansion of TVE is needed, in particular for commerce and services for collectives and self-employment, but the size of expansion is yet to be quantified. A review of the process of planning the proposed expansion and evidence on provincial differences in labor markets and in the success of schools in placing graduates suggests that sufficient planning has not been done to determine appropriate enrollment levels on a national level, that SWSs should be incorporated in the planning process and that expansion plans must be differentiated at the provincial level. Therefore the 50/50 rule should be clarified to indicate that it is a general principle and that provinces should implement it on the basis of local labor market needs. Such a policy would be consistent with the Reform's objectives of attempting to meet development  - xv - needs and of allowing full play to the initiatives of enterprises. It is also consistent with the policy on basic education which allows implementation to be paced in accordance with local conditions. The pace of expansion should be based on the quantity of skilled manpower needed, the ability to expand without serious sacrifices of quality, and the resources required to address other educational priorities, such as basic education. 16. The mission recommends that a strong institutionalized planning and evaluation of TVE is essential and should draw on local employer surveys guided by projected local economic growth. There needs to be greater coordi- nation between the planning of STSs, SWSs and SVSs in local areas to prevent overlap, fragmentation and excessively small program size. The specific steps that should be taken are outlined below: (a) SEdC in consultation with NCCVTE should determine guidelines for coordination in the planning of various types of schools at the local level. Guidance needs to be provided to local planning authorities on employer sample surveys; (b) SEdC in consultation with NCCVTE should coordinate research on the effectiveness and costs of existing programs (employment and appropriate placement of graduates). Tracer studies should be carried out to evaluate various forms of school-based and nonschool- based training. Quality and Internal Efficiency of Schools 17. The ability of the schools to meet the demands of expansion at acceptable levels of quality depends on the existing quality and efficiency of those schools. The three types of schools, despite their differences in man- agement, administration and purpose, have similar strengths and weaknesses in quality and internal efficiency. The schools are highly efficient in graduat- ing most of the students they initially enroll. In most cases, facilities and equipment are adequately maintained and teachers have adequate academic quali- fications. 18. On the negative side, there are problems of quality and inefficiency in their use of resources. Facilities are generally inadequate and the equip- ment is limited and outdated. Schools report that only 60X of prescribed experiments and workshop training can be carried out with existing equipment and facilities. The equipment needs are particularly obvious in the special- ized laboratories and shops. In addition to shortcomings of physical facili- ties shared by many general secondary schools, such as poor lighting, heating and sanitation, serious problems arise from converting general facilities into workshops and laboratories. Teachers are inexperienced in many schools and the specialized teachers often lack relevant industrial and commercial experi- ence. Consequently STSs and SWSs give more time to general education than specified in the officially recommended curricula. In additio,a, teaching methodology is too heavily weighted to lecture/demonstratiou. Expansion without improvement in quality would not be desirable. Substantially more specialized equipment and facilities must be provided for the existing schools, as well as for new schools. Specialized teachers need to be upgraded  - xvi - to increase their experience and the training of new teachers must be given priority. SEdC should establish standards for the qualifications of special- ized teachers, the amounts of pedagogical training needed for teachers recrui- ted from industry and the amount of training and industrial experience needed by general teachers who are to become specialized. 19. Typically teachers, equipment and facilities are underutilized in all three types of schools. Overall student/teacher ratios are low by inter- national standards, especially in STSs and SWSs. Low teaching loads and large class sizes represent inefficient teacher utilization. Excess staffing is also reflected in large nonteaching staff, exceeding 50% of total staff in the sample STSs and SWSs. Equipment and facilities are underutilized due to block scheduling of classes whereby lectures take place in the morning and labs in the afternoons. Low utilization is also a fonction of the extremely small size of schools, even smaller enrollments in each specialty and the prolifera- tion of unrelated specialties within individual schools. 20. The elimination of some inefficiencies could lower costs of existing programs and reduce the costs of expansion. If teaching loads were doubled, then the proposed doubling of enrollments could be accomplished without additional general teachers. Additional specialized teachers would still be required to fill the existing deficit. Whether such a doubling of teaching loads is feasible within existing institutions is uncertain. Some adjustments in teachers' salaries may be required to accomplish this. Increased utiliza- tion of existing general facilities and equipment is essential and would require a shift in organization of school programs. While this is also needed in general education, it is especially necessary in TVE where there is a higher concentration of specialized equipment and facilities. In addition, the proportion of nonteaching staff in schools needs to be reduced through consolidation of functions. Increases in school size might also improve utilization of administration overhead. SEdC should provide new guidelines. 21. The inefficiencies arising from small school size should be addressed wherever possible by expanding existing technical/vocational schools rather than by converting general secondary schools. Consolidated planning for school enrollments for STSs, SVSs and SWSs is essential if program and school sizes are going to increase and fragmentation within and overlap among schools are to be eliminated. In theory the Education Reform recognizes this, but in practice emphasis seems concentrated on conversion of general secondary schools into SVSs rather than expansion of existing SWSs, STSs or SVSs. While some expansion of existing schools is possible with increased utilization, concurrent quality improvements are essential and expansion should be made in pace with these improvements and established labor markets needs. In addi- tion, training centers serving a number of schools may be tried on a trial basis to capture economies of scale on specialized equipment. This will only be feasible where local density of demand is sufficient. Cost Implications of Technical/Vocational Education 22. The ability of China to afford both quality improvement and expan- sion depends on their costs and the financial resources available. The recurrent costs of secondary TVE in China, as elsewhere, exceed those in  - xvii - general secondary education but vary greatly by the type of specialty and the type of school. SVSs have average recurrent costs of a third to a fourth of those in STSs and SWSs. The unit costs of SVSs as a percentage of GNP are generally low compared with those of TVE in other developing countries while STSs and SWSs have relatively high costs on this basis of comparison. There are no estimates of the costs of alternative types of training in short-term labor service companies. Such data would help evaluate training alternatives. 23. The review of the recurrent cost estimates of the surveyed schools and an evaluation of the adequacy of facilities and equipment in the schools allows an estimate of the costs of proposed expansion of the system. The cost implications of the expansion have not been calculated in China, and therefore were not taken into consideration when arriving at the 50/50 rule. 24. The costs of TVE during the Seventh Five-Year Plan will vary greatly depending on: (a) the utilization of teachers, equipment and facilities; (b) improvements in the quality of teachers, equipment and facilities; and (c) the extent of the expansion. At a minimum the existing system without changes in enrollments, efficiency, or quality would require Y 12.5 billion in recurrent costs between 1986 and 1990. At the other extreme with the proposed expansions and quality improvements but no change in efficiency, Y 68.3 bil- lion woy3d be required for capital and recurrent costs over the same period.- This would represent 1.4% of GNP for only about 4% of total enroll- ments at all lev 1, s compared with an expenditure on all education in China of about 3% of GNP, This indicates the serious risks of cost escalation that can arise in expanding TVE. By doubling teaching loads, other staff utiliza- tion and utilization of facilities and equipment, the costs of current and expanded enrollments and improved quality could be about Y 43 billion. With sacrifices of quality, in particular, no improved facilities, the costs of the expanded system might be as little as Y 18 billion if efficiency is doubled. China is thus faced with some serious trade-offs between improved quality, exnansion and improved efficiency. It is not feasible for China to spend almost half its present education budget (as a percent of GNP) for improved quality and doubling of enrollments in SVSs and STSs at existing levels of efficiency, while expansion without some improvement in quality is undesirable from the perspective of external efficiency. Thus it is recommended that quality and efficiency be improved as stated earlier, but that expansion not be pushed to the 50/50 ratio except where specifically justified in local areas* 1/ Recurrent costs are based on survey data. Equipment and facilities are estimated at the lowest 10% costs in 63 institutions in 9 projects funded by the World Bank between 1981 and 1983. 2/ It is not possible to get breakdowns of these expenditures into capital and recurrent costs for the educational budget for the country as a whole.  - xviii - Financing of Technical/Vocational Education 25. The affordability of various alternatives discussed above depends on the sources of school finance. The financing of TVE varies highly by school type and to a lesser degree by province. Rough calculations of systemwide finance of TVE indicate that 14% of revenues are from central ministries (pri- marily technical ministries) 54% from local government, 27% from enterprises (primarily for SWSs) and 1%, 2% and 3Z come from school-run factories, tuition and other sources respectively. Thir implies that the central government, particularly SEdC, has little financial leverage in directing the system. 26. The majority of school financing currently is for recurrent expendi- tures. The capital expenditures are made on a much more ad hoc basis. For SWSs and STSs run by central ministries, blocks of funds are set aside for capital and equipment. For SVSs, SEdC has set aside a fund of Y 250 million for the Seventh Five-Year Plan for capital and equipment improvement. This compares with a mission estimate of Y 1.5 billion needed for equipment upgrading in existing SVS9. The need for realistic financial planning for existing schools and for the expansion and quality improvement of the system is of high priority. 27. Tuition fees and school-run factories cannot be expected to repre- sent major contributions to expansion, although equalization of fees across schools and liberal tax allowances for school-run factories are advisable. Contributions from. enterprises are already quite high by international standards and can only be expected to increase if more generous tax write-offs are given. Greater cost consciousness generated by the new responsibility system and shorter labor contracts may in fact lead to a decrease in school support by enterprises. Thus local governments must bear the brunt of the proposed increase in costs. Local areas differ greatly in their ability to do this. Areas which have not yet achieved universal basic education should give higher priority to that objective. Thus not only the need for, but the ability to pay for the improvement and expansion of TVE, varies greatly within China. 28. The introduction of major new taxes at the local level seems unadvisable until the effectiveness of the programs has been improved and the level of need can be better evaluated. Given the devolution of firms from control by central ministries and increased cost consciousness by firms, it seems advisable to proceed incrementally by providing more attractive tax write-offs for preservice training paid for by firms and run by firms, schools or labor service companies. At the local level guidelines and priorities for the expansion of education need to be established. Unless increased funds are made available to poor areas from the State, those areas which have not yet obtained universal basic education should give TVE lower priority as a budget share than those areas where basic education has been obtained. 29. On a trial basis in one locality or province a training tax might be instituted on local firms. Firms could either spend the specified tax on training they provide themselves or training contracted from others or they could put the amount in a local fund to be administered for publicly provided technical/vocational education and training. This system would have merits of  - xix - both raising revenues and increasing employer guidance of training. It would, however, have administrative costs and might represent excessive taxation in some areas. Therefore it should only be tried in a richer province on a trial basis. Conclusions 30. China's current system of secondary TVE is rich in local input, employer linkages and enterprise finance. Nevertheless, the report has found that there are several issues that need to be addressed to build on these strengths. They are the following: (a) the policy on TVE stated in the Education Reform needs to be elaborated to encompass the question of types of education that should be best conducted through the various secondary schools, short-term preervice training, in-service training and postsecondary technical training; (b) the planning and evaluation of TVE to meet labor market needs is underdeveloped; (c) the curriculum of specialized courses is too narrow and the integration of general education in TVE is not well developed; (d) quality and efficiency suffer because schools are small and programs within schools are often uncoordinated; (e) existing Leachers, facilities and equipment, mostly general in nature, are underutilized by international standards; (f) instructional quality suffers because of a shortage of management skills, specialized teachers, equipment and facilities; (g) the costs and financial implications of the proposed expansion have not been well explored and it is essential to recognize the risks of cost escalation of TVE; and finally; (h) some labor market characteristics inhibit the efficient development and use of skills for economic development. 31. A number of recommendations are proposed. A central theme of these recommendations is that before large-scale expansion occurs and before more conversions of general secondary schools take place, improvements in the quality of the existing programs and an increase ia the efficiency of existing technical/vocational schools must be made. In addition, decisions on enroll- ment levels by schools and by special'y should be decided on the local level based on local labor market needs, the quality of the schools, the division of programs between various types of schools and school size and local priorities for educational expenditures. Only in those areas where the quality of pro- grams are high and there is substantial demand for graduates, should expansion be allowed to occur. This implies that the pace of development of TVE should be differentiated between provinces and should embrace the full spectrum of TVE approaches available. The closing statement of the July 1986 National Working Conference of Technical and Vocational Education emphasized the importance of local conditions in determining enrollments. This point needs to be reiterated to local planners.  