Tunisia - Employment and Training Fund Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15398 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINING FUND (LOAN No.3255-TUN) FEBRUARY 28, 1996 Human Resources Division Maghreb and Iran Department Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit: Tunisian Dinar (TD) In 1994, 1 $US = 1. 0126 Tunisian Dinars (TD) FISCAL YEAR OF BORROWER January I - December 3 1 LIST OF ACRONYMS AND ABBREVIATIONS ATE Agence Tunisienne de l'Fmploi Tunisian Employment Agency ATFP Agence Tunisienne de la Formation Professionnelle Tunisