Philippines - Second Vocational Training Project

Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10221-PH Report No. 10221-PH Type: (SAR) BREDIE, J./ X81216 / E-9037/ ASTPH STAFF APPRAISAL REPORT PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT MAY 11, 1992 Population and Human Resources Operations Division Country Department I East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of August 31, 1991) Currency Unit = Philippine Peso (P) P 1 - US$0.036 US$1.00 = P 28 ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank BTVE - Bureau of Technical and Vocational Education COA - Commission on Audit CTC - Community Training Center CTU - Community Training Unit DECS - Department of Education, Culture and Sports DOLE - Department of Labor and Employment DSWD - Department of Social Welfare and Development DTI - Department of Trade and Industry HRD - Human Resources Development IDA - International Development Association ICB - International Competitive Bidding ILO - International Labour Office JICA - Japan International Cooperation Agency LCB - Local Competitive Bidding LGU - Local Government Unit NEDA - National Economic and Development Authority NGO - Non-Governmental Organization NMIS - National Manpower Information System NMYC - Nationial Manpower and Youth Council OMSD - National Skills Training Center OSY - Out-of-School Youth PCR - Project Completion Report PMTC - Provincial Manpower and Training Center PMU - Project Management Unit PPAR - Project Performance Audit Report RMDO - Regional Manpower Development Office RMTC - Regional Manpower and Training Center SAT - School of Arts and Trade SOE - Statement of Expenditure TA - Technical Assistance TAC - Training Assistance Contract TCS - Training Contract Scheme TDIS - Training Delivery System for the Rural Informal Sector TEI - Technical Education Institute UNDP - United Nations Development Programme USAID - United States Agency for International Development FISCAL YEAR January 1 to Decewber 31 SCHOOL YEAR June - March  FOR OFFICIAL USE ONLY PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Credit and Proiect Summary Borrower: Republic of the Philippines BengficiaXy: National Manpower and Youth Council (NMYC) Amount: SDR 26.4 million (US$36.0 million equivalent) Terms: Standard, with 35 years' maturity. Project DescriRtion: Faced with persistent unemployment and growing under-employ- ment, the Government of the Philippines is creating an environment conducive to investment and, thereby, employment generation. It also plans to improve efficiency in the labor market by, among other things, improving labor market informa- tion and employment services which are currently inadequate, and strengthening the policies, plans and delivery services for vocational training, which have become unresponsive to changing employment conditions and skill needs in the economy. To support these efforts, the project would: (a) strengthen institutional capabilities in policy formulation, planning, and management of nonformal vocaLional training and employment services; (b) improve training staadards by strengthening training support services and developing mechanisms to increase cost sharing and cost recovery for training; (c) improve facilities and programs for nonformal vocatioral. education by (i) upgrading 14 Regional and 13 Provincial Manpower and Training Centers and the National Skills Training Center operated by NMYC, (ii) providing incentives to the private sector to increase its provision of on-the-job training, (iii) improving the apprenticeship program, and (iv) supporting training in rural areas for women as well as unemployed and out-of-school youth; and (d) conduct two studies under the auspices of the Council of NMYC to: (i) define a strategy and investment plan for the rationalization and improvement of formal technical and vocational education and training, and (ii) determine the feasibility of establishing sector specific -nd advanced technology training centers. Benefits: The project would assist in developing the capacity to improve employment and training policies and delivery services to increase efficiency in the labor market. It will also help to meet the skill needs of the economy and establish a sound basis for future expansion of the training sector. It would support poverty alleviation by providing skills for employment and self-employment for women and out-of-school youth and of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - increase the skills of the work force for export-oriented and value-added services requiring higher skills. It would help transfer the burden of training and its financing to the private sector. Risks: The major risk concerns the potential constraints on counter- part funds. The project has been designed to defer the requirements for counterpart funds to the later years of the project when the economy is expected to be stronger. A second risk is the possibility that the private sector may not be responsive to the need to expand their in-house training. To minimize this risk, the project would help to strengthen industry's capacity to train workers in private firms, improve apprenticeship training and extend cost sharing incentives and advisory services to firms to develop their capacity to train workers. Estimated Cost: Local Foreign Total ------(US$ million)----- Institutional Development 5.6 3.9 9.5 Improvement of Training Quality and Cost Recovery 5.7 1.3 7.0 Training Capacity Development 8.7 7.3 16.0 Studies 0.4 0.2 0.6 Base Cost 20.4 12.7 33.1 Physical contingencies 0.6 1.0 1.6 Price contingencies 5.8 1.3 7.1 Sub Total 6.4 2.3 8.7 Total Project Cost /a 26.8 15.0 41.8 Financing Plan: Government 5.8 - 5.8 IDA 21.0 15.0 36. Total 26. 15.0 41.8 Est. Disbursements: IDA Fiscal Year 12993 1994 1995 199i 1997 1998 ------------------ (US$ million) ------------------- Annual 3.6 8.9 10.2 7.8 4.3 1.2 Cumulative 3.6 12.5 22.7 30.5 34.8 36.0 Economic Rate of Return: Not applicable IiR: IBRD No. 23477R Lg Includes US$1.8 million in identifiable taxes; figures may not add up due to rounding.  - iii - PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Table of Contents Page No. Credit and Project Summary . . . . . . . . . . . . . . . . . . . . I. ECONOMIC TRENDS AND THEIR IMPACT ON EMPLOYMENT . . . . . . .1 II. POLICIES AND SERVICES FOR EMPLOYMENT AND TRAINING . . . . . 4 A. Employment & Training Policies: Formulation . . . . . . and Coordination . . . . . . . . . . . . . . . . . . . . 5 B. Employment Services . . . . . . . . . . . . . . . . . . 8 C. Training Plans and Training Delivery Services . . . . . 9 D. Training Quality and Demand for Training . . . . . . . . 11 E. ;osts and Financing . . . . . . . . . . . . . . . . . . 13 . Strategy for Development of Vocational Training and . . Technical Education . . . . . . . . . . . . . . . . 14 III. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . 17 A. Project Formulation . . . . . . . . . . . . . . . . . . 17 B. Project Objectives . . . . . . . . . . . . . . . . . . . 17 C. Project Description .... . . . . . . . . . . . . . . 17 IV. PROJECT COST, FINANCING AND IMPLEMENTATION . . . . . . . . . 22 A. Costs . . . . . . . . . . . . . . . . . . . . . . . . . 22 B. Financing . . . . . . . . . . . . . . . . . . . . . . . 24 C. Project Management and Implementation . . . . . . . . . 26 D. Procurement .... . . . . . . . . . . . . . . . . . . 27 E. Disbursement . . . . . . . . . . . . . . . . . . . . a . 29 F. Accounts, Audits Monitoring and Reporting . . . . . . . 30 G. Environmental Impact . . . . . . . . . . . . . . . . . . 30 H. Impact on Women . . . . . . . . . . . . . . . . . . . . 31 I. Project Sustainability . . . . . . . . . . . . . . . . . 31 V. BENEFITS AND RISKS . . . . ... . . . . . . . . . . . . . . . 31 A. Benefits . . . . . . . . . . . . . . . . . . . . . . . . 31 B. Risks . . . . . . . . . . . . . . . . . . . . . . . . . 32 VI. AGREEMENTS REACHED AND RECOMMENDATION . . . . . . . . . . . 33 This report is based on the findings of a May 1991 appraisal mission consisting of Messrs. J. Bredie (mission leader), R. Prosser (ASTPH), and T. Coyle, G. Hurley, R. Noonan and Ms. E. Tan (consultants). Mr. I. Morris (consultant) participated in the pre-appraisal and contributed to the report. Messrs. W. Rees and J. Segerstrom (ASTPH) were the peer reviewers. The report was cleared by B. Babson (Chief, EA1PH), and C. Madavo (Director, EA1DR).  - iv - Page No. TABLE IN THE TEXT 4.1 Summary of Project Costs by Component . . . . . . . . . . . 23 4.2 Summary of Project Costs by Category of Expeniiture . . . . 24 4.3 Financing Plan. . . . . . . . . . . . . . . . . . . . . . . 25 4.4 Summary of Procurement Arrangements . . . . . . . . . . . . 28 ANNEXES 1. NMYC: Institutional Strengthening. . . . . . . . . . . . . 34 2. Summary of the Policy Paper: "Vocational and Technical Education Towards a Long-Term Policy Paper for the Subsector, July 1990 . . . . . . . . . . . . . . . . . . . 40 3. Summary of "Memorandum of Agreement between the Department of Education, Culture and Sports and the Bureau of Technical and Vocation Education and the Department of Labor and Employment and the National Manpower and Youth Council". . . . . . . . . . . . . . . . . . . . . . 42 4. Status of Apprenticeship Training . . . . . . . . . . . . . 43 5. Sharing the Burden: Privatization, Decentralization and Devolution. . . . . . . . . . . . . . . . . . . . . . . . 49 6. NMYC 5 year Financing Plan ... . . . . . . . . . . . . . . 51 7. Project Components by year ... . . . . . . . . . . . . . . 52 8. Summary of Technical Assistance Component . . . . . . . . . 56 9. Implementation Schedule ... . . . . . . . . . . . . . . . 70 10. Disbursement Schedule and Profile . . . . . . . . . . . . . 72 11. Supervision Plan .... . . . . . . . . . . . . . . . . . . 74 12. Selected Documents and Data Available in the Project File. 75 CHART National Manpower and Youth Council - Organizational Chart IBRD No. 23477  PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT I. ECONOMIC TRENDS AND THEIR IMPACT ON EMPLOYMENT Introduction 1.1 High levels of unemployment and underemployment and low rates of productivity growth have been characteristic features of Philippine economic development in the last two decades. In recent years, the Philippine Government has implemented a range of economic reforms designed to return the economy to a sustained growth path and improve efficiency. These measures are beginning to have results. The economy recovered substantially during 1987- 89, following the mid-1980s recession, with economic growth averaging about 6 percent per annum. However, due to a combination of external shocks and natural disasters, economic growth slowed to less than one percent in 1991. Despite the general improvements, pressures in the labor market, which resulted from the severe unemployment during the economic recession, are only slowly abating. Employment data is either non-existent or weak but indications are that employment growth remains inadequate, with significant levels of unemployment and growing underemployment, while labor is inefficiently deployed in the economy. Labor markets in both urban and rural areas are changing rapidly due to declining industrial and agricultural employment and increasing work opportunities in agro-industry, the services sector, small- and medium-size manufacturing and the production of nontraditional exports in free trade zones. Faced with persistent unemployment and changes in the structure of the labor market, the Government is liberalizing investment laws with the aim of increasing employment in labor-intensive manufacturing and agriculture and allowing foreign ownership of enterprises. It is also committed to improving efficiency in the labor market by, among other things, improving employment services and rationalizing the policies, plans and delivery services for vocational training. Recent Economic Performance 1.2 While the Philippine economy experienced a real rate of growth of more than 6 percent in the 1970s, distortions in the pattern of incentives resulted in inefficient investments (particularly in large-scale, capital- intensive import-substitution industries), low levels of savings and slow employment growth. Following a period of modest growth in the early 1980s, the economy entered a deep recession during 1983-85. In 1984, the worst year of the recession, GDP declined 6 percent and investment slumped sharply by 43 percent and was to fall a further 21 percent and 9 percent in 1985 and 1986, respectively. In 1986, unemploymant peaked at 11.1 percent. 1.3 During 1987-89, the economy recovered across a broad front, with GDP growing at 5.7 percent per annum. Investment partly recovered from the declines of the mid-1980s, reaching 22 percent of GDP in 1989. Notwith- standing the improvements in economic performance in the second half of the 1980s, in 1989 real GDP had just only recovered its 1980 level on a per capita basis. Unemployment remained high at 8.4 percent, and productivity was only marginally higher than in 1970. This compares unfavorably with some  -2- neighboring countries like Thailand, where productivity almost doubled during this period, and Malaysia, where it increased by about 60 percent. 1.4 The economic recovery weakened in 1990. GDP grew at 2.5 percent, partly as a result of a series of natural disasters and exogenous shocks -- most notably, a severe earthquake and the Gulf crisis -- as well as delayed policy response led to a widening of the consolidated public sector and current accounts deficits. In 1991, after a new stabilization program was put in place, fiscal and external imbalances improved considerably. These positive developments were however accompanied by a further slowdown of economic activity, as new natural disasters -- the volcanic eruption of Mount Pinatubo and flash floods in Leyte -- hit the Philippines. As a result of these events, and lagged effects of the developments of 1990, GDP growth in 1991 was a negative one percent. Also, unemployment is expected to worsen in 1992 and could reach 15 percent according to the Department of Labor and Employment. roRulation Trends and the Labor Force 1.5 The country's rapid population growth has magnified the effects of its economic problems. During the 1980s, the Philippine population grew at an average annual rate of about 2.5 percent which, by exceeding the rate of GDP growth, resulted in a decline in real per capita income. The rapid rate of population growth combined with increasing labor market participation rates, particularly for women (para. 1.11), caused the labor force to expand from 17.3 million in 1980 to 22.5 million in 1990, with 28.6 million projected for the year 2000. While employment growth kept pace with the incremental growth of the labor force -- both grew at around 3.5 percent p.a. over the 1980s -- employment will need to grow faster than the work force if unemployment is to decline. DeveloRments in the Labor Market 1.6 The country's faltering economic performance and population increases resulted in fluctuations and distress in the labor market and the emergence of five dominant trends: persistent unemployment and growing underemployment, the transfer of employment from agriculture into the services sector and small- and medium-scale manufacturing, increased self-employment, rural-urban migration, and an increase in the labor participation rate. 1.7 Persistent UnemDloyment and UnderemRloyment. The backlog of unemployment and underemployment observed in the early 1980s has continued and become even worse. Unemployment rose from 5 percent in 1980 to about 11 percent in 1986 and then decreased to 8 percent in 1990, when about 2.0 million people were unemployed despite improved economic performance. Unemployment is expected to increase in 1992 to about 15 percent. Open unemployment almost entirely involves young high school or college graduates - - about 70 percent of the unemployed have a high school education. Only about 10 percent are household heads, and the majority of those, at least in urban  - 3 - areas, are under 25 years old.1/ Underemployment figures provide an even more important indication of the nature and extent of labor market distress. Nearly one third of the work force worked less than 40 hours a week, and well over one fifth of the work force wanted to work longer hours throughout the 1980s. 1.8 pjRloyent Growth in the Service Sector and Smaller-scale Manufac&uJng. During the 1980s, the share of service sector employment increased from one third to 40 percent of total employment, while agriculture's share fell from one half to 45 percent and the industrial sector's share remained at about 15 percent. For most of the 1980s, service sector activities accounted for more than half of the additions to the labor force -- much of this in the informal sector. The manufacturing sector's share of employment fell from just under 11 percent in 1980 to 9.2 percent in 1986, but almost regained the 1980 levels by 1990, reflecting a growth rate of 3.5 percent p.a. during 1986-90. During the same period, employment in cottage as well as small- and medium-scale enterprises 2/ in rural areas increased by 2.' percent. The Philippines differs from other countries with similar incoui.z levels in that the service sector has a relatively high share of total employment compared to manufacturing and agriculture, but a typically low share of output. 1.9 Rural-Urban Migratio. Changes in the sectoral composition of employment have also resulted in changes in the location of employment opportunities. These trends can be expected to continue in the 1990s. There has been significant rural-urban migration. Urban employment grew at about 5.5 percent over the 1980s -- much faster than total employment, which has grown at 3.5 percent, and rural employment at 2.1 percent. Urban employment in 1990 accounted for just under 37 percent of the total, compared to 29 percent in 1980, while rural employment declined from 70 percent in 1980 to 64 percent in 1988. In rural areas, two thirds of the labor force work in the agricultural sector and one quarter in the service sector. In urban areas, nearly two thirds of employment is in the service sector and only 13 percent is in agriculture. Industrial employment accounts for 10 percent of employment in rural areas and a significant 23 percent in urban centers. 1.10 Increased Self-Employment. The 1980s saw a rapid growth in self- employment. Of the 21.5 million employed in 1988, 9.8 million (46 percent) were wage and salary earners, 8.3 million (38 percent) were self-employed, and 3.4 million (16 percent) were unpaid family labor. On a sectoral basis, wage and salary earners accounted for 76 percent of economic activity in industry, 61 percent in the service sector and 24 percent in agricultural. Self- 1/ In 1988, the population aged 15-24 was estimated at just over 10 million, of which only 4.3 million (43%) were employed. Just over 4 million were urban based (35% employed) and just under 6 million were in rural areas (48% employed). 2/ Official statistics define small and medium-size industries as those employing less than 10, and 100 - 200 persons, respectively, and with a total investment of less than P 500,000 and P 5 - 9 20 million, respectively.  -4- employment accounts for only 8 percent of industrial employment but 32 percent of service sector employment and 59 percent of agricultural employment. Unpaid family labor is relatively low outside of agriculture (28 percent) and the wholesale and retail trade (14 percent). Over the 1980s, self-employment expanded faster (at 3.4 percent a year) than wage and salary employment (at 3.1 percent a year). The vast majority of self-employment growth has, however, been in urban-based service sector activities, with their typically low income and productivity levels. 1.11 Increase in the Labor Participation Rate. Labor participation rates have increased sharply -- particularly for females. The male participation rate increased from about 78 percent in 1980 to 84 percent in 1989, while the female participation rate increased from about 41.5 percent to 49 percent over the same period. Participation rates are procyclical and increase when GDP and employment are growing. II. POLICIES AND SERVICES FOR EMPLOYMENT AND TRAINING 2.1 Faced with persistent unemployment and changes in the structure of the labor market, the Government is liberalizing investment laws with the aim of increasing employment in labor-intensive manufacturing and agriculture and allowing foreign ownership of enterprises. Increased investments will be the basic requirement for improving employment in the Philippines, but they must be supported by active employment policies to provide incentives for employment creation, improve labor mobility and strengthen labor market information systems, to assist workers to adjust to changes in the labor market. Training policies are intimately linked with employment and the Government is presently most concerned that the limited relevance of current training programs are important constraints to employment and to improving productivity and economic competitiveness. The Government is committed to improving the relevance of employment and training policies as well as services. Existing employment policies are no longer responsive to the rapidly changing conditions in the labor market due to the paucity of manpower data and consequential poor policy analysis. Furthermore, management capacity of the responsible institutions require improvement. Employment services are poorly managed and insufficient to provide labor market information and assistance to persons seeking employment. The existing training policies, like those for employment, have not been updated since 1974, and as a result firms are not committed or prepared to train their workers, apprenticeship training is declining and sev_ral pre-employment education and training programs are no longer relevant to the changing skill needs in the economy. The project would assist the Government in improving its data base, its analytic capabilities and the capacity of the responsible institutions to formulate employment and training policies and manage the delivery of employment and training services.  5 - A. EmRloyment and Training Policies: Formulation and Coordination Policy Formulation 2.2 Several Government departments are respo,.qible for training and employment policies: the National Economic and De iment Authority (NEDA) is responsible for linking macroeconomic development .a planning with human resources development; the Department of Education, Culture and Sports (DECS) is responsible for education policies and plans; and the Department of Labor and Employment (DOLE), the National Manpower and Youth Council (NMYC), and the Department of Trade and Industry (DTI) are responsible for employment and training policies. According to the 1974 New Labor Code (para. 2.8), NMYC is, in addition, responsible for policy and program coordination and for manpower planning and training. 2.3 The performance of these agencies with respect to employment and training policies has been uneven. NEDA has not been very effective in linking macroeconomic policies with human resources development. DECS's planning divisions have focused on policies regarding primary and secondary education. Linkages between education and employment have not been its primary concern, mostly because of a lack of expertise in this area. DOLE is responsible for the macro-economic employment policy framework but has focussed more on manpower projections, labor legislation and overseas workers. Although DOLE prepares annual employment plans, these plans fail to link macroeconomic policies related to, for instance, the removal of trade restrictions, price controls and financial incentives for capital, with employment policies and employment promotion. NMYC has undertaken analysis of trends in employment and demand for training but, until recently, has not formulated employment or training policies. DTI operates a number of training centers but lacks staff resources in the area of industrial labor and employment policies. To improve policy analysis and planning for employment and training, the DOLE, NMYC, DECS and DTI staff responsible for these activities require additional training. Coordination 2.4 The weak polic; .-nalysis capacity of the Government departments has been partly due to NMYC'* preoccupation with implementation of training programs. NMYC comprises a Council, which is responsible for long-term national manpower planning, and a full-time Secretariat. The Council includes representatives from concerned Government departments, private sector employers, workers, welfare and youth organizations and is chaired by the Secretary of DOLE, with the Secrecary of DECS as Vice Chairman It has four standing committees for the industrial, agricultural, and services sectors and for non-formal education. 2.5 The Secretariat, headed by a Director General, coordinates the work of the Council and prepares or solicits policy papers, plans, and proposals for the Council's consideration. It has four departments: the Office of Manpower Planning and Coordination (OMPC), the Office of Industry Manpower and Incentives (OIMI), the Institute of Vocational Training and Development (IVTD), and the Office of Manpower Skills Development (OMSD). Each of the four departments was established to provide policy directions and develop  strategies for .he utilization of the country's labor force, drawing on expertise of the staff and specialists in academia as well as the public and private sectors. Because NMYC's mandate includes the provision of training, the four departments, especially those concerned with skills development and industrial manpower, came to focus on line functions in support of NMYC's growing training infrastructure and programs. However, this is now changing (para. 2.6). NMYC's Secretariat manages 14 Regional Manpower Development Offices (RMDOs), 14 Regional Manpower and Training Centers (RMTCs), 13 Provincial Manpower and Training Centers (PMTCs), the National Skills Training Center (OMSD) and about 120 Community Training Units (CTUs). It was therefore more of a training agency than a Secretariat to the Council. The operations of the Council, and more generally, the national formulation of policies for employment and training, had been neglected. 2.6 The Government is jtrengthening policy coordination. The NMYC has separated its policy formulation, planning and research departments from those responsible for managing and delivering training programs. Under the project, NMYC's management staff would be trained to plan and supervise the work of the Secretariat. Its professional staff and selected staff from council member agencies would be trained in policy analysis, planning, research, and training technology and delivery to serve national skill development needs. Major responsibilities for managing the training programs would be decentralized to the RMDOs and, in time, the communities. The project would support NMYC's reorganization, through staff training and the establishment of a national manpower information system to facilitate decentralization of its training management functions and to support its various other functions. The NMYC is discussed in more detail in Annex 1 and its new organizational structure is shown in Chart 1. This major reorganization has been ongoing during project preparation which influenced the direction and process and was completed, de facto, at the end of 1991. Policies 2.7 Because of the weak policy analysis capacity and poor coordination, the existing employment policies are no longer relevant to conditions in the labor market. Policies regarding wages, unemployment insurance, chi:d labor, etc. have not been updated, and critical issues in employment policy and labor relations are not being addressed. For example, the current minimum wage policy may not increase employment of youth, as intended, since minimum wages are relatively high in the Philippines compared to those of neighboring countries. The policy may also discourage foreign investment and discriminate against foreign firms that follow labor regulations and face high wage costs compared to some local firms not complying with regulations. This and other policies now being pursued only serve to lower efficiency in the labor market. As an initial step in improving employment policies, selected DOLE staff need to be trained to strengthen their capacity for policy formulation. 2.8 Policies for training and technical and vocational education are contained in the 1974 Labor Code of the Philippines. The Labor Code calls for: (a) the establishment of industry boards to ensure the participation of workers and employers in training; (b) the provision of incentives in the form of tax deductions to persons and enterprises undertaking training; and (c) the creation of trade standards, testing and certification schemes. Implementa-  - 7 - tion of the Code is weak and several provisions are no longer followed. How- ever, due to a lack of well trained management and staff resources as well as poor coordination, the Code has not been updated and no training policies (or plans) have been produced during the past few years. Recently, however, several steps have been taken to update the Labor Code and to define training policies which supplement and strengthen the provisions of the 1974 Code. Under the auspices of NEDA, the NMYC Secretariat in 1990 commissioned the preparation of a basic training policy paper (dated July 27, 1990) which was discussed and approved by the NMYC Council in June 1991. The policy generally follows the 1991 World Bank Policy Paper, Vocational and Technical Education and Training. The main points of the Government's basic training policy are summarized in Annex 2. 2.9 Under the new policy, training responsibilities would be divided between NMYC and DECS, with NMYC responsible for nonformal vocational training and DECS for formal vocational and technical education. A Memorandum of Agreement between DECS and NMYC, to clarify this division of responsibilities, was signed in August 1991. Steps to implement the agreement were formalized with the signing of an Executive Directive in January 1992. The principle points of the Memorandum of Agreement are summarized in Annex 3. 2.10 According to the new policy, the Government plans to: (a) improve the linkages between nonformal and formal training programs; (b) raise the quality of training; (c) increase the role of employers in training and cost sharing; and (d) improve vocational guidance and information about training programs. Several steps to implement the policy have recently been taken. To improve linkages with DECS programs, NMYC is sharing curricula and trade testing programs with DECS. It is also expanding incentives and support to employers to increase their role in training and it is improving vocational guidance at the RMDOs. The full implementation of the new policies, especially for quality improvement, increasing cost recovery and expanding private sector training would require training of NMYC staff and technical assistance to develop the data bases and methodologies for analysis, and the management, coordination and implementation of training strategies. 2.11 Although the policy paper addresses several basic issues, it fails to deal with important issues such as the role, quality and regulation of private technical institutes; the lack of efficiency of formal pre-employment training programs; the devolution of training to communities and employers; and the means for increasing cost sharing and cost recovery. NMYC has been unable to address these issues adequately because it lacks the capacity to collect and analyze data and formulate and present options for the Council's consideration. Assistance in this regard would be provided under the project for the training of key staff in policy analysis, economics, manpower planning and research. 2.12 In December 1991 a Congressional Commission on Education (EDCOM) issued a report recommending sweeping reforms for improving education and training in the rhilippines. In the area of vocational training, the EDCOM proposals are consistent with the policy directions already adopted by the NMYC council, and include (a) transferring responsibility for technical education and job related training to local authorities and industry groups; (b) reforming the apprenticeship program; (c) significantly increasing cost  -8- recovery from beneficiaries; (d) establishing a national agency to oversee the planning coordination, monitoring and resource allocation for technical education and skills development in both public and private sectors; and (e) strengthening the linkage between national employment planning and technical education and skill development planning. While it may take some time before the EDCOM report is acted upon by the Legislative and Executive branches of Government, the project would advance many of the policy goals cited by the report and would provide improved policy analysis capacity and data to support decision making in the future. The substantial staff training and technical assistance component of the project was welcomed by EDCOM as a timely intervention to support their recommendations. B. Employment Services 2.13 Employment services to assist workers in finding jobs and to provide information on employment and training opportunities are provided by only one public agency in the Philippines, i.e., DOLE. DOLE operates Community Exchange Centers to match labor supply and demand in local labor markets, while its Philippine Overseas Employment Administration does the same for overseas labor markets (in 1991, almost 50,000 Filipinos were employed as Overseas Contract Workers). In addition, NMYC provides employment, training, and trade certification services through its various offices. However, the local labor market services are underbudgeted, insufficient in number and coverage, and lack necessary labor market information and data processing capability. DOLE's Philippine Overseas Employment Administration primarily register job seekers and process contracts but its role is small and private employment agencies secured more than 90 percent of the contracts for overseas workers in 1990. NMYC employment officers in its RMDOs undertake regular local employment surveys and assist Out-of School Youth (OSYs) and others looking for work with the job application process. However, only about 20,000 of the estimated 2.6 million OSY, unemployed and underemployed, were helped by the RMDOs in 1988. NMYC, like the other agencies, is unable to improve and expand its employment services since resources for these purposes are not available. This will begin to be addressed under the project. An information system will be established at NMYC headquarters and the RMDOs to collect and analyze labor market information and staff will be trained in data processing, vocational guidance and employment counselling. 2.14 NMYC also has a mandate to set trade standards and issue trade certificates. A well functioning trade standards and certification system can provide signals to employers regarding the availability of skills in the work- force, which would be useful in investment or technology decisions. NMYC, in cooperation with industry, has developed 266 standards and conducts regular trade tests in training centers and in industry. Despite this, the current system is limited in coverage and acceptance. Furthermore, few of the existing standards are in critical areas. Several industries are therefore developing their own standard and certification systems with the assistance of NMYC. The trade standards and certification system would be strengthened under the project through increased involvement of industry to facilitate recruitment and more efficient deployment and utilization of skills in the economy.  - 9 - C. Training Plans and Training Delivery Services Training Plans 2.15 In the past, NMYC had adopted the then typical centralized approach for national manpower planning which has proved to be ineffective internation- ally. In its place, NMYC is now using the more realistic micro-planning methodology. This is based on local strategic human resource development (HRD) issues in the economy arising from investments and emerging skill requirements in strategic high-growith or high-technology areas. Information about strategic HRD issues is usually generated by many sources, including business associations, academia, financial institutions, consulting firms, and local employment surveys. The staffs of the NMYC secretariat and other departments responsible for training/employment policies and plans would therefore need to be trained in new methodologies focussing on strategic analysis and covering a wider range of data and information provided by both the public and private sectors. NMYC's role in coordinating the analysis of HRD issues by other public and private sector agencies would also need to be developed. Technical assistance, training and computer support would be provided under the project to address these needs. Skills Training: Current Situation and Major Issues 2.16 The economy's changing skill needs combined with the rapidly growing labor force should ideally be matched with a flexible and relevant system of vocational training and technical education institutions and programs. However, this is not the case in the Philippines. The existing training system is characterized by weak and variable demand for training and uneven quality of programs, predominance of public sector financed formal pre- employment training, limited training by private fitms and large variations in unit costs. The major providers of vocational training and technical education are NMYC and DECS. NMYC programs are part of the nonformal educational system, which largely comprises vocational education for OSYs and training of apprentices and employees in private firms. DECS programs are part of the formal educational system comprising technical and technician education programs of one or more years duration. Formal training is also provided by the private proprietary training centers. Informal training is given in specialized fields by the Departments of Agriculture (DA), Social Welfare and Development (DSWD), and Trade and Industry (DTI), as well as private training centers. In addition, DECS, NMYC, DSWD, and a large number of Non-Governmental Organizations (NGOs) provide informal pre-vocational training, mostly at the literacy and livelihood level. 2.17 NMYC offers a wide range of nonformal vocational training. This includes courses at their regional and provincial centers and short, community-based courses in livelihood and cottage skills for women, short trades courses for OSYs, and other courses for unemployed adults as well as support for the in-service training of workers in private firms, either on- the-job or at training centers. Course offerings are based on local employ- ment surveys. More than 200,000 persons were trained in 1991, and demand is increasing. Each year, NMYC offers six-month basic-level courses in more than 12 trades to approximately 22,000 OSY and adults (including a large number of women), preparing them for semi-skilled jobs. It also offers a small number  - 10 - of intermediate-level courses, mostly for employed or unemployed adults seeking skilled jobs, as well as courses aimed specifically at the leather, garment, construction, and metal working industries. 2.18 DECS, through its Bureau of Technical and Vocational Education (BTVE), provides center-based pre-employment training for about 190,000 persons a year in basic, intermediate and higher-level skills. More than 600 private training centers (both profit and non-profit) similarly train about 140,000 persons annually at a variety of levels. DECS exercises some control over the private sector training institutions, although the majority are autonomous. At the secondary level, training is provided at public and private vocational high schools, which enroll some 87,000 students (2.3 percent of all high schools students) in agriculture, fishery and trade programs. Vocational education at the post-secondary level is available at private and public Schools of Arts and Trades (SATs), which each year offer one- and two-year programs to approximately 230,000 students preparing for skilled and supervisory positions. More specialized education is provided by Technical Education Institutes (TEIs), which offer three-year post-secondary technical education to approximately 6,000 students each year preparing for supervisory and technician positions. In addition, Colleges of Arts and Trade as well as state and private colleges and universities offer programs in industrial technology and engineering, preparing technical teachers and undergraduate and graduate engineers. 