I. TECHNICAL/VOCATIONAL EDUCATION IN CHINA: ITS ECONOMIC SETTING A. The Macroeconomic Situation 1.1 China's economy is undergoing rapid growth and structural change. Its per capita GNP of about $300 in 1984 places China among the poorest countries, but it shows far more momentum for income growth and lower population growth than most of these countries. Between 1981 and 1985 GNP averaged 9.7% arnual increase and population grew only 1.2% p.a. providing per capita income growth on average at about 8.5%. This rapid growth has resulted from unique policies to liberalize economic production and control population growth. The policies of economic liberalization began first in the rural areas in 1979 with the introduction on the Rural Responsibility System and were expanded to urban areas gradually in the early 19809. The reforms have made managers more responsible for their profits and losses. Profits are now being retained by the enterprise (except for taxes) instead of being passed to the state. Managers have increased responsibilities for expenditures, invest- ments, production and personnel. It is anticipated that this will lead to greater efficiency through cost consciousness and sensitivity to product markets. Price and wage reforms have not yet been implemented extensively. 1.2 The structure of production and employment in China is unusual for a developing country. China is predominantly rural with only 21% of the population residing in urban areas in 1982. Redefinition of towns increased the proportion of the urban population to 321 in 1984 and this has shown a rapid one year increase to 36% in 1985. Although rural populations in China are poorer than urban populations, as is true in most poor countries, the introduction of economic reforms in rural areas first has resulted in a more rapid rural, than urban, annual per capita income growth in the period 1981-85 (13.7% versus 6.9%). The Seventh Five-Year Plan (1986-90) proposes that rural per capita income grow by 7% and for urban areas by 4X. 1.3 The economic structure of China also differs from that of other poor countries in both its sectoral distribution and its organization by type of employment. In 1984, 291 of total production came from agriculture, 54% from industry, 9% from construction, 2.8% from transport and only 5.2% from com- merce. With respect to employment 68% wal in agriculture, 13% in industry 41 in construction, 2% in transport and 12% in commerce, education, research, government and other. The tertiary sector is particularly underdeveloped in China. Proposals to further liberalize economic management are expected to have an effect on this sectoral distribution. The Seventh Five-Year Plan envisions primary industry to grow 4.2% a year between 1986 and 1990 while secondary industry will grow by 7.7% and tertiary industry by 11.4%. 1.4 Economic management in China is a mixture of state enterprises and units, collectively owned units in urban areas, joint ownership units and, self-employment in urban and rural areas. The vast majority of workers are either individual or collective workers in rural areas (74%). Among urban staff and workers the majority are in state-owned units (71%). Only 26% are in collective enterprises and a mere 3% are in private employment. The proposals for employment expansion in the Seventh Five-Year Plan indicate that  - 2 - this will change. The 128 million urban labor force in 1985 is expected to expand by 30 million between 1986 and 1990. Collectives and private employment are expected to take up a larger portion of this expanded work force than in the past with collectives absorbing 9 million (30%) and self- employment absorbing 3 million (10%). 1.5 The growth during the Sixth Five-Year Plan (1981-85) has been remarkable, but it has not been without drawbacks. The rapid growth of the period resulted in both inflation and external imbalance as the demand for goods exceeded the supply domestically available. Problems of labor surplus and unemployment must also be addressed. It is estimated by MOLP that of the 128 million urban staff and workers 15 million are redundant while an additional 2.4 million individuals are awaiting work in urban areas. In the Seventh Five Year Plan the proposals for expansion are intended to eliminate both these sources of lost potential. 1.6 The above description refers to the entire country but there are substantial differences across regions. There are three major 1egions recognized in China--the Eastern, the Central and the Western.1 Income levels, employment by sector and occupation and urban unemployment differ greatly by region with per capita GNP being more than 50% higher in the Eastern region (see Annex Tables 1 through 4). Per capita GNP was Y 2,822 in Shanghai and Y 381 in Guizhou in 1984. Census data from 1982 indicate that urban unemployment as a percentage of the urban working age population (no , the unemployment rate) ranged from 5.9% in Guangdong to 0.57% in Shandong., More recent data on unemployment give no breakdowns by province, but overall the number of job waiting individuals has declined since 1982. The Seventh Five-Year Plan incorporated separate development strategies for the three regions. B. The Labor Market 1.7 The operation of the labor market has been well outlined by King (1984) and Byrd and Tidrick, (1985). The main features relevant to this study are: (i) the educational structure of the labor force; (ii) the practice of lifetime employment; (iii) restricted labor mobility; (iv) central job assign- ment for certain groups; (v) narrow wage differentials; (vi) low geographical 1/ The Eastern region includes Beijing, Shanghai and Tianjin and the provinces along the coast and contains 400 million population. The Central region stretches north to Inner Mongolia and includes 8 other provinces and autonomous regions with a population of 370 million. The Western region incorporates the remainder. 2/ In 1982, the overall unemployment rate for urban and rural areas combined was higher 4.7% (4.0% for men and 5.5% for women). This rate is below the rates observed in Canada (11.0), United States (9.7) and various European countries, (Germany 5.8), (Great Britain 12.3) for that period and above those in Hong Kong (3.8), Korea (4.4), Japan (2.4) and Singapore (3.6) (Taylor, 1985).  mobility; and (vii) high youth unemployment. All of these characteristics of the labor market have substantial impact on the TVE system and their impact will change during the process of economic and labor market reform and with the changing age structure of the population. The 1986 labor market reform will first be discussed, followed by a discussion of the underlying characte- ristics of the labor market. Labor Market Reform 18 The labor regulations have been changed to restrict recruitment, to allow for dismissal of workers and to create an unemployment fund. These regulations became effective October 1, 1986. The new regulations require that workers be recruited "in accordance with the state plan for labor and wages, follow the principle of training before employment, openly recruit workers in society, examine them in an all round way and select the best applicant for employment" and in addition "enterprises must practice the labor contract system" (China: Labor Regulations for State Enterprises September 16, 1986). While these regulations cover only state enterprises and not collectives and small businesses, they are potentially revolutionary changes. First, the majority of urban workers are in state enterprises. Second, the collectives and small businesses are already much less protected from competitive pressures and are less subject to overstaffing. Third, the requirements for open recruitment on the basis of merit and training before employment will end the practice of inheriting jobs that has hindered the acquisition of the best trained and most highly motivated workers. Further, employment in state enterprises is restricted to those who have finished lower secondary school. Finally, the most revolutionary change of the recruitment policy is the introduction of the contract system. The policy is designed to eliminate the guaranteed lifetime employment, "the iron rice bowl" which reduces motivation and leads to overstaffing. Educational Structure of the Labor Force 1.9 China has achieved very rapid expansion of education since the 1949 revolution. By 1980 it had a literacy rate of 69%, compared with an average of 40% for low-income countries other than China and India, and close to that for m;ddle-income countries. China's education policy of restricting higher education has allowed it to achieve almost universal access to primary educa- tion while spending only about 3% of GNP on education compared with 4% for the average developing country. Secondary enrollment ratios are above the average for low-income countries but substantially below middle-income countries (35% versus 47%). The higher education enrollment ratio is far below that of the average middle-income country (5% versus 12%), but recent expansions have raised enrollment above the average for low-income countries other than China and India. 1.10 Despite the educational achievements of China the educational level of the labor force remains a serious problem. The disruption during the Cultural Revolution (1966-76) had these effects on the labor force: (a) the quality of education during the period was generally poor due to periods of school closure, high absenteeism, poor instruction and breakdowns in disci- pline; (b) the TVE system was dismantled during that period; and (c) higher  - 4- education institutions were closed with the result that the proportion of the population with postsecondary education was twice as high among males over 35 as for males 25-34 in 1982 (the latest census date). The poor quality of education delivered during the Cultural Revolution has been partly addressed through large scale programs for adult education both within the work place and outside (see Colletta, 1982). As a consequence of this educational history only 0.8% of the labor force are college graduates while 28% are illiterate or semiliterate. However, educational attainment differs greatly by occupation. In nonagricultural occupations, 3% are college graduates, 24% upper secondary graduates, 39% lower secondary graduates, 27% primary gradu- ates and less than 7% are literate or semiliterate. Annex Table 5 provides data on the occupational/education structure from the 1982 census. 1.11 Data from 1983 indicate that the ratio of engineers to technicians in China was 1.6 to 1 (3.66 million versus 2.24). It is believed 3y planning authorities in China that a ratio of 1 to 3 would be appropriate - and consequently it is argued that very rapid expansion of technicians education is needed (see Gao, 1984). A manpower survey of the needs for higher level manpower between 1983 and 2000 has been conducted. This indicates that about 9 million university graduates, 8 million polytechnic graduates and 17 million graduates from specialized secondary education would be required. There have been no projections of the skilled workers or the other types of TVE graduates needed. More general data indicate that 40 million of the 128 million urban workers are classified as skilled workers but over 70% are in the lowest grades (2 and 3) in an 8 grade scale while in the United States only 20% of skilled workers are in the lowest grade. 