2.19 With the exception of a few large corporations, most firms provide no in-house training. Efforts by NMYC to promote employer training by providing incentives through cost-sharing have met with mixed results. Employers have been willing to cover about 60 percent of the cost of NKYC training schemes for firm employees, but few firms are training workers on their own or have developed an in-house training capacity. NMYC is now planning to assist medium- and large-size firms to develop in-house training capacities by training supervisors as trainers and assisting with program and training material development. Small firms, however, lack resources for in- house training and would continue to be assisted by NMYC. 2.20 Apprenticeship training, combining employment and training under a contract, is also limited. Due to a lack of resources for apprenticeships and uneven acceptance of the program, the number of apprentices registered with DOLE's Division of Apprenticeship declined from more than 37,000 in 1980 to less than 9,000 in 1989. In 1986, an amendment to the Labor Code restricted the duration of apprenticeships to six months to correct for the long periods of low wages, inadequate training, and lack of legal protection which had crept into the system. In 1990, a project to overhaul the system was started with assistance from the United Nations Development Program and the International Labor Office (UNDP/ILO). The project convened a national tripartite congress which recommended that responsibility for apprenticeship training be transferred to NMYC. The necessary bills to effect this change are currently under consideration in the Philippine Legislature. Rebuilding a viable apprenticeship system will take some time to accomplish, but the project will support NMYC in its initial efforts. The apprenticeship system is discussed further in Annex 4.  - 11 - D. Training Quality and Demand for Training 2.21 Nonformal Training (NMYC). The quality of nonformal training by NMYC, DTI and DSWD is generally good. The livelihood and entrepreneurship training programs are based on local demand and surveys of employment. Local governments contribute up to 50 percent of the cost, and trainees bring their own training materials. In many cases, local NGOs conduct the training and provide financing and marketing assistance in the entrepreneurship training programs. Expansion of these programs to meet increasing demand will, however, require external support. Investments need to be made to procure tools and small equipment and to train local managers and staff in employment analysis, training program design and financing. Assistance is also required to develop mechanisms to transfer management and financing of the programs to the communities or local NGOs, where appropriate. 2.22 The quality of basic technical training at NMYC's Regional and Provincial Manpower Training Centers (RMTCs and PMTCs) needs to be improved: trainers require more frequent training; curricula and instructional materials should be made more relevant; and the safety practices and organization of the workshops need to be strengthened. On the other hand, the quality of NMYC's industrial training programs for the leather, construction, garment and metal working industries is good; the programs are designed by industry boards and are partly financed by industry. 2.23 One of the key weaknesses of NMYC is the quality of its management particularly as NMYC has begun to devolve its training responsibilities to local governments, communities, NGOs, industrial associations, and.firms, with the intention of making training more responsive to the needs of industries. It therefore requires assistance in strengthening its management to implement the devolution program and to develop and implement a system to control and monitor standards. This assistance would be provided under the project. 2.24 Formal Training (DECS). The quality of DECS and private pre- employment training in vocational high schools, SATs, TEIs, and colleges is uneven. Information on the performance of these institutions and on the absorption of their graduates is scarce, but there is a general perception that the quality is poor. Demand for the vocational high school program is, in fact, low (para. 2.18), which reflects a range of problems, including unclear objectives, weak links with employment, low relevance, inadequately prepared teachers, small workshops with old tools and equipment, and a short- age of books and materials. Quality problems in the SATs and most TEIs are similar to those of the high schools, since the majority of these schools are on the same campus and share the same teachers and facilities. A particular issue related to the SATs is that the one- and two-year duration of the programs raises the aspiration of the students for supervisory jobs. However, the low quality of the laboratory and workshop training, which tends to be theoretical rather than practical due to a lack of tools and equipment, does not equip students for middle-level technical jobs. 2.25 An exception to the prevalent low quality is the training provided by 21 TEIs which were upgraded in terms of teachers, curricula and facilities under a project assisted by the Asian Development Bank (ADB). The Australian Government through the Philippine-Australian Technical and Vocational  - 12 - Education Project is also helping to upgrade eight other TEIs and to strengthen BTVE's management capacity. Demand for technicians from the TEIs is now increasing, and employers are providing inputs into the curricula. 2.26 Management and Monitoring. The poor quality of some vocational training results from a variety of factors, including poor management and monitoring of training. DECS has delegated much of the responsibility for managing institutions under its supervision to its Regional Offices. However, BTVE, which is responsible for monitoring vocational and technical education, lacks the capacity to analyze information it receives from the regions, besides lacking authority to manage or monitor the large number of private (proprietary) technical education institutes or the autonomous private and public colleges. In general, this management system is ineffective in controlling and maintaining standards of quality, expenditures, institutional performance or outputs, and there is evidence of serious quality and efficiency problems. The problems responsible for the poor quality and management of formal technical and vocational education and training are complex and linked to inadequacies in policies and financing. Addressing these issues effectively will require, first, establishment of a system to collect and analyze performance and financial information and, second, a study of the various institutions. The required study would be included in the project. Demand for Training 2.27 According to surveys conducted by NMYC, demand for NMYC's basic six-month trades training programs, provided at its 14 Regional and 13 Provincial Manpower Training Centers (RMTCs and PMTCs), is about five times the number of places available. This is partly due to the low cost and high employment opportunities of these programs. Distribution of the training centers in the country is uneven, however, and poses a particular problem when industrial development in the unserved area is under way. Recent surveys by NMYC indicate that seven new PMTCs are needed now in northern Luzon, Visayas and Mindanao, where insufficient training centers exist and demand for trained workers is high as a result of investments in industrial estates and free trade zones. At this time, the Government is not able to finance the construction of these centers and it is instead looking for ways to encourage the establishment of private training centers in these areas and to increase training by employers. Expanding private sector provision of training is in line with recent policies and will be supported in the project through incentive schemes and advisory services by NMYC. The demand for intermediate- level training is increasing, particularly in the woodworking, food processing and engineering industries, which are trying to compete with neighboring countries for a share of the export markets. The higher quality and new products required for exports require more highly skilled workers. NMYC is responding to this need with plans to upgrade the instructors, curricula and facilities of the RMTCs and PMTCs in a number of trade areas. The upgrading program calls for extensive staff training through technical assistance which would be financed under the project. 2.28 Demand for NMYC's nonformal livelihood and entrepreneurship training is also strong, particularly from women, OSY and the unemployed in rural areas. NMYC has established Community Training Units (CTUs) in each  - 13 - province. The CTUs are mobile and move between locations where training needs have been identified on the basis of employment surveys by NMYC's Regional Manpower Offices and the local government units (LGUs). The LGUs provide accommodations, NMYC provides tools and the curricula, and a local NGO, the trainers. In view of the high demand, the project will provide support to strengthen the capability of LGU's to deliver such programs. 2.29 In contrast, demand for formal pre-employment training in vocation- al high schools and SATs is static and even declining in many parts of the country where denqnd for skilled workers is decreasing with the decline in industrial employment. Students will not invest two or more years to training when employment prospects are uncertain, and employers tend to prefer either trainees from shorter, more practical, hands-on programs or students with general high school or college diplomas. Although information is incomplete, there is evidence of under-enrollment in vocational high schools and SATs, both public and private, which further lowers the efficiency of these institu- tions. The study of formal technical and vocational education mentioned above (para. 2.26) would also determine if consolidation of the institutions would improve quality and economies of scale and link them more closely with the local labor markets. The curricula and workshop classes of these institutions clearly need to be restructured to bring them in line with skill demands emerging in the economy. The effectiveness of such a restructuring is demonstrated by the strong demand for technician education offered by those TEIs which have restructured their curricula. E. Costs and Financing 2.30 About 5.5 percent of the Government's allocation for education and training is spent on formal and nonformal technical and vocational education and training. This includes the allocations for DECS institutions for vocational and technical education and budget allocations for NMYC. The allocation covers about 85 percent of DECS and NMYC expenditures for training and support operations and is high in relation to the number of students benefitting from these programs. Unit costs, particularly of the DECS programs, vary considerably. They range as follows: for DECS's SATs and TEIs, from P 4,100 to P 12,500; for private technical institutes, from P 5,600 to P 7,900; and for NMYC's nonformal livelihood programs and basic technical training, P 800 and P 2,200, respectively. Unit costs of nonformal programs are relatively low because trainees bring their own training materials, local Governments provide the training sites and NGO's the teachers. The large variations in unit costs are due not only to the high capital costs of equipment in some schools such as fishery and agro-industry compared to industrial trades schools, but also to the uneconomic size of the DECS vocational schools, many of which have enrollments of less than 400 studepts and offer five or more specializations. As a result, class sizes are small and utilization rates of expensive workshops are low. 2.31 Many institutions spend little on maintenance, materials and books, which lowers unit costs but also quality and enrollments. The institutions have not been able to repair or replace outdated equipment; they lack spare parts and consumable materials and have insufficient manuals and instructional materials to support the training. In addition, inadequate accounting  - 14 - practices and poor expenditure controls make it difficult to determine how allocations can be improved in order to address priority maintenance and repair problems and generally improve workshop classes, which are currently unattractive and of poor quality. 2.32 Formal and nonformal training institutions charge only nominal fees and depend on the Government for financing. The constraint on public funds and the fact that many institutions need to improve their facilities and programs would suggest the need to charge higher fees and begin to recover costs from trainees as is done in privately-owned schools, which cover most of their costs through fees. NMYC in particular has scope for greater cost recovery and cost sharing with the firms, communities and trainees it serves. At present, NMYC's enterprise-based training programs are financed about 50 percent by firms and about 50 percent under a Training Contract Scheme (TCS). The share of costs borne by firms could be increased, particularly when firms have benefitted from the TCS more than once. NMYC's basic skills (pre-employ- ment) training at the RMTCs and PMTCs is free, but a significant proportion of the trainees would be able to make small contributions to the cost of the program. Similarly, several communities are regular users of the livelihood and entrepreneurship training programs of NMYC's Community Training Center (CTC) program. It might be possible for the communities or the trainees themselves to eventually finance most or all of the cost of this training. Although industry currently shares some training costs, measures to increase fees gradually and share more of the training costs with employers and communities will be introduced under the project. F. Strategv for Develonment of Vocational Training and Technical Education Government Strategy and Programs 2.33 Transferring part of the financing and responsibility for training to the private sector, improving training quality, expanding short training programs with high demand and gradually consolidating publicly financed formal training programs with a declining demand, are the main elements of the Government's newly adopted policy formulated during project preparation. NKYC's strategy to implement the Government's policy include the gradual transfer of responsibility for livelihood and basic technical training programs to the communities and Local Government Units in line with the Local Government Code of 1991. NMYC is also transferring training programs to industry boards or industry associations and it assists firms to develop an in-house capacity for training. Only the first steps of this program have been taken and much remains to be done to transfer training to the private sector. 2.34 DECS has taken several initiatives to improve the quality of SATs and TEIs and rationalize the programs of these institutions and the vocational high schools. In coordination with DECS Regional Offices, quality and performance standards have been developed for each type of institution and a program of assessing DECS controlled schools against these standards has begun. Institutions that fail to meet the standards will be notified that public financial support will be discontinued unless quality is improved and standards met by a specific date. It is expected that this program will lead  - 15 - to a rationalization and consolidation of technical institutes as well as improving the quality of technical education. DECS is also attempting to strengthen its collaboration with the large number of proprietary schools in order to improve the quality of these schools and promote the establishment or expansion of private schools in critical and strategic skill areas. Both these programs are only in the initial phases and progress is slow due to the lack of data and analysis of the performance of technical institutions, particularly the private ones. Bank's Experience in the Sector 2.35 Since 1965, the Bank has provided financing of US$517 million for ten education projects in the Philippines, including four projects for general education and six for technical education, agricultural education and industrial skills training. The thrust of the four general education projects was to provide assistance for the development of basic knowledge and skills as part of a strategy for the comprehensive development of elementary education in the country. The Second Education Project (Credit 349-PH, 1972) included the first ten RMTCs which were later transferred from DECS to NMYC. The thrust of the six technical, agricultural and industrial education projects was to develop the much needed skills in these critical sector of the economy. The Bank's strategy is to address strategic issues at the basic, middle and higher level of human resources development. With the recent Second Elementary Education project (Ln. 3244-PH) and the Second Vocational Training project, the Bank would continued its support for basic education and training in order to address poverty alleviation and raise the general level of productivity of the labor force. Through the recent Engineering and Science Education project, (Ln. 3435-PH) the Bank will be supporting higher technical education to improve the quality of scientists jnd engineers for national industrial development. 2.36 Except for the two most recent projects, all have been completed. Project Performance Audit Reports (PPARs) have been prepared for the first six projects (SecM75-560, SecM82-898, SecM84-283, SecM86-781, SecM86-885, SecH90- 850) and a Project Completion Report was recently prepared for the seventh project aimed at improving elementary education. The main issues identified by these reports were delays in implementation and disbursement due to protracted procurement processes and complex budget release and payment procedures. These problems are being addressed as general countrywide issues by the Government and the Bank. In addition, the PPARs point out the critical importance of preparing for procurement of project inputs prior to implementa- tion and the need to avoid, or minimize the impact of, changes in the project management structure and key personnel during implementation. 2.37 Lessons learned under the First Vocational Training Project (Ln. 2200-PH), which was completed in April 1991 have been taken into account in the design of the follow-up project now proposed. The earlier operation sought to strengthen the national industrial training system by restructuring NMYC, staff development in manpower planning and technical training, establishing a system for contracting training in seven priority industrial and service sectors, strengthening industrial training through the construction of five new training centers and equipping of nine existing centers, and expanding trade testing and certification. During the early  - 16 - implementation phase, NMYC encountered a variety of problems, which resulted in very low disbursement during the first three project years. Construction of project civil works was slow due to difficulties in acquiring suitable sites, selecting qualified contractors and providing adequate supervision. Procurement became an issue, as it did in most other projects implemented in the Philippines during the 1980s because of lack of Government counterpart funding. The plan for organizational improvement and staff training was revised as a result of the new focus on training rather than policy and planning (para. 2.5). Departments with line responsibilities for training were expanded and 14 Regional Manpower Development Offices were established to manage training in the regions. Furthermore, changes in the economy and employment led to major changes in the scope of the project. 2.38 After the EDSA revolution in 1986 which impacted on NMYC and the project -- staff redeployment out of NMYC, particularly economists, managers, two Director-Generals and movement of Directors -- the project was restructured in line with the new government priorities, end US$8.0 million of the loan amount was canceled to reflect the ;;caled-down project. However, by the time of loan closing in April 1991, most of the project's training objectives had been met. The NMYC was restructured but because of the efforts to respond to the need for livelihood and self-employment training, almost all staff resources were devoted to the training function. The sensitivity of the Bank to politico-economic changes assisted the reorganization of the project to fulfillment following the changes in Government priorities after the 1986 EDSA revolution. Finally, lessons learned involving procurement delays are being specifically addressed in the project's design. Bank staff are working with NMYC to improve procurement procedures and NMYC has already prepared draft bidding documents. 2.39 Implementation of the project is expected to proceed more rapidly than the earlier project since civil works and procurement programs are much smaller than in the previous project and could be completed in about two years since no new construction is involved. The Bank is also working with the Government to improve procurement procedures, and several important changes already implemented should keep project procurement on schedule. A monitoring system will be established to produce semi-annual progress reports on project implementation. In addition, NMYC has prepared civil works rehabilitation and procurement plans. Finally, IDA's supervision plans include provisions for monitoring the technical assistance component related to the institutional development aspects of the project. Also, expertise is being provided under the project for the day-to-day implementation of these items. Rationale for IDA Involvement in the Project 2.40 The NMYC is a unique institution with a mandate for the national development of both manpower planning to determine manpower needs and for matching these with training programs. It also has major functions in introducing cost-effective innovations through research and development and the monitoring and evaluation of key, innovative training programs. Under the First Vocational Training Project a key objective was to build-up NMYC's capability to execute its mandate. However, line training activities of its own together with political uncertainties and economic problems mitigated against the full realization of this particular project objective. The  - 17 - project is therefore noteworthy for what it does not contain as much as for what it does. The project does not focus on expansion of training in the public sector but rather emphasizes the build-up of NMYC's institutional capability to manage the sector and to shift training to industry through the highly successful Training Contract Scheme begun under the First Vocational Training Project and to enhance cost recovery and cost sharing with the private sector and to rehabilitate existing facilities in order to maximize the efficiency of the existing system. III. THE PROJECT A. Project Formulation 3.1 The Government's Medium-Term Investment Plan emphasizes the need for employment generation and further investment in the country's training effort. In support of the latter objective and in preparation for the project, NMYC in 1990 prepared a long-term priority investment plan for development of policies. infrastructure, and programs for nonformal vocational training. The plan proposed an investment of US$150 million to expand and improve the exiLting system, expand the role of the private sector, and establish sector-specific and advanced technology training centers. A portion of that long-term investment plan would be supported under the project, the scope of which was determined by the country's current budgetary constraints and the need to establish a sound policy environment to support further expansion of vocational training programs and to assist with the full realization of the policy and planning objective of the First Vocational Training Project. B. Project Objectives 3.2 The project would support the Government's efforts in the medium term to improve employment and training policies, strengthen employment services, expand nonformal rural basic training and increase private sector involvement in training and cost recovery, and, in the longer term, develop strategies for improving the internal and external efficiency of the sub- sector. The project's specific objectives are to: (a) strengthen institu- tional capabilities of NMYC in policy formulation, planning, management, research and evaluation of nonformal vocational training and employment services; (b) improve training quality and cost recovery; (c) upgrade training facilities; and (d) improve formal technical education through two studies, including an identification of investment needs. C. Project DescriRtion 3.3 Under the project, the following components would be carried out over a five-year period: (a) Institutional Development (USS12.1 million eguivalent including contingencies): (i) strengthening of NMYC through assisting the implementation of the restructuring of its Secretariat by  * 18 - management training for selected central and regional staff; (ii) training of NMYC and other Government staff in training policy, planning and coordination; and (iii) development of a National Manpower Information System to facilitate the decentralization of management and strengthen employment services; (b) ImRrovement of Training Quality and Cost Recovery (USS8.8 million equivalent including contingencies): (i) improvement of the National Skills Certification Program and promotion of similar programs in individual industries; (ii) development of a program to train trainers; (iii) improvement of curricula and training materials; (iv) strengthening of guidance and employment services; (v) development of monitoring and evaluation systems to allow NMYC to monitor the technical, management and financial performance of training institutions; and (v) development of mechanisms to increase cost sharing with industry, communities and trainees; (c) Training CaRacity Development tUSS20.3 million equivalent including contineencies): (i) upgrading of 14 Regional Manpower and Training Centers, 13 Provincial Manpower and Training Centers and the National Training Skills Center; and (ii) expansion of Enterprise- Based training by private sector firms, support for existing and new I'raining programs, improvement of apprenticeship training, and support for a rurAl skills and livelihood training program; and (d) Studies (USSO.6 million eguivalent including contingencies): (i) a study of the formal technical and vocational education sector to improve the data base and develop an investment strategy to rationalize formal technical and vocational education and (ii) a feasibility study of the needs for the establishment of sector specific training centers and advanced technology training centers. Institutional Development 3.4 Organizational Strengthening. The project would provide technical assistance to strengthen the functions of the restructured NMYC Secretariat. The NMYC has separated the Council support function from the training support function. NMYC's Regional Manpower Development Offices (RMDOs) have also been restructured into local policy and planning units and training units. In addition, a special unit has been established in both the central office at Taguig and in the RMDOs to promote private sector training through regional management of the Training Assistance Contract (TAC) and Training Contract Schemes (TCS) for local firms (see para. 3.15). This unit also liaises with private sector schools, local NGOs, and local governments and develops mechanisms for the transfer of management and financial responsibilities of training programs to these organizations. Measures aimed at privatization, devolution and decentralization are discussed in Annex 5. 3.5 To equip staff for their functions, the project would finance the training of approximately 299 central and regional NMYC staff according to a detailed staff development plan agreed with IDA. The plan would cover the following areas: (a) organization, management, and financial analysis; (b) employment services including local employment surveys, vocational  - 19 - counseling, placement and guidance; and (c) training support functions comprising training program management and the financing, management and promotion of trade standards and certification, instructor training and career development, training need surveys, curriculum and material development, and testing and evaluation. 3.6 Development of a National Manpower Information System (NMIS). Under the project, a computer-based NMIS network would be procured and installed at NMYC's central and regional offices to expand and com-uterize the on-going collection and analysis of labor market information. The project would also support the training of policy analysts in labor market information systems and of computer programmers and data processors in computer operations and data management. 3.7 Strengthening of ManDower Policy. Planning and Coordination. The project would provide assistance to train economists, policy analysts, statisticians and planning staff of NMYC and similar staff responsible for employment and training policy, at DOLE and other Government departments including DECS, DTI, the Department of Agriculture, and NEDA according to a detailed plan agreed with IDA. This training would total about 72 foreign fellowships and about 350 local training places. The training would help those staff members who are responsible for policy analysis and planning to upgrade their knowledge and skills in the following areas: (a) policy analysis and coordination; (b) manpower planning and training needs analysis; (c) management and allocation of training resources; (d) private sector training and incentives; (e) cost effectiveness analysis; and (f) cost and impact evaluation. Improvement of Training Ouality 3.8 Improvement of the National Skills Certification Program. The project would provide support and technical assistance to expand and improve implementation of the National Skill Certification Program by: (a) priori- tizing and consolidating existing trade standards; (b) training management staff, technical staff and additional testing officers; (c) establishing a central test item bank; and (d) procuring additional equipment for RMTCs which are used as testing centers and leasing testing facilities and equipment, if necessary. Support would also be provided to RMTCs and RMDOs to cover the cost of publicity and promotion of standards among employers and the cost of the provision of advisory and accreditation services and incentives to industries willing to establish and operate their own skills certification programs. 3.9 Strengthening the Trainer Development Program. Local technical assistance would be provided under the project to: (a) help develop a plan for analyzing demand for trainers for center-based and firm-based training; (b) propose a licensing and qualification system; and (c) suggest arrangements for private sector financing of trainer training. The project would also provide for upgrading the skills of instructors. 3.10 Improvement of Curricula and Training Materials. The project would support the purchase and adaptation of sample curricula and supporting training materials. The emphasis would be on the adaptation or updating of  20 - existing programs and materials in consultation with employers. An incentive scheme would be established to encourage development or adaptation of curriculum packages which deal with the environmental, science and technological aspects of skills training and that use media to enhance the effectiveness and attractiveness of the training. The commercialization of curriculum packages would be encouraged, and printing and distribution would be done as much as possible through commercial printing and publishing firms. 3.11 Strengthening of Guidance and Employment Services. Technical assistance would be provided to improve local labor market surveys, establish local employment information systems, and improve the vocational guidance and placement services of the RMTCs, PMTCs, and RMDOs. The provision of employ- ment services at the local level would be integrated with development of the Manpower Information System under the project (para. 3.6) and the training of central and regional staff in employment analysis and data management (para. 3.7). 3.12 Monitoring and Evaluation of Training Performance. To improve the quality and efficiency of training, the project would provide NMYC with technical assistance for development of provincial, regional and central systems to monitor and evaluate training centers for infrastructure and equipment maintenance, curriculum implementation, and performance of instructors, administrators, and trainees. The system would provide for regular analysis of training costs, assess variations in unit costs, and support budget preparation and financial control systems. The project would also support the development of computer-based performance and financial data bases, including assistance with programming and data analysis. 3.13 Improvement of Cost Recovery. Support would be made available under the project to: (a) provide technical assistance to improve financial analysis and accountability of training programs at the provincial, regional and national levels; (b) conduct sample surveys and studies to determine the ability of trainees, firms and communities to pay for training; and (c) develop mechanisms to increase cost sharing and cost recovery. Special attention would be given to improve cost recovery under the TCS, which finances part of the cost of employee training by small firms. These firms should be willing to pay for all or most of the cost of the TCS. Similarly, the ability and willingness of communities and local governments to pay for livelihood training would also be reviewed. Estimates of anticipated cost recovery under the project are provided in Annex 6. Training CaRacity DeveloRment 3.14 Upgrading of Existing Facilities. The 14 existing RMTCs, 13 PMTCs and the OMSD would be upgraded and provided with additional and replacement equipment in order to accommodate middle-level and apprenticeship training programs. The locations of the RMTCs and PMTCs are shown in Map IBRD 23477R. Each of the 28 centers would be provided with an additional multi-trade workshop, and the 17 oldest centers would be rehabilitated to ensure their full use and to prolong their useful life. All centers would be provided with adequate quantities of quality learning materials, books and consumables. To improve safety standards, which are currently not satisfactory, special protective equipment would be procured and made available in each center. To  - 21 - improve efficiency, particularly in class scheduling, computer equipment, special software, and specialist services would be provided. Facility management and maintenance would also be improved with the help of technical assistance to be provided under the project. 3.15 ExRansion of Enterprise-Based Training Programs. To promote and increase the role of private sector firms in training, the project would provide funds and technical assistance for various training schemes. The highly successful Training Contract Scheme (TCS) begun under the First Vocational Training Project would be further supported. It focuses on training of skilled workers for small-scale enterprises which do not have training capacity. For medium- and large-scale enterprises, the project would support the operation of the Training Assistance Contract (TAC) scheme. The TAC provides enterprises with one-time assistance to develop a capacity for on-the-job employee training through the training of trainers and consultation and advice on the design and implementation of training programs. The project would also support the ongoing Garment Industry Training Program and the Enterprise-Based Training Program. The latter program will be extended to the printing, electronics, wood working and food processing industries. 3.16 The project would also assist in annrenticeshiR training, following up on a UNDP/ILO project which is assisting with the drafting of legislation and design of model 2rograms and cost sharing schemes. Support would be provided under the project for promotion of the new legislation and field testing of the new schemes. 3.17 To meet the demand for livelihood, basic skills and entrepreneur- ship training by women, OSY, and under- and un-employed adults, the project would provide funds and technical assistance for a Training Delivery System for the Rural Informal Sector (TDIS), a follow-up to the existing Community Training Center and Entrepreneurship Development programs. The TDIS would support local communities in identifying training needs, selecting trainers and training venues, providing training materials and identifying employment opportunities. It would also assist persons who want to become self-employed by providing entrepreneurship training, help in preparing business plans and obtaining financing. The project would support: (a) the procurement of tools, equipment, materials and supplies as well as teaching and learning materials; and (b) technical assistance including local training and local experts. 3.18 The training of women in new trades is a very important NMYC policy and is currently being implemented under the on-going Women in New Trades (WINT) project with assistance from the Government of the Netherlands. The broad goals of the WINT project are to: (a) create a broader and more diversified range of occupations for women, and (b) increase women's access to a broad range of occupations. Under the project funds would be made available to conduct an impact evaluation of the WINT program and to fully integrate the WINT project as a regular part of the TDIS operational program.  22 - Studies 3.19 There are two studies under the project to be conducted by the Council of NMYC. The first is a study of formal technical and vocational education programs at the secondary, post-secondary, technician and technical teacher education levels in the private and public sectors. The purpose of the study would be to determine what could be done to improve the relevance and effectiveness of the formal vocational education and training system. The study would include a data collection and sample surveys to update and improve the inadequate data base. It would also include a review of the role of private training centers and formulate or propose regulations to promote and improve private centers. A strategy and investment plan would be prepared for the rationalization and improvement of formal technical and vocational education as well as a proposal for the conversion of suitable SATs into TEIs, the rehabilitation of SATs and upgrading of TEIs that meet a local demand for training. The second study is a feasibility study for the establishment of sector specific and advanced technology training centers will also be conducted under the project. IV. PROJECT COST. FINANCING AND IMPLEMENTATION A. Costs 4.1 The project is estimated to have a total cost of about Pesos 1,170.0 million (US$41.8 million equivalent), including foreign exchange costs of about US$15.0 million (36 percent of total costs) and taxes and duties estimated at about US$1.8 million (equivalent to 10 percent of the value of goods procured locally and 10 percent of imported goods). Base costs are estimated at May 1991 prices and were based on the following assumptions: civil works at US$245 per square meter; equipment on recent NMYC experience for similar imported or locally available items; local training at US$1,000 per month and foreign fellowships at US$8,000 per man-month. A total of 140 months of foreign assistance and 477 staff-months of local assistance would be provided. A total of 322 months of foreign fellowships and 6,755 months of local training would be provided. Foreign exchange requirements were estimated on the following basis: 20 percent for civil works; 85 percent for equipment; 90 percent for international expert services; 100 percent for international fellowships; 75 percent for books and resource materials. 4.2 Physical contingencies of 10 percent were allowed for civil works, professional services, consultants, fellowships, furniture, equipment, books and consumables. Physical contingencies total US$1.6 million or 5 percent of base costs. Price contingencies of US$7.1 million, equivalent to 22 percent of base costs, were estimated on the basis of the following inflation factors: for foreign costs, 3.9 percent per year during 1992-97; for local costs, 10 percent during 1992-97. A summary of costs by project component is given in Table 4.1 and by category of expenditures in Table 4.2. Cost breakdowns by component, category of expenditure and project year are provided in Annex 7.  - 23 - Table 4.1: S%WRY OF PROJECT COSTS BY CtJWONENTS Peso Millilon USS Million X % Component Local Forelgi Total Locr. Forelgn Total Foreign Base A. INSTITUTONAL DEVELOPIENT 1. Strength inst. Capability 38.5 19.6 58.1 1.4 0.7 2.1 34 6 2. mrPow PoI.PIg & Coord. 