1.12 The deficit of highly skilled workers and technicians is attributable to several factors: the closing of technical and vocational schools during the Cultural Revolution; the lack of well-planned, systematic on-the-job upgrading of workers; and the reward system which en-.ourages movement across streams from worker to technician to engineer rather than improvement skills within a stream. The Iron Rice Bowl 1.13 The majority of the labor force in urban areas is employed in state enterprises (71%). In the past, workers in state enterprises were employed for life after initial one-year probation periods. Lifetime employment meant that they could not be fired or move without permission. Workers were occa- sionally fired, but this was a difficult process and was rarely attempted. Workers could be downgraded but this was also a difficult process. Until recently state enterprises could not go bankrupt either because of poor management or adverse market movements. Thus the worker once employed was guaranteed a wage regardless of his own or his enterprise's performance. This was the "iron rice bowl" that recent reforms in both the labor regulations and enterprise management have tried to break. How far these changes will go is 3/ International data show wide differences between countries and across industries in the engineer/technician ratio.  -5 - highly uncertain given their recent introduction and possible resistance on the part of workers who view as a right their tenure in a job (perhaps even their child's right to inherit that job). Voluntary mobility between jobs is also reduced by the housing, pension, health and welfare benefits that accompany a job and do not move with an individual. Workers in collectives and in self-employment have no such guarantees, but as a consequence have much more mobility between jobs within the same geographical area. 1.14 The effect of lifetime employment on investment in education and training depends on who bears the cost and captures the benefits. Prior to the New Responsibility system firms were motivated to get becter trained manpower to meet production targets but were insensitive to costs since all revenues were retained by the State and all costs were covered for given approved categories of expenditure. Under the new system, firms will be more careful to weigh costs versus benefits. Lifetime employment allows firms a long time period to capture benefits. It is expected that a new system of contract labor will stimulate firms to only invest in training that can yield a high rate of return over the contract period unless employers are allowed to have longer contracts for those in whom they have invested more in training. Labor Mobility 1.15 The geographical mobility of all workers is more restricted in China than elsewhere. This is one reason why urban populations have,until recently grown slowly relative to those in other developing countries.- Residence permits and grain rations (now of little significance) have been major means of restricting mobility in the past. The residence permits still provide sig- nificant restriction on geographical mobility. As a consequence of this limited mobility, skill needs for the most part must be met through the local education system and surplus of certain skills may exist in some areas and deficits elsewhere. This low geographical mobility meant that local areas had more motivation to train individuals because they were unlikely to migrate. However, the municipality itself may not be responsible for the training and smaller geographical areas, such as districts, may not have the motivation to train since their trainees can work elsewhere in the municipality. As mobi- lity beyond municipal and provincial boundaries increases so must the respon- sibilities of the Central Government or the individual for training. Job Assignment 1.16 The mobility of the labor market is further restricted by the job assignment system. Until 1980 graduates of all upper secondary schools who did not enter college were assigned jobs. Today, those who are graduated from higher educational institutions, (except polytechnics), secondary technical schools and skilled workers schools are guaranteed jobs. Since over 90% who enter also graduate, admission is tantamount to employment. This is believed 4/ Given the rapidly changing proportion of the population that is urban, according to recent statistics, mobility may be increasing. This needs to be explored in further labor market analysis.  - 6 - to reduce student motivation to study and also leads to a high demand for places in these institutions. The job assignment system has had two effects on enterprise support of TVE. On the one hand, the difficulties of getting assigned the type of workers and technicians needed from the center encouraged enterprises and employers to establish schools to meet their training needs since they would be assigned the graduates of these schools. This encouraged the development of schools specializing in the diverse needs of one enterprise or employer. On the other hand, because those admitted to these schools must be placed upon graduation, there was reluctance to expand enrollment in these institutions since new positions to