79.3 58.5 137.8 2.8 2.1 4.9 42 15 3. Mrower hnfomtion System 24.3 31.7 56.0 0.9 1.1 2.0 57 6 4. ProJect Mnagement 14.8 0.0 14.8 0.5 0.0 0.5 0 2 SLbtotal 156.9 109.8 266.7 5.6 3.9 9.5 41 29 B. IWROVE TRAINING QUALITY 1. Not Skill Cert & Prom PR 38.2 16.4 54.6 1.4 0.8 2.0 30 6 2. Curric. & Trg Met Dev. 32.4 13.8 46.2 1.2 0.5 1.7 30 5 3. Traior Developent Program 66.0 3.1 69.1 2.4 0.1 2.5 5 8 4. Employent Services Program 16.5 2.9 19.4 0.6 0.1 0.7 15 2 5. Center Tee S M Fhin badit 2.7 0.3 3.0 0.1 0.0 0.1 11 0 Wbtotal 155.8 36.5 192.3 5.7 1.3 7.0 19 21 C. TRAINING CAPACITY 0EVLOWENT 1. grade Existing Facilities 82.8 153.1 235.9 2.9 5.5 8.4 65 26 2. Training Contract Sdem 26.1 0.2 26.3 0.9 0.0 0.9 1 3 3. Training Assistant Contract 80.7 1.8 82.5 2.8 0.1 2.9 2 9 4. Trng.Dev. S&a. Inf. Sect. 57.4 47.9 105.3 2.1 1.7 3.8 46 11 Subtotal 247.0 203.0 450.0 8.7 7.3 16.0 45 49 D.STLDIES 10.4 5.7 16.1 0.4 0.2 0.6 38 2 Total BASELINE COSTS 570.1 355.0 925.1 20.4 12.7 33.1 38 100 Physial Contiwgncles 18.4 27.1 45.5 0.6 1.0 1.6 59 5 Price Contingcles 161.4 37.8 199.2 5.8 1.3 7.1 19 22 Total PROJECT COSTS /a 749.9 419 9 1.169.8 ; 15.0 Jt8 a 127 /a inckkes US$1.8 mililon in Identiflable taxes.  - 24 - Table 4.2: SUMIARY OF PROJECT COSTS BY CATEGORY OF EXPENDITURE Peso Mlillon US$ Million Category of X X Expenditure Local Foreign Total Local Forelgn Total Forelgn Base 1. INVESTMENT COSTS A. Civil Works 44.7 11.2 55.9 1.6 0.4 2.0 20 6 B. Furniture 4.3 0.0 4.3 0.2 0.0 0.2 0 1 C. Professional Services 2.8 0.0 2.8 0.1 0.0 0.1 0 0 D. Tectlcal Assistance 1. Foreign Fellowship 0.0 72.1 72.1 0.0 2.6 2.6 100 8 2. Local Training 189.2 0.0 189.2 6.7 0.0 6.7 0 20 3. International Experts 4.7 42.3 47.0 0.2 1.5 1.7 90 5 4. Local Experts 39.9 0.0 39.9 1.4 0.0 1.4 0 4 Sub)total 233.8 114.4 348.2 8.3 4.1 12.4 33 38 E. Equipment 38.6 218.7 257.3 1.4 7.8 9.2 85 28 F. Books & Resource Material 3.6 10.7 14.3 0.1 0.4 0.5 75 2 G. Consunable Materials 41.1 0.0 41.1 1.5 0.0 1.5 0 4 H. Enterprise-Based Training 125.2 0.0 125.2 4.5 0.0 4.5 0 14 Total INVESTMENT COSTS 494.1 355.0 849.1 17.7 12.7 30.4 42 92 11. RECIRRENT COSTS A. Operatlon and Maintenance 62.9 0.0 62.9 2.2 0.0 2.2 0.0 7 B. Staff SalarIs 13.1 0.0 13.1 0.5 0.0 0.5 0.0 1 Total RECURRENT COSTS 76.0 0.0 76.0 2.7 0.0 2.7 0.0 8 Total BASELINE COSTS 570.1 355.0 925.1 20.4 12.7 33.1 38 100 Physical ContingencIes 18.4 27.1 45.5 0.6 1.0 1.6 59 5 Price Contingencies 161.4 37.8 199.2 5.8 1.3 7.1 19 22 Total PROJECT COSTS 749.9 419.9 1,169.8 26.8 15.0 41.8 36 127 B. Financing 4.3 The Credit of SDR 26.4 million (US$36.0 million equivalent) would finance about 90 percent of the total project cost, net of taxes. The Government of the Philippines would provide f.nancing of US$5.8 million equivalent. Project financing arrangements are summarized in Table 4.3.  - 25 - Table 4.3: FINANCING PLAN (US$ million) GOP IDA Total Category of Expenditure Amount % Amount % Amount Investment Costs: A. Civil Works 0.5 20 2.0 80 2.5 6 B. Furniture /a 10 0.2 90 0.2 1 C. Professional Services /a - 0.1 100 0.1 0 /b D. Technical Assistance: 1. Foreign Fellowships - - 2.9 100 2.9 7 2. Local Training - - 9.2 100 9.2 22 3. International Experts - - 1.9 100 1.9 5 4. Local Experts - 1.8 100 1.8 4 E. Equipment 1.4 12 9.8 88 11.2 27 F. Books and Consumables 0.4 10 2.2 90 2.6 6 G. Enterprise-Based Training - 5.9 100 5.9 14 Recurrent Costs A. Operation & Maintenance 2.9 100 - - 2.9 7 B. Staff Salaries 0.6 100 0.6 1 Total 5.8 36.0 41.8 /a Value less than 0.05. A Value less than 0.5. 4.4 The project will generate additional recurrent expenditures for salaries and operations and maintenance resulting from the upgrading of existing RMTCs, PMTCs and the National Skills Training Center and expansion of existing training programs. Total additional recurrent expenditures are projected at US$3.5 million over the five-year project period. This would represent an average annual increase of about 1.6 percent of NMYC's current budget and is considered small, representing about one eighth of the average annual increase in NMYC's budget allocation, which has been growing at an annual average of 18 percent during 1987-91. There is, however, a serious constraint on counterpart funds in 1992. Although this constraint is expected to ease after 1992 due to projected increases in revenue and GDP growth, the project has been designed to allow for a gradual increase in recurrent expenditures. If the 1991 budget allocation is taken as the basis, the budget increase would be 0.3 percent in the first year, rising to 0.6 percent in the second year to remain at less than one percent for the remaining project  - 26 - years. In addition, NMYC is instituting measures, including a gradual reduction in its staff size, to lower its budgetary requirements and free up funds from budget allocations to finance new recurrent expenditures required by the project. NMYC also plans to recover an increasingly larger share of the cost of its training programs from the ^ommunities, firms and trainees benefitting from the programs. 4.5 To further ensure its ability co finance the project, NMYC has prepared a five year financial plan (Annex 6) showing estimated costs and sources of financing for the proiect and for its on-going operations. The plan shows NMYC's requirement for government budgetary allocations for counterpart funds for implementation of the project and for the salaries, operations and maintenance requirements of all other NMYC programs and operations. The financial plan also provides estimates of projected cost recovery anticipated to result from charging training fees for industry-based training programs, fees for trade testing and certification operations and from sales of training manuals and materials developed under the project. It is estimated that cost recovery will increase from about 0.5 percent of total recurrent costs during the first year of the project to a sustainable figure of about 26 percent of recurrent costs during the final year of the project. C. Project Management and ImRlementation 4.6 The project would be implemented over a five-year period under the overall supervision of NMYC. Day-to-day supervision of the project would be handled by the Project Management Unit (PMU), which was established within NMYC's Administrative Division to manage implementation of the Vocational Training Project (Ln. 2200-PH) which has been completed successfully. Core staff of the PMU would be retained under the project. The PMU is headed by a Project Director and comprises sections for programs and monitoring, civil works, procurement and finance. The responsibilities of the four key PMU staff (an architect, education officer, procurement officer and accountant) are well defined, and the experience of these key staff should help to keep implementation on schedule. Responsibilities for supervising and inspecting construction and equipment installation would be delegated to staff in the Regional Manpower Offices, as was done successfully in the previous project. To improve the capacity of PMU and other NMYC staff to implement the project, seminars in procurement, financial management and disbursement would be provided at project start-up. PMU staff would also receive additional training as well as 18 staff-months of technical assistance related to management of the technical assistance component as well as project civil works and procurement. 4.7 To strengthen NMYC's capability and capacity in management and administration, technical services and training delivery systems, the technical assistance (TA) component of the project includes provisions for 140 months of international and 477 months of local consultancy services. Also included in this component are a total of 322 months of foreign fellowships (for 144 fellows) and a total 6,755 months of local training for 775 fellows (Annex 8). In addition, the TA component includes provisions under the Training Contract Scheme (TAC) and the Training Assistance Contract (TAC) program to develop industry's capacity for the training of about 150,000 of  - 27 - its own workers during the implementation period of the project. Given the importance and scope of the project's technical assistance component, a nine person NMYC team would be assigned on a full-time basis to plan and monitor the project implementation and would work closely with NMYC's Human Resource Development staff. A summary of the TA component, which includes an implementation schedule and draft terms of reference for both international and local consultants is included as Annex 8. 4.8 The following safeguards have been taken to ensure timely implementation of technical assistance, civil works and procurement: plans and schedules for project civil works rehabilitation and equipment procurement were agreed at negotiations; the PMU would be required to provide the Bank with semi-annual reports of the status of implementation (para 2.39); and the project would provide a supervisor at each training center site who would be responsible to keep the work on schedule, maintain quality standards and monitor and report on progress. In addition, to enable the project architect to make frequent visits to the construction sites, funds would be provided to cover the transport and .ubsistence costs related to the supervision of project works. 4.9 The Council of NMYC, through its Secretariat, will establish a task force to manage the two studies to be conducted under the project. Plans and timetables for the studies and draft Terms of Reference for the local and international consultants, who will assist the task force, have been prepared and agreed with IDA. A project implementation chart is provided in Annex 9. Status of Project PreRaration 4.10 Detailed plans for the upgrading and rehabilitation of the existing RMTCs and PMTCs will be prepared in late 1992 as rehabilitation and construc- tion work is not scheduled to commence until at least mid-1993. Draft bidding documents for civil works and equipment procurement and training and technical assistance plans have been prepared. Basic equipment lists and the equipment procurement plan have been prepared and are satisfactory. D. Procurement 4.11 Procurement arrangements are shown in Table 4.4. Civil works contracts for the upgrading of the 28 existing centers are estimated to cost from US$43,000 to US$110,000 each and would be awarded on the basis of local competitive bidding (LCB) procedures acceptable to the Bank. Equipment packages costing US$200,000 equivalent or more would be awarded on the basis of international competitive bidding (ICB) in accordance with Bank guidelines. Equipment items in contracts valued at less than US$200,000 equivalent and aggregating up to US$900,000 equivalent would be awarded on the basis of LCB in accordance with Bank guidelines. Local equipment manufacturers will be extended a 15 percent preference margin, or the prevailing customs duties, whichever is lower, on bid evaluation under ICB. Furniture, which is of a basic design and readily available locally, would be procured on the basis of LCB procedures acceptable to the Bank. Books would be procured either by international or local shopping procedures involving the comparison of quotes from at least three suppliers, or by direct contracting from the publisher or  - 28 - sole authorized distributor. Minor and/or specialty items of equipment and furniture, estimated to cost less than US$5,000 each and aggregating to less than US$200,000 equivalent, would be purchased by international or local shopping on the basis of quotations from a minimum of three suppliers. Consulting and training services will be procured in accordance with the "Guidelines for Use of Consultants by World Bank Borrowers". Table 4.4: SUMMARY OF PROCUREMENT ARRANGEMENTS (US$ million equivalent) Procurement Method /a Total Category of Expenditure ICB LCB Other / N.I.F. Costs Civil Works 2.5 - - 2.5 - (2.0) - (2.0) Professional Services - - 0.1 - 0.1 (0.1) - (0.1) Furniture 0.2 - - 0.2 - (0.2) - - (0.2) Technical Assistance - - 15.8 - 15.8 - - (15.8) - (15.8) Equipment 10.1 0.9 0.2 - 11.2 (8.9) (0.7) (0.2) - (9.8) Books and Consumable 2.6 - 2.6 Materials - - (2.2) - (2.2) Enterprise-Based Training - - 5.9 5.9 (5.9) - (5.9) Operations and Maintenance - - - 3.5 3.5 and Staff Salaries - - Total 10.1 3.6 24.6 3.5 41.8 (8.9) (2.9) (24.2) - (36.0) ,ij, All figures include contingencies; figures in parentheses are the respective amounts financed by the IDA Credit; figures may not add up due to rounding. Lb Includes international shopping, direct purchase and technical assistance contracts. N.I.F. Not IDA Financed.  - 29 - 4.12 Prior IDA review would be required for Terms of Reference and Letters of Invitation for consultants' contracts and for civil works contracts over US$75,000 and equipment contracts over US$100,000; this would include 85 percent of the value of the Bank-financed components. Selective post award review of contracts below the threshold levels would be carried out on about in 1 in 10 goods contracts. Standard documents will be used for procurement, to facilitate Bank review. E. Disbursement 4.13 The proceeds of the Credit would be disbursed against eligible expenditures as follows: (a) Civil Work: 80 percent of total expenditures; (b) EguiRment: 100 percent of the c.i.f. cost of all items procured directly from abroad; 100 percent of the ex-factory cost (net of taxes) of locally manufactured items; and 75 percent of local expenditures for other locally procured items; (c) Furniture. Books and Consumables: 90 percent of total expend- itures; and (d) ExRert and Professional Services. Foreign Fellowships and Local and Enterprise-Based Training: 100 percent of total expenditures. 4.14 Disbursement would be made against full documentation for expenditures for professional services and experts as well as those related to contracts, including consultants' contracts. For civil works contracts less than US$100,000 equivalent each, and equipment contracts less than US$200,000 equivalent each, itemized Statements of Expenditure (SOEs) would be used. Itemized SOEs would also be used for all expenditures covering fellowships, local training or programs not undertaken by contract. Documentation in support of these SOEs would be retained by the PMU and made available to Bank supervision missions on request. To the extent possible, withdrawal applications should be consolidated into amounts of US$50,000 equivalent or more, prior to submission to the Bank. 4.15 Disbursement of the Credit is expected to be completed in five and a half years, with Credit closing by December 31, 1997. An estimated schedule of disbursement and a profile of disbursement under previous education projects in the Asia Region are given in Annex 10. Disbursement of the Credit is expected to be faster than the profile (by 30 months) due to measures being taken to ensure a rapid project start-up (para. 4.8). These precautions, in conjunction with the project monitoring system to be established, should prevent disbursement delays.  - 30 - F. Accounts. Audits Monitoring and ReRorting 4.16 The PMU would establish and maintain separate accounts for all project expenditures. Accounts and documentation supporting SOEs would be maintained in accordance with sound accounting practices. The executing agency, NMYC, has several accounting officers who have managed the accounts of the previous project, and their experience would be utilized in the project. All project accounts, including SOEs, would be audited annually by the Commission on Audit (COA), which is an independent auditor acceptable to the Bank. Since the audits would be performed by COA's resident staff in the regions and provinces where the project will be implemented, the central COA representative in NMYC's central office will consolidate audit reports from all regional and provincial training centers and offices. Assurances were provided at negotiations that, within nine months of the end of each government fiscal year, IDA will be provided with a consolidated audit report on project accounts of such scope and detail as the Bank may reasonably request, including a separate opinion by the auditor on disbursement against certified SOEs. 4.17 The PMU would monitor the progress of project implementation. The establishment of a computer-based monitoring system would assist the PMU in this task. Critical path analysis would be done to coordinate the timing of the civil works, procurement, staff training and operational training programs. The monitoring system would allow adjustment of target dates and schedules for all major activities in case of delay in one or more of these activities. The PMU would prepare progress reports of a standard format for review by the Covernment and IDA each semester. 4.18 Project supervision would follow the plan shown in Annex 11. The Bank'" field supervision is expected to require at least two visits a year. Supervision during the first two project years would be carried out by a vocational/technical education specialist, an institutional development specialist and an architect; thereafter, when the emphasis of the project would be on improved financial management and cost recovery, it would be necessary to include a financial specialist in the missions. G. Environmental Impact 4.19 The project is expected to have a positive impact on the environ- ment. The skilled workers trained under the project would be available for employment in the Government's public works programs, some of which are aimed at improving operation and maintenance of the country's water, sewerage and road infrastructure in both urban and rural areas. Moreover, based on previous experience, the training centers to be upgraded under the project tend to become conduits for disseminating information on environmental issues; automotive-related training, for example, already includes environmentally- based measures for reduction of vehicle pollution and proper disposal of toxic substances. Under the project, the coverage of environmental topics in the training curricula would be expanded or new topics introduced, as appropriate. The NMYC, in consultation with industry and relevant Government bodies, would be responsible for reviewing the content of the curricula to ensure that  - 31 - environmental issues are addressed properly and that environmental concerns are included in instructor training programs. H. Impact on Women 4.20 Project support to NMYC would directly affect the role of women in the areas of policy, planning and program implementation because the NMYC Council actively participates in the formulation and implementation of women- focused policies and the Philippine Development Plan for Women (PDPW). Such policies and plans could be further enhanced through developing the capabilities of policy-makers and planning staff through the project. Women would also benefit through project support for improvement of training quality at NMYC. Over 40 percent of the 220,000 graduates of NMYC programs in 1991 were women. Women are also being encouraged to develop competencies in non- traditional trades such as welding, automotive and machine-shop. In this regard the project would pursue the efforts initiated in 1990 under the Women in New Trades (WINT) Project. This project, supported by the Government of the Netherlands, is aimed at (a) creating a broader and more diversified range of occupations for women, and (b) increasing women's access to a broad range of occupations in line with manpower requirements. Women would also benefit from project support to the Garment Industry Training Program which, since its inception in 1990, has prepared more than 1,300 women for employment in industry or at home through subcontracting. I. Proiect Sustainabilitv 4.21 Strong Government commitment to improvements in the vocational training system achieved under the recently completed Vocational Training Project (Ln. 2201'-PH) and the high priority given by the Government to the preparation of the project indicate that they will be sustained in the future. There is now a more widespread, deeper understanding of the issues in developing skills training nationally and locally, and of the relationships between public and private sector roles. There is also strong Government commitment to NMYC and understanding of its role as the key policy making and planning body for vocational training activities. Management and manpower planning issues are still serious, but awareness has deepened and their dimensions are better understood. Both have assured high profiles and will be addressed in the project. Flexibility in training delivery and enhanced relevancy of training and quality to meet labor market needs together with cost-recovery and evaluation of training are now deeply imbedded in NMYC's training activities. V. BENEFITS AND RISKS A. Benefits 5.1 The benefits of the project, though difficult to quantify, are important. In particular, NMYC would acquire the capacity to provide policy advice to the Government on the role and contribution of employment services and vocational training in economic development, and prepare plans and  - 32 - undertake research to improve the contribution of skills development to economic growth. Other benefits would be as follows: (a) The project would assist in the restructuring of the vocational and technical education sector, intcrease efficiency and achieve a better use of Government resources. (b) The project would also assist in transferring the responsibilities of training from the Government to the private sector since it would help to develop training capabilities in industry and increase the private financing of training costs. (c) Project activities to improve the skills of the work force would facilitate efforts of the industry and services sectors to move into export-oriented and value-added manufacturing and services requiring higher skill levels. The project would also provide an opportunity for workers in the free trade zones to upgrade their skills and thereby increase the attractiveness of the zones to foreign investors and joint venture operations. (d) Opportunities for wage or self-employment of women and other disadvantaged groups would be enhanced through training and entrepreneurship programs specifically designed for them. (e) Finally, expansion of livelihood and entrepreneurship training programs would be one means to address both the high level of poverty and of unemployment and underemployment in the Philippines by providing skills for women, the unemployed and out-ot-school youth for employment and self-employment, particularly in the rural areas and in the urban informal sector. B. Risks 5.2 There are two major risks. The first is the potential for increased constraints on counterpart funds caused by possible further reduction in government resources. To minimize this risk, the project has been designed to defer the requirements for counterpart funds to the later years of project implementation when the economy is expected to be stronger. At negotiations the Government agreed to consult with IDA prior to making revision to the financial plan. The second project risk is the possibility that the private sector may not be responsive to the need to expand their in- house training capability and allocating more resources to the training of workers. To lower that risk, the project would provide assistance to strengthen the capacity to train workers in private firms, revive apprenticeship training, and extend incentive and advisory services to firms to develop their capacity to train their workers.  - 33 - VI. AGREEMENTS REACHED AND RECOMMENDATION 6.1 IDA has received assurances from the Government that it would: (a) consult IDA prior to making revisions to the financial plan for NMYC (para. 5.2); and (b) within nine months of the end of each Government fiscal year, IDA will be provided with a consolidated audit report on project accounts (para. 4.16). 6.2 Understandings have been reached with the Government that it would: (a) implement project studies according to an agreed timetable (para. 4.9); and (b) implement civil works rehabilitation and equipment procurement according to an agreed timetable (paras. 4.8 and 4.10). 6.3 Subject to the above agreements and conditions, the project would constitute a suitable basis for a development credit of SDR 26.4 million (US$36.0 million equivalent) to the Republic of the Philippines on standard IDA terms with 35 years maturity.  - 34 - ANNEX 1 Page 1 of 6 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT NHYC: Institutional Strenathening 1. The recent review undertaken by the Bank and the Philippine Government of vocational training for operations and craftsmen (WB report No. 8259-PH, January 24, 1990) concluded that the immediate need for strengthening NHYC's capacity to furnish support in policy development, planning, research and development to the sector was imperative. The new management of the NIYC has taken steps to begin addressing this issue. Background 2. The NHYC was created in 1966 to integrate skills training activi- ties under one body. It was comprised of a Council and a Secretariat and was given important statutory powers consolidated in an Act of Congress of 1969. The powers and functions of the Council were further enhanced by the promulga- tion of a Labor Code in 1974. The prime purposes of the Council under the Act and Labor Code are to: (a) recommend on the development of national training policies, strategies and programs to meet manpower needs; (b) provide "staff" support to agencies executing training programs through technical advice and assistance for the purpose of improving training, planning, management, quality, efficiency and relevance, and initiate research and development, and (c) conduct training programs. 3. NMYC is headed by a Council consisting of senior representatives from all training agencies in the country. These include both Government Departments dealing with human resources and private sector representatives from labor, management and industry, and youth welfare organizations. The Council is currently chaired by the Secretary of Labor and Employment (DOLE), with the Secretary of the Department of Education, Culture and Sports (DECS) as Vice Chairman. Other government officials on the Council include: the Secretaries of the Departments of Trade and Industry; Food and Agriculture; Environment and Natural Resources; Social Welfare and Development; Science and Technology; Local Government; the Director General of the National Economic and DevelopmenL Authority; and, the Chairman of the Civil Service Commission. From the private sector there are two representatives from Labor, two from management and industry, one for youth welfare and one for family organiza- tions. The Council's membership was established some years ago and is no longer appropriate. It would be necessary to increase representation from industry and NGOs. At regional and provincial levels, "council" committees do typically have a broader representation as the membership is not governed by legislation. The Council has four standing committees covering major sectors: industry, agriculture, services and non-formal education. Each has functions for policy formulation and planning.  - 35 - ANNEX 1 Page 2 of 6 4. The Council is provided with a full-time Secretariat headed by a Director General. The Secretariat had developed a strong public image and "everyday" reference to NMYC usually refer to the Secretariat rather than the Council. The organization of the Secretariat was overly complex and not suited to execute its functions. The Director General manages the organization. Recently, a new Deputy Director General was appointed and given responsibility for the policy and planning function. A second "de facto" Deputy Director General is responsible for the training function. Four Executive Directors head the four departments: Office of Manpower Planning and Coordination (OMPC), the Office of Industry Manpower and Incentives (OIMI), the Office of Manpower Skills Development (OMSD), and the Office of Vocational Training and Development (OVTD). 5. The OMPC has staff functions with three divisions: Planning; Rural Manpower Development; and, Evaluation and Research is intended to provide policy direction to the Council, including the mapping out of strategies for the preparation, utilization and conservation of the country's human resources. It also provides consultative technical and advisory services on planning to the regional offices of NMYC, but has limited capacity to do so. The OMPC is inadequately staffed and managed but steps are being taken to strengthen and develop MPO's sectoral support functions through staff training. 6. The OMSD includes units for: Skills Standards Development; Training Technology; Trainer's Development, and Vocational Guidance. It is responsible for providing policy recommendations: on trainers' training; skill standards development and certification; curriculum and training materials development; vocational guidance; and management and development of staff training. The OMSD is one of the strongest of NMYC's offices, and its work is reflected in the comparative strength of the NMYC training programs. 7. The OIMI provides line support for new skills development and training operations and includes what are essentially the line functions of a regional training center. It is expected to recommend policies on the establishment, administration and management of national manpower skills training programs and projects, including those undertaken through foreign financial and technical assistance. 8. The OMSD functions as a Regional Manpower and Training Center for the National Capital Region. It is designed to allow for the introduction and testing of new training programs and houses the leather and garment training institutes. 9. At the resional level, NHYC has 14 Regional Manpower Development Offices (RMDOs), each headed by a Regional Director whc reports to the Director General. The Regional Directors are virtually autonomous and responsible to plan and implement manpower development plans for their respective regions. They conduct training programs at the 14 Regional Manpower and Training Center (RMTCs) in -'ollaboration with local government, other national government agencies, private firms and NGOs. The 14 RMTCs run courses of six months or less for operators and craftsmen in traditional skills such as mechanics, construction, and electronics, and are housed in  - 36 - ANNEX 1 Page 3 of 6 well-equipped permanent structures. Three RMTCs have important functions in trainer training and trainer upgrading. At the provincial level, 13 Provincial Manpower and Training Centers (PMTCs) have been established together with 150 Community Training Units (CTUs). The PMTCs run courses, similar to those offered by the RMTCs, but with an emphasis on addressing local industry needs. The CTUs are established in conjunction with implementation of the Community Training Programs, and are equipped with 'mobile' training equipment and tool units. 10. Responsibilities for training strategy development and planning are primary mandates of NMYC. These responsibilities had not been met. The seriousness of the situation is however still reflected in the lack of accurate basic data on such fundamentals as the numbers of institutions, training places, and graduates. To develop and improve data basis and planning capacity is a key need. There is also a need for more and better trained manpower planners, and human resource economists in the NMYC, NEDA, and other Government Departments. Strong technical support will be given in the project to Departments that provide training to develop their sectoral planning capabilities and to improve data collection and analysis. NEDA is responsible for long-term planning. Its Social Development Division has a mandate to coordinate education and manpower training programs but it relies on NMYC for this. NEDA also provides technical assistance in project preparation. Although it is nominally responsible for analysis of the labor market, very little attention is given to this task in view of the few professional NEDA staff in the Division. 11. Planning is also weak in the Department of Education, Culture and Sports. The Planning Division of this Department has not undertaken any substantial assessments of the relationship between education and the labor market owing to lack of expertise. Similarly, the Department of Labor and Employment has two Bureaus responsible for the labor market: the Bureau of Employment Statistics and the Bureau of Labor and Employment. The latter is expected to analyze the data collated by the former. Unfortunately, it concentrates instead, through its Labor Market Information Division, on collecting data solely from DOLE's employment exchanges. By default, another agency in DOLE, the Institute of Labor Studies, has taken over the role of analyzing the labor market, but little work has been completed. 12. Policies to meet strategic labor market needs to support economic development are critical and pertinent questions must be continuously posed and answered. Is the training delivery system relevant to the skill needs of the economy? Are there clear objectives and a realistic set of policies? Is there sound management? Are there effective planning and evaluation mechanisms? The NMYC has, for long, been legally mandated by Congress with the formulation of training policies. The Council, with senior representation from core Departments involved in training, industry, unions, and NGOs, was established to provide a forum for the discussion of policies and plans. However, the Secretariat has neither been called to give account to the Council on the appropriateness of training policies nor has it raised issues at the Council that required policy discussion. This situation has now changed. Although training is still provided by a variety of agencies on a piece meal basis, with all the inefficiencies that naturally arise from this  - 37 - ANNEX 1 Page 4 of 6 approach, a more orderly program is being put in place. The NMYC is charged by Statute with a complete set of "staff" functions including, for instance, national manpower planning, setting training standards, research and develop- ment. A renewed emphasis is now being placed on sectoral support through NMYC's constituent training agencies and the Secretariat is planning to phase out its "hands-on" training activities. Institutional Development 13. A component under the project has been designed to improve the capacity of NMYC to deliver the policy, planning and training support to the sector as described in legislation currently proposed. The component has four thrusts: (a) improving the overall managerial capability, particularly at national and regional level; (b) improving the technical capability of professional and key sub-professionals at national, regional and provincial levels in such key sector support areas as (i) labor economics and manpower planning; (ii) computer-based information system development; (iii) research and development; and, (iv) monitoring and evaluation; (c) developing a management and planning information system; and (d) separating within the NMYC organizational structure at provincial, regional and national levels the "linen training and "staff" sector support functions, ensuring the adequate staffing of the two functions. 14. ManaRerial Capability. The justification for strengthening management is described in the Vocational Training Subsector Report and in the Project Preparation Document of October 1990 prepared by NMYC. While the technical capability of NMYC senior and middle managers is considered reasonable, this is not true of their managerial skills and a management training program is required. The actual numbers to be trained would be specified in a staff development plan under preparation by NMYC. The staff development would be executed through a linkage between NMYC, perhaps a local university (or the Asian Institute of Management) and an overseas university or center of management training. It is expected that this institutional linkage arrangement will facilitate (i) the build-up of a local management training capability; (ii) provide a pool of technical assistance staff to perform functions in NMYC while local staff are being trained "off-the-job"; and (4ii) permit on-the-job training of more junior staff simultaneously. 15. Technical Capability. Training and upgrading of key technical support staff would also be necessary and particularly staff of other Departments with responsibilities of training would have to be included. The training would focus on strengthening technical capabilities in such areas as manpower planning, economics, statistical analysis, computing, evaluation and research. It is proposed that a major emphasis be given to the planning capability. As with management training, a system of institutional links is envisaged between training institutions, a local university and an overseas center. 16. NMYC Oraanization. During project preparation, the present organization would has been changed to make it possible for the Council and its regional and local committees to perform their functions as indicated by their legal mandate; and for the NMYC Secretariat to strengthen (i) its  - 38 - ANNEX 1 Page 5 of 6 management and support functions to the Council and its field offices; and (ii) its functions to train operatives and craftsmen. The following principles have guided the new structure (part of which has already been implemented by NMYC)s (a) build on existing strengths and capabilities; (b) avoid new recurrent costs; and (c) ensure the profiles of staff broadly match job needs. The following three major thrusts have occurredt (a) the direct "line" training functions of NMYC and the "staff* sector support functions below the level of Director General have been separated by creating Deputies to manage each of the two mandates; (b) increasing the representatives of the private sector (i.e., industry and NGOs) in Regional Committees and below, where micro-planning takes meaningful shape and in line with government policy decentralizing; and (c) rearranging sector support functions organizationally particularly to enhance data collection and analysis, policy review, planning (sub-sectoral manpower), budgetary allocations and expenditures, research and development and evaluation and feedback. 17. Information Systems. The plan for the establishment of a management and planning information system are consistent with the government order (MC237) requiring all agencies to formulate a long-term (2-5 years) Information System Strategic Plan. The development of this plan is presently under way within NMYC. The plan would address the following objectives: (1) define an information system to support planning, operation, and control functions of NMYC; (2) evaluate NMYC's present capability to support its information needs; and (3) identify system development priorities, organiza- tional and resource requirements, and a time schedule for implementation. The information system would comprise five sub-systems. These include (1) admin- istration; (2) manpower supply; (3) manpower demand; (4) skills certification register; and (5) test item bank. These sub-systems would operate most effi- ciently and cost-effectively as discrete units. They would have the capability of data interchange when necessary but would not dependent on data interchange for their operation. 18. Consistent with the present NMYC goals for devolution of respon- sibility, a distributed system is planned, to provide the regional offices with the capability of independent operation. Such a design would provide high flexibility at relatively low cost. It would be implemented gradually and independently at different sites. Small computers, commonly referred to as "personal computers," would serve adequately at most sites. Standard off- the-shelf software application packages would serve for most purposes. Ini- tially, no custom programming would have to be done. Although standardized data formats would be desirable, the system would be sufficiently flexible to allow variations and changes in formats. These features would combine to provide a robust system, less sensitive to most kinds of system failures faced by centralized systems. 19. In order for such a system to operate most efficiently, however, training in standard computer application programs will have to be provided on a wide scale. In most cases, machines will not be used for a single specific task, but will be available for a variety of uses. With this kind of system, few computer specialists and many generalists will be required. Since the information system is to be installed at the regional level within the next few years, training will also have to be provided at that level in order to  - 39 - ANNEX 1 Page 6 of 6 enable full utilization of the equipment. At the level of the R8Os, all professional staff and most of the support staff will need basic training in standard off-the-shelf software application packages. The duration of training would be short since modern software packages are relatively easy to learn and use. The duration of courses is typically hours, rather than months. Persons with computer skills can often command salaries higher than the government offers. In the Philippines, a two to three year period of bonding is standard practice for government employees receiving training at government expense. This practice would apply to persons trained in the project. 20. Since standard off-the-shelf software application packages will form the backbone of the system, most training requirements would be met by local commercial training organizations or by in-house training. A relatively small number of specialists would require more advanced local training. Technical assistance may be required to help in the development of data collection instruments and procedures. The overall training and technical assistance requirements would be specified in the Information System Strategic Plan. 21. Availability of Computers. At present, the NMYC has approximately 180 work stations, distributed as follows: At the Taguig complex, a total of 79 divided as follows: Office of the Director General 12; MPO 8; IMO 5; NISD 9; Finance Branch 7; VTP 7; Administrative Branch 7; NSTC 24. In the Regions and Provinces, there are 104 computers as follows: RMTOs 66; RMTCs 30; PMTCs 8. About 40 percent of these work stations are computers without hard disks. These machines are out of date. They are slow and do not perform well with modern software and should be upgraded or replaced. The computer requirements would be specified in the Information System Strategic Plan. 22. Estimated cost. The largest cost for the information system would be incurred for consulting services for software development. The software system will be developed partly by the staff of the Technical Services & Information Branch of NMYC and partly by local computer software consultants, working in consultation with the staff. The second largest cost item would be computer equipment and standard, commercially available, application software. The present computer system at NMYC is based on personal computers. For those applications envisaging large data bases, however, a faster high-range RISC type personal computer would be needed. Also, one medium-range 386 type computer would be required for each of the regional offices (RMOs). The third largest cost would be for local and foreign staff training in hardware maintenance and software development to enable the staff to work with the system. Other items include uninterrupted power supplies with power stabil- ization, a generator to provide reserve power for the main computer, and air conditioners for the equipment at 14 RHOs.  - 40 - ANNEX 2 Page 1 of 2 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Summary of the Policy Paper 'Vocational and Technical Education and Training: Towards a Long-Term Policy for the Subsector'. July 27. 1990 Introduction 1. The policy paper was drafted in the later part of 1990 as part of the preparation of the Second Vocational Training Project by a task force comprising staff of Government Departments responsible for employment and training assisted by a labor market economist. It was discussed by the Council of the National Manpower and Youth Council (NMYC), which represents all concerned Departments, labor, management, industry and youth organizations. The Council approved the policy paper in June 1991 and directed Government Departments to begin with the implementation of the agreed policies. The Rationale for a Long-term Policy for Technical Education and Trainina 2. The major reason for introducing the policies proposed in the paper is that the Government has made considerable investments in technical and vocational education and training to increase productivity of the labor force, improve income distribution and expand the pool of trained manpower. However, at this time, weak economic growth constrains further investments and new policies are necessary which aim at getting the maximum benefits from the earlier investments in the training system. For that reason, the focus of the policies in the paper is on improving the efficiency and quality of existing programs and institutions and increasing the role of the private sector while safeguarding the equity objective of making training available to those who need such training to secure jobs. Policies to ImDrove Efficiency and Quality 3. To achieve the objective of higher efficiency and quality, the paper analyses five broad policy issues and makes specific recommendations to improve existing policies in these areas. A short description and rationale for the recommended policies is given below. 4. Clarify the role and responsibilities of the two maior providers of training: the Department of Education, Culture and Sports (DECS) and NMYC. DECS should administer and coordinate technical and vocational education and training programs in the formal education sector and NMYC would be responsible for nonformal vocational training. This division of responsibilities would lead to more efficient program management, simplify program selection by trainees and employers, avoid unnecessary duplication of efforts and maximize  - 41 - ANNEX 2 Page 2 of 2 the expertise and comparative advantage of the two agencies. A detailed set of guidelines and measures of cooperation was agreed upon by DECS and NMYC and a Memorandum of Agreement was signed in August 1991 (see Annex 3). 5. Improve articulation between DECS and NMYC proRrams. To make this possible, accreditation and equivalent schemes would be developed to facil- itate trainees transferring from formal to nonformal programs and vice versa, depending on their needs and employment conditions. Better articulation would lead to the acquisition of multiple skills by workers, improve access to training and increase mobility in the labor force. 6. Focus on imDrovina the quality and relevance of training. Improve- ments in quality of training would have direct benefits in terms of higher quality of the workforce, higher productivity and better products and services. It would also improve the attractiveness of technical education and training and possible improve the attitude of young people regarding this type of education which is currently low. 7. Expand the role of the private sector in training and increase cost sharing with the private sector. Since trainees and firms benefit from technical education and training they should become more involved and responsible for the design and the quality of the programs. Firms in particular would be able to increase the relevance and attractiveness of training programs by participating in the design and conducting of courses. Trainees and firms as the beneficiaries should also shoulder a greater share of the cost of training. 8. Expand and improve the dissemination of information about trainini opportunities and benefits. The infermation about the type of training programs available in the country is uneven, particularly in the smaller towns and villages, this needs to be improved. Also, potential trainees as well as employers should be educated about the benefits of training programs in terms of increased employability, acquisition of a great variety of useful skills and usually, improved work ethics and attitudes.  - 42 - ANNEX 3 PHILIPPINIC SECOND VOCATIONAL TRAINING PROJECT Summary of the Memorandum of Understanding betwegn DECS and NMYC 1. The agreement was entered into and executed by Secretary Isidro D. Carino and Undersecretary Erlinda C. Pefianco representing the Department of Education, Culture and Sports and the Bureau of Technical and Vocational Education -- and -- Secretary Ruben D. Torres and Director General Jose D. Lacson representing the Department of Labour and Employment and the National Manpower and Youth Council. It was signed in November 1991. 2. The purpose of the Agreement is to optimize the use of the education and training resources of DECS and NMYC by improving cooperation and articulation between the two agencies and the education and training programs they provide. 3. DECS and NMYC agreed to collaborate in the following areas: (a) technical information systems (b) apprenticeship or enterprizes-based training (c) accreditation or credits (d) trainers training (e) manpower and labor market information (f) training materials development, and (g) job placement th rough the enterprise-based scheme 4. The following activities will be jointly implemented: (a) development and management of technical teachers/trainers training programs, (b) development and management of technical trainee skills upgrading programs for graduate of TVE institutes, (c) development and production of technical trainee skills upgrading programs for graduate of TVE institutes, (d) development of occupational skill standards measuring instruments and certification schemes, (e) establish joint management information system for manpower demand, (f) establish for joint programs and activities, and (g) establish and share a pool of experts and create joint committees to implement joint programs. 5. NMYC and DECS will provide, share and make available the required resources and personnel to implement the above activities.  - 43 - ANNEX 4 Page 1 of 6 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT The Status of A&RrenticeshiD Trainins Introduction 1. Apprenticeship is a system of employment and training governed by a legal contract between the trainee and the employer. It is subject to specific regulations, and monitored by a designated Government agency under the umbrella of nationally enacted legislation. The legislation prescribes periods of work experience and on-the-job training, combined with periods of related technical training conducted in an approved technical institution. The duration of apprenticeship varies widely from country to country. In recent years, long apprenticeships, sometimes up to five to six years, have been replaced by shorter, more focused and intensive periods lasting up to two to three years. There has also been a decline in the number of apprenticeable trades. Changing manufacturing techniques and changing skills have lessened the demand for apprenticeship in traditional occupations. Nevertheless, modern apprenticeship programs, supported by suitably legislation, remain an efficient and cost-effective means of developing skilled workers, whose competency matches the needs of employers, because of the close link between on, and, off-the-job training and the focuses on real training needs. For these reasons apprenticeship is also seen as an integral part of employment promotion. 2. The core of an apprenticeship scheme is the contract entered into by the trainee and the employer. The contract guarantees and protects the rights of both parties. It specifies the length of training, conditions of work and leave entitlements, and the obligations of both parties. The employer guarantees to provide specific periods of on-the-job training and agrees to allow time off for off-the-job training. Financial remuneration is written into the contract at rates, usually not less than the minimum wage rate. A guarantee is given to the trainee that the prescribed training program would be followed for the full duration of the apprenticeship and that in return, the apprentice will accept the agreed level of remuneration. For the period of the apprenticeship, the wage structure will be less than that paid to a non-apprenticed worker undertaking similar tasks. The contract ensures that an apprenticeship program meets the expectations of employer and trainee alike at an economic opportunity cost which both parties recognize as equitable. 3. A national apprenticeship scheme needs to be carefully monitored, a process which includes maintaining a national register of apprentices by name and occupational area, as well as regular inspection of enterprises where apprentices are employed to monitor their conditions of employment. The government would also be responsible for maintaining a national certification system to record the progress of apprentices towards the status of skilled worker. In some countries, governments subsidize apprenticeship programs  - 44 - ANNEX 4 Page 2 of 6 through: a system of tax rebates or other incentives to employers; and, direct or indirect subsidies to trainees through subsistence payments during periods of institutional training; or, the provision of free off-the-job instruction and learning materials. But, in principle, apprenticeship programs are self supporting with the costs of apprenticeship training to the employer being met by increased productivity, less down-time, lower maintenance charges and reduced wastage, and for the trainee through the free acquisition of skills resulting in higher income at a later stage. 4. It is essential to see apprenticeship as part of a wider manpower development system. A well-designed and well-monitored apprenticeship scheme can promote company loyalty, and create a cadre of skilled workers capable of turning into master craftsmen, supervisors and technicians. Apprenticeship systems depend on the existence of effective training system in the public and private sectors. There must be sufficient numbers of in-plant trainers, and provisions should be made for inspectors who can monitor working conditions of apprentices, check on occupational safety, opportunities to practice skills which do not endanger the trainee, and ensure that the conditions of the apprenticeship contract are observed. Training facilities need to be avail- able and center trainers must be able to provide practical work experience. Finally, an apprenticeship program depends on the existence of a system of skill standards and certification to support the apprentices' skills and career development and promote mobility in the labor market. The Philippine Experience 5. Formal apprenticeship in the Philippines dates back to 1951 when the Republic Act No. 602 - 'Minimum Wage Law", made provision for the estab- lishment of an Apprenticeship Division within the Bureau of Labor. Prior to that, various forms of "informal" apprenticeships could be found but they were not bound by a legal framework. The Apprenticeship Division was mandated to create a national register of apprenticeable trades, and determine the number of apprentices to be indentured under each category, but this task was never satisfactorily completed. In 1957, the government enacted the National Apprenticeship Act (Republic Act No. 1826) which made amendments to the Labor Code to include specific reference to a national apprenticeship program, apprenticeship standards and the need for protection of apprentices and their working conditions. A National Apprenticeship Council (NAC), a tripartite body intended to advise the Secretary of Labor on all matters relating to apprenticeship was established. Funds from the South East Asian Treaty Organization were used to train staff from the Division of Apprenticeship, to plan and administer apprenticeships, in accordance with the new provisions of the Labor Code. 6. In 1960, the Division was upgraded to an Office of Apprenticeship. But external resources for staff development were exhausted and it proved impossible to up-grade those responsible for administrating the apprenticeship program and many of the modest provisions of the Labor Code were not fully implemented nor could their progress be properly monitored. Also in 1960, Republic Act No. 2628 replaced the original NAC by a newly constituted body with the same name, but supported by a network of trade and industry advisory  - 45 - ANNEX 4 Page 3 of 6 committees. Some further improvements to the policies governing apprentice- ship were introduced over the following decade, culminating in the elevation of the Office of Apprenticeship to a Bureau of Apprenticeship in 1972. 7. In the years that followed, the importance of apprenticeship, as a viable training, gradually declined to an almost total lack of public and professional confidence in the scheme by the late 1980s. A lack of under- standing of the potential benefits to be derived from an effective apprentice- ships reduced successive governments' commitments and the funds available to support the national system. By 1981, the program was once again transferred to a Division of Apprenticeship, located in the newly created Bureau of Local Employment. 8. While the government failed to appreciate apprenticeship's poten- tial benefits, the pubkic's perceptions of apprenticeship sank still further. Workers organizatiQns came to regard apprenticeship as a blatant form of exploitation, pointing to the fact that the majority of trainees failed to receive even a modicum of structured skills development, had relatively few rights, and experienced no substantive legal protection. Hardly worthy of the name "apprenticeship", the system provided some employers with a period of greatly reduced labor costs in exchange for relatively little outlay on training. The number of registered apprentices showed a marked decline. In 1959, when apprenticeship started, there were 90 apprentices, rising to 2,347 by 1970 and 37,182 by 1980, but declining to 8,511 in 1989. 9. In 1986, the situation was inadvertently worsened by Executive Order 111, which amended Article 58 of the Labor Code. Apprenticeship was now confined to "highly technical industries" and its duration was limited to a maximxum period of six months. Although the intention was to set right some of the worst abuses of the apprenticeship program, the impact of Statute 111 was to reduce still further the status and viability of apprenticeship without overcoming the system's technical, professional and equity problems. The repeal of EO 111 must be a precursor to any improvement in the present apprenticeship program.l/ 10. Recognizing that more fundamental measures were required, the government requested a technical assistance project to review the needs for change in the current apprenticeship system. 'Strengthening Apprenticeship" (UNDP/ILO PHI/88/037) commenced in October, 1990, with the objective of: reviewing the current status of apprenticeship; fostering tripartite consensus for legislation to overhaul the present system; and, introducing much needed reforms to ensure a more equitable and professional apprenticeship program. A detailed review of the system has been completed and currently a series of tripartite workshops are being organized to consider technical and administra- tive issues including the selection of apprenticeable trades, administration, and finance. These activities will culminate in a national tripartite conference due to be held in June, 1991, where government, employers and 1/ Report of the first tripartite workshop on apprenticeship, UNDP/ILO PHI/88/037, 1991.  - 46 - ANNEX 4 Page 4 of 6 workers representatives are expected to endorse recommendations for new apprenticeship legislation. 11. Agreement has already been reached with the Department of Labor and Employment that the new legislation will recognize the transfer of responsi- bility for administering apprenticeship to the NHYC. It will be administered in the context of NMYC's mandate to set skills standards and coordinate insti- tutional or industry-based skills development. NMYC has developed ways to promote private sector involvement in skills training. The current project includes a Training Assistance Contract Program which would assist in building up industry's capability to train its own workers. This would support apprenticeship programs, by financing the development of in-plant trainers, foremen and supervisors who will administer the new apprenticeship program. Also included is support for an Inspectorate tasked to monitor the employment and legal aspects of the apprenticeship system. Approximately 32 professional inspectors would be trained. Issues to be addressed by the Proiect 12. Weak Administration. Successive Governments have failed to appre- ciate the need for adequate financial resources for administration. As the system's reputation declined, there appeared to be even less incentive to improve the administration. Staffing levels declined, and there has been an exodus of experienced staff. The need to ensure an informed and committed administrative framework for apprenticeship will be addressed by the transfer to the NMYC Office for Apprenticeship and the establishment of a new adminis- trative system to implement the revised apprenticeship rules and regulations currently being drafted. Staff development for this new unit is envisaged under the project. 13. Complex Bureaucratic Structure. A recent ILO study 2/ identifies three levels of bureaucratic responsibility for apprenticeship. At the national level, the Apprenticeship Division of the Bureau of Local Employment (BLE). At the regional level, Apprenticeship Sections within the Employment Promotion Divisions (EPD) of the Bureau of Local Employment; and at the local enterprise level, Plant Apprenticeship Committees. Current weaknesses in these structures are due to a lack of commitment, aggravated by a lack of knowledge of apprenticeship programs. The transfer of apprenticeship to the NHYC and the presence of newly trained staff at both the central and regional NHYC offices should assist in rectifying this situation. Also, under the project, appropriate standards, testing and certification procedures will be introduced and a computerized registration system installed. 14. Apprenticeshi2 AQreements. BLE has developed a pro-forma agreement for use by employers. This model specifies: work processes; hours of theoret- ical training; and a graduated scale of approved wages. But it falls far 21 Newton,G. "An evaluation of apprenticeship in the Philippines and policy recommendations to strengthen it"; a draft report prepared for GOP/ILO under PHI/88/037, April 1991.  - 47 - ANNEX 4 Page 5 of 6 short of the detailed contract, which should be the basis of a responsible apprenticeship system, and provides little in the way of guarantees to either party. In addition, the basic agreement appears to be subject to "negotia- tion". A recent survey 3/ noted that nationwide, 45 percent of apprentices are likely to receive less than the legislated 75 percent of the minimum wage, while in the National Capital Region the figure rises to over 60 percent.4/ This is partly due to a widely held perception that the Labor Code's provision for apprentice's wages is not a mandatory regulation but an indicative ceiling. The same survey also notes that the six month duration of apprent- iceship agreements imposed by EO 111 is 'highly inconsistent with the realities of the labor market ... technically advanced industries cannot be serviced by a training period of six months ... which at best can only produce semi-skilled workers for a narrow range of employment functions".5/ Some employers have recognized this anomaly and are voluntarily extending apprent- iceship duration. Approximately 25 percent of apprenticeships are lasting longer than six months. New legislation, currently being prepared under the UNDP/ILO project, should tackle this problem and the Second Vocational Training Project should ensure that there are adequately trained administra- tors to oversee its legal provisions. 15. Monitoring. The EPDs are responsible for monitoring to ensure that apprenticeship agreements are honored. Checks are necessary to ensure that: agreed training standards and duration of on-and off-the job training are maintained; that there is a record of each apprentice's progress and attain- ments; and, that wage records match those agreed in the contract. Recent review reveals that many employers modify agreed training schedules, keep inadequate records, pay less than the agreed minimum wage, give trainees work unrelated to the apprenticeship contract, and transfer apprentices and their contracts to new trade areas every six months, in order to restart the indent- ure period prescribed by EO 111. EPD monitoring staff are unable to cope with the task of monitoring because of under-funding, a shortage of trained staff and an absence of effective legislation to deal with contract violations. The proposed new legislation and the provision of a cadre of trained inspectors under the project should help to improve the monitoring process. 16. Evaluation of Apprentice Performance and Certification. Employers lack specific guidelines to evaluate apprentices and are unaware of the relationship between apprenticeship and skill standards set by NMYC. Evaluation tends to focus on work output and attitudes rather than skill attainment. Certification is the task of EDP, but certificates are issued automatically at the expiry of the indentured period. The MMYC Office for 3/ "Evaluation of the apprenticeship program in the Philippines"; Pulse and Mind, Consultants, draft report submitted to GOP/ILO, April 1991. 4/ Survey conducted by Pulse and Hind Consultants for PHI/88/037, 1991. S/ Newton, G. "An evaluation of apprenticeship in the Philippines and policy recommendations to strengthen it"; a draft report prepared for GOP/ILO under PHI/88/037, April 1991.  -48 - ANNEX 4 Page 6 of 6 Apprenticeship, together with the Division of Trade Testing, Standards and Certification, are mandated to correct this situation. 17. Identification of Apprenticeable Skills. The current list of apprenticeable occupations requires a major review since it contains many anomalies which do not match the criteria for a modern apprenticeship system. Many of the present occupation require low-level skills and should not qualify In addition, some employers use apprenticeship programs for non-recognized occupations such as janitors and kitchen helpers, in order to take advantage of the lower wages which can be paid during the training period. Such practices lower the overall value of apprenticeship. The current UNDP/ILO Project is intended to rectify this situation by redefining the list of apprenticeable occupations and under the Second Vocational Training Project, the necessary standards and certification would be developed. 18. Training Institutions. Under the 1957 National Apprenticeship Act, all off-the-job apprenticeship training was to be undertaken at institutions of the Department of Education and Culture. A general acceptance that such training was largely unrelated to employment needs and the emergence of more practical venues, namely the facilities of NMYC and DTI, has resulted in a shift away from DECS institutions. 19. Completion Rates and Post-Apprenticeship Employment. Completion rate are estimated at less than 50 percent, a very low figure. This is due to the failure of employees to properly train their registered apprentices and the tendency for apprentices to leave prior to completion, due to low wages and a search for better employment. However, prior to 1986, as many as 96 percent of apprentices, completing their agreed period of indenture, and were given opportunities to remain in employment with the same employer. After EQ 111 was passed in 1986, this figure declined to 87 percent in 1987. Revised legislation incorporating ' realistic duration of apprenticeship and improved basic wage rights, combined with better administration and provisions for monitoring, will improve completion rates and provide better guarantees for subsequent employment. Conclusion 20. Apprenticeship in the Philippines has suffered from a lack of commitment on the part of successive governments and a comparable lack of appreciation on the part of employers. This has resulted in the system being under-financed, under-staffed and insufficiently supported by appropriate legislation; exploited by employers and mistrusted by workers' associations. Current efforts to put the system to rights need to be supported since a viable apprenticeship system produces an effective means of training skilled workers at an affordable cost. Assistance must be provided to prepare appro- priate standards and certification. Industrial trainers will be required in large numbers and will need up-grading in knowledge and experience. An inspectorate must be established to ensure that the system works, and that legislation is enforced for the benefit of employers and trainees. Support for these proposed reforms is envisaged under the Second Vocational Training Project.  - 49 - ANNEX 5 Page 1 of 2 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Sharing the Burden: Privatization, Decentralization, and Devolution 1. NMYC recently began to devolve its training responsibilitLes to local governments, communities, NGOs, and firms, with the intention of making training more responsive to the needu of the trainees. This process of devolution will be continued under the project. The framework for the devolution of the training and related activities are outlined below. SLicoonent Burden-sharing Measures A. INSTITUTIONAL DEVELOPIENT StrengtheninQ Institutional Capability Develop mechanisms for the decentralizatlon and dsvolution of mnagement of (SIC) IMYC Training Programs. Marower Policy. Plaming and Preparation of pollcies for the further devolutlon of responsbilIties for Coordination (MPPC) training and for Increasing the participatlon of the private sector In tralning. Marvower Information System The management Informatlon svstem would isprove the management capabilitles Development (NMIS) of the regional offices (RMDs) and would promote decentralizatIon of training activitles and devolutlon of management of training In order to luprove accesslblllty. B. IWROVING TRAINING QJALITY Natlonal Skills Certification (NSCP) The on-going devolutlon of trades testing responsibilities and transfer of testing responsibllltlEs, includirg plaming and policy to the private sector would continue. COrrlculun and Training Materials The target Is to cou,ercialize the prototype technical traIning materials Development (CTMD) hilch would be produced throi4t the Incentive scheme Included urder this stbcomponent and to Increase the participation of the reglon and the private sector In the curriculum development. Trainig Development Program (TiP) The responsIbilltles for tralner training would be devolved to the local commwnitles. Employment Services and SkIlls Employuent services are already decentralized to the regional and provincIal Promotion (ESSP) levels. The activities uider this subwcoponent are almed at supporting the Improvement of these services In both the formal and Informal sectors and Increase the participation of the private sector and NGOs. Monitorhg and Evaluation of Trainin The aim Is the Inprovement of technical and financlal managment mot only at (MET) the central level but also at the reglonal levels. which would swort the devolution of responsibilitles.  - 50 - ANNEX 5 Page 2 of 2 Sbco(nent Burde-sharing Measures C. TRAINING CAPACITY DEVELOPbENT Trahi Contract Schm (TCS) Ths alm Is to refocus the onw-oirg tranhin contract scheme and to targat the sche more directly to small - and medim-sized firms In the private sector and to focus on building t histry's omw training capacity. Trainkn Assistance Contract (TAC) The aim Is to assist medium - and large-sized firms and other governmnt agnoies to develop their own capacity to traln. Trainkig. Delivery System for Rural The objeotive Is to support the ftrther devokution of Informal training hfornal Sector (MIS) programs to the loal comitbs ard NGOs 0. SECTOR STUDY The study would consider Inter alla the role and responsibilities of private e*catlon and trainin kistitutlons for vocatlonaVtoctllcal programs and the responsIbilItIes of DECS In relatlon to these training Institutlons.  - 51 - ANNEX 6 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT NIYC 5 YEAR - Financig Plan (US$ million) Category Total 1992 1993 1994 1995 1996 1997 GOP 44.1 5.9 8.1 8.5 7.7 7.1 6.8 IDA 38.0 0.3 6.7 11.0 9.4 6.2 2.4 Total 80.1 6.2 14.8 19.5 17.1 13.3 9.2 Cost Recovery Trainkrg Fees 2.7 - - 0.6 0.7 0.7 0.8 Trade Testing Fees 1.8 - - - 0.1 0.7 1.0 Sale of DeveloWed Materials 0.3 0.0 0.0 0.0 0.0 0.1 0.1 Total 4.8 0.0 0.0 0.6 0.8 1.4 1.9 CapitaVinvestment Costs A. Civil Wrks 3.2 0.0 1.1 2.1 0.0 0.0 0.0 B. FurnIttre 0.2 0.0 0.1 0.1 0.0 0.0 0.0 C. Professional Services 0.1 0.0 0.1 0.0 0.0 0.0 0.0 D. Techlical Assistance !nternatlonal Fellowship 2.8 0.0 0.7 G.8 0.6 0.5 0.3 Local Training 8.7 0.1 1.4 2.3 2.1 1.9 0.9 Local Exerts 1.7 0.1 0.8 0.3 0.2 0.2 0.1 Forelig Experts 1.8 0.0 0.6 0.3 0.5 0.2 0.2 SLbtotal 15.0 0.2 3.6 3.7 3.4 2.8 1.4 E. Equlpment 11.2 0.0 1.6 3.9 4.2 1.5 0.0 F. Books & Res. Mats. 0.6 0.0 0.3 0.2 0.0 0.0 0.0 G. Caosmbie Materials 2.0 0.0 0.3 0.5 0.5 0.4 0.2 H. Others 5.9 0.0 0.7 1.7 1.7 1.3 0.4 SLbtotal 38.3 0.3 7.9 12.3 9.8 6.0 2.0 Recurrent Costs 1. Operation & Maitenance 16.0 1.7 2.6 2.8 2.9 3.0 3.0 J. Staff Salaries 25.9 4.2 4.3 4.3 4.3 4.3 4.3 Subtotal 41.9 5.9 7.0 7.1 7.2 7.3 7.3 TOTAL EXPEIDITUES 1 42 .L8 19.5 17.1 1 3.  - 52 - ANNEX7 Paig- of 4 PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Peso Prolect Components by Year Bas Costs Total . ................................................................. 92 93 94 95 96 97 Peso USS A. INSTITUTIONAL DEVELOPMENT 1. STRENGTH INSTIT CAPASL 2.6 15.6 10.1 12.9 9.5 7.4 58.1 2.1 2. MUNPOWER POL,PLNG & COORD 0.0 15.7 32.3 34.4 36.6 18.8 137.8 4.9 3. MANPOWER INFO. SYSTEM 1.2 23.3 21.8 7.3 1.8 0.6 56.0 2.0 4. PROJECT MANAGENT 0.1 3.4 3.2 3.2 3.2 1.6 14.8 0.5 Sub-totat 3.9 57.9 67.5 57.9 51.1 28.4 266.7 9.5 B. IMPROVE TRAINING QUALITY 1. NAT SKILL CERT&PROM PR 0.0 18.7 20.7 10.8 4.4 0.0 54.6 2.0 2. CURRIC & TRNG MAT DEVEL 0.0 28.2 9.5 5.9 2.2 0.4 46.2 1.7 3. TRAINOR DEVELOPMT PROG 0.0 8.5 19.2 16.3 17.3 7.7 69.1 2.5 4. EMPLOYNT SERVICES PROG 0.0 0.9 3.8 4.5 5.6 4.5 19.4 0.7 S. CENTER TEC&NGNT/FIN AUDIT 0.0 0.8 1.2 0.3 0.4 0.3 3.0 0.1 ,.......;.......................................................... Sub-total 0.0 57.2 54.3 37.9 29.9 12.9 192.2 6.9 C. TRAINING CAPACITY DEV. 1. UPGRADE EXISTING FACILIT 2.0 18.6 96.7 86.4 31.5 0.7 235.9 8.4 2. TRAINING CONTRACT SCHEME 0.2 3.9 8.0 7.9 4.9 1.4 26.3 0.9 3. TRNG ASSIST CONTRACT 0.0 12.0 25.2 24.6 16.3 4.4 82.5 2.9 4. TRNG DEV SUPP INF SECT 1.6 30.8 39.7 19.3 9.4 4.5 105.3 3.8 9 .................................................... ........... ..................... ............... Sub-total 3.8 65.3 169.6 138.3 62.0 11.0 449.9 16.1 D. SECTOR & FEASIBIL STUDIES 0.0 16.1 0.0 0.0 0.0 0.0 16.1 0.6 ......... ..... ;...................... i............................ Totat BASELINE COSTS 7.7 196.4 291.5 234.1 143.1 52.2 925.0 33.0 Physical Contingencies 0.4 8.9 16.6 12.4 5.9 1.4 45.5 1.6 Price Contingencies 0.2 15.8 47.3 56.0 53.8 26.2 199.2 7.1 .................................................................. Total PROJECT COSTS 8.2 221.1 355.4 302.5 202.8 79.8 1169.8 41.8 ====a3== -------as----i ---ns-m.Unm---U3 -u-uU33ai3naUUUUUUUUU3 Taxes 0.4 10.4 19.3 14.2 6.2 0.9 51.5 1.8 Foreign Exchange 1.5 81.4 136.4 128.3 57.1 15.0 419.9 15.0 V eSa b0......0..........0 5/1/199215:38.. V lues Seated by 10D0000.0 5/1/1992 15:38.  PHILIPPINES SECOSD VOCATIONAL TRAINING PROJECT Projects Camiorents by Year Totals Inctuding Contingencges Totals Including Contingefcies Peso US# 92 93 94 95 96 97 Totat 92 93 94 95 96 97 Totat A. INSTITUTIONAL DEVELOPNENT 1. STRENGTH INSTIT CAPABL 2.8 17.4 12.3 16.7 13.7 10.6 73.5 0.1 0.6 0.4 0.6 0.5 0.4 2.6 2. NANMPOER POL,PLNG & COOOR 0.0 17.5 38.6 44.3 50.8 27.6 178.8 0.0 0.6 1.4 1.6 1.8 1.0 6.4 3. NAJNPOWER INFO. SYSTEM 1.2 26.0 25.9 9.2 2.7 1.1 66.2 0.0 0.9 0.9 0.3 0.1 0.0 2.4 4. PROJECT MANAGENT 0.1 3.7 3.9 4.3 4.8 2.6 19.4 0.0 0.1 0.1 0.2 0.2 0.1 0.7 .............. .............................. ............................................................ ......................................................... Sub-Totel 4.2 64.6 80.8 74.6 72.0 41.8 337.9 0.1 2.3 2.9 2.7 2.6 1.5 12.1 S. IMPROVE TRAINING oUALITY 1. MAT SKILL CERISPoN PR 0.0 20.8 25.0 14.4 6.1 0.0 66.3 0.0 0.7 0.9 0.5 0.2 0.0 2.4 2. OURRIC & TRNG NAT DEVEL 0.0 31.3 11.3 7.9 3.3 0.6 54.4 0.0 1.1 0.4 0.3 0.1 0.0 1.9 3. TRAINOR DEVELOPUT PROG 0.0 9.5 23.9 22.2 26.0 12.5 94.1 0.0 0.3 0.9 0.8 0.9 0.4 3.4 4. EMPLOYNT SERVICES PROG 0.0 1.0 4.6 6.0 8.1 7.0 26.6 0.0 0.0 0.2 0.2 0.3 0.2 1.0 5. CENTER TECI GNT/FIN AUDIT 0.0 0.9 1.5 0.4 0.6 0.4 3.8 0.0 0.0 0.1 0.0 0.0 0.0 0.1 w Sub-Totel 0.0 63.6 66.3 51.0 44.0 20.4 245.2 0.0 2.3 2.4 1.8 1.6 0.7 8.8 C. TRAINING CAPACITY DEV. 1. UPGRADE EXISTING FACILIT 2.1 22.2 120.0 108.1 41.3 1.1 294.8 0.1 0.8 4.3 3.9 1.5 0.0 10.5 2. TRAINING COTRACT SCHEME 0.2 4.3 9.7 10.5 7.1 2.3 34.1 0.0 0.2 0.3 0.4 0.3 0.1 1.2 3. TRNG ASSIST CONTRACT 0.0 13.2 30.6 32.9 23.9 6.9 107.4 0.0 0.5 1.1 1.2 0.9 0.2 3.8 4. TRW DEV SUIP INF SECT 1.8 35.2 48.0 25.4 14.4 7.3 132.2 0.1 1.3 1.7 0.9 0.5 0.3 4.7 SubTrotal 4.1 74.9 208.3 176.9 86.8 17.6 568.6 0.1 2.7 7.4 6.3 3.1 0.6 20.3 P. SECTOR & FEASINIL STIDIES 0.0 18.0 0.0 0.0 0.0 0.0 18.0 0.0 0.6 0.0 0.0 0.0 0.0 0.6 Total PROJECTS COSTS 8.2 221.1 355.4 302.5 202.8 79.8 1169.8 0.3 7.9 12.7 10.8 7.2 2.9 41.8 ....................................................................................................................................................... Vatues Scaled by 1000000.0 5/1/1992 15:38. Iur x -.5  PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Peso Siarv Accotmts by Year Base Costs Forein Exchue . .. . ...... .... ......... .. ............ ........ ................ ........... ..................... ........ .............. ...... 92 93 94 95 96 97 Total X mount 1. INMSTHENT COSTS .. . ......... A. CIVIL WORKS 0.0 16.5 39.5 0.0 0.0 0.0 55.9 20.0 11.2 B. FURNITURE 0.0 0.6 1.0 1.9 0.9 0.0 4.3 0.0 0.0 C. PROFESSIONAL SERVICES 1.0 1.0 0.8 0.0 0.0 0.0 2.8 0.0 0.0 D. TECNNICAL ASSISTANCE 1. FOREIGN FELLOUSNIPS 1.1 17.0 19.7 14.6 12.9 6.8 72.1 100.0 72.1 2. LOCAL TRAINING 1.5 34.6 49.5 42.9 40.9 19.6 189.1 0.0 0.0 3. INTERNATIONAL EXPERTS 0.3 16.5 8.1 11.5 5.4 5.2 47.0 90.0 42.3 4. LOCAL EXPERTS 2.1 18.8 8.1 5.7 3.7 1.5 39.9 0.0 0.0 Sub-totat 5.1 86.8 85.3 74.8 62.9 33.2 348.1 32.9 114.4 E. EQUIPMENT 0.0 38.4 92.1 93.7 32.5 0.7 257.3 85.0 218.7 F. BOOKS & RESOURCE MATERIAL 0.0 7.7 4.9 1.2 0.4 0.0 14.3 75.0 10.7 G. CONS0SABLE MATERIALS 0.8 8.2 11.1 9.9 7.9 3.2 41.1 0.0 0.0 N. ENTERPRISE-IASED TRAINING 0.8 17.7 38.0 35.9 25.0 7.8 125.2 0.0 0.0 ..... .i - --- ; -- ---- . .. .. ...........--- --- Total INVESTMENT COSTS 7.7 176.9 272.7 217.3 129.6 44.9 849.1 41.8 355.0 11. RECURRENT COSTS ................... 1. OPERATION & MAINTENANCE 0.0 16.7 15.8 13.8 10.6 5.9 62.9 0.0 0.0 J. STAFF SALARIES 0.0 2.9 2.9 2.9 2.9 1.5 13.1 0.0 0.0 .... ........................... ..... ......... ................ ........................................................... .................. Totol REWRRENT COSTS 0.0 19.6 18.7 16.7 13.5 7.4 75.9 0.0 0.0 ............... . . .......... ;7.................... .... ......... .. . ........ .............. .. .... ...... ........ Total BASELINE COSTS 7.7 196.4 291.5 234.1 143.1 52.2 925.0 38.4 355.0 Phyical Contimunies 0.4 8.9 16.6 12.4 5.9 1.4 45.5 59.4 27.1 Price Cantirpncies 0.2 15.8 47.3 56.0 53.8 26.2 199.2 19.0 37.8 ... ... .. .. ...... ;; ......... ..; .. ....... ............ ...... .... ...... . ........ ............. .. .. . .. ... Total PROJECT COSTS 8.2 221.1 355.4 302.5 202.8 79.8 1169.8 35.9 419.9 Tas 0.4 10.4 19.3 14.2 6.2 0.9 51.5 0.0 0.0 Foreign Ex *h,e 1.5 81.4 136.4 128.3 57.1 15.0 419.9 100.0 419.9 . ................................... ........ .............. ................. ..................................... ........... .............. Value Saled by 100000.O 51/192 15:38. 0  PHILIPPINES SECOND VOCATIONAL TRAINING PROJECT Summarv Accounts by Year Totats Including Contingencies Totals Including Contingencies Peso USS 92 93 94 95 96 97 Total 92 93 94 95 96 97 Total 3333333333333m3=S =-3333m =C SW :_U S=S I. INVESTMENT COSTS ............... A. CIVIL MORES 0.0 19.7 51.4 0.0 0.0 0.0 71.1 0.0 0.7 1.8 0.0 0.0 0.0 2.5 B. FURNITURE 0.0 0.6 1.2 2.5 1.3 0.0 5.7 0.0 0.0 0.0 0.1 0.0 0.0 0.2 C. PROFESSIONAL SERVICES 1.1 1.2 1.1 0.0 0.0 0.0 3.4 0.0 0.0 0,0 0.0 0.0 0.0 0.1 0. TECHNICAL ASSISTANCE 1. FOREIGN FELLOWSHIPS 1.2 18.3 22.0 17.0 15.5 8.4 82.4 0.0 0.7 0.8 0.6 0.6 0.3 2.9 2. LOCAL TRAINING 1.6 39.5 62.1 59.2 62.2 32.0 256.7 0.1 1.4 2.2 2.1 2.2 1.1 9.2 3. INTERNATIONAL EXPERTS 0.4 17.8 9.1 13.6 6.7 6.7 54.3 0.0 0.6 0.3 0.5 0.2 0.2 1.9 4. LOCAL EXPERTS 2.2 21.4 10.2 7.9 5.7 2.5 49.8 0.1 0.8 0.4 0.3 0.2 0.1 1.8 Sub-Total 5.4 97.0 103.4 97.7 90.0 49.6 443.2 0.2 3.5 3.7 3.5 3.2 1.8 15.8 E. EUJIPNENT 0.0 44.1 110.1 116.9 42.3 0.9 314.2 0.0 1.6 3.9 4.2 1.5 0.0 11.2 F. BOOS & RESOURCE MATERIAL 0.0 8.2 5.5 1.4 0.5 0.0 15.5 0.0 0.3 0.2 0.0 0.0 0.0 0.6 6. CONSUMABLE MATERIALS 0.9 9.3 13.8 13.8 12.2 5.3 55.4 0.0 0.3 0.5 0.5 0.4 0.2 2.0 H. ENTERPRISE-BASED TRAINING 0.8 19.5 46.1 47.9 36.7 12.3 163.3 0.0 0.7 1.6 1.7 1.3 0.4 5.8 ......................... ................................ ......................................................... Total INVESTMENT COSTS 8.2 199.6 332.7 280.2 182.9 68.2 1071.7 0.3 7.1 11.9 10.0 6.5 2.4 38.3 =33====33=3=33=3~e=333===_===~~==s3s3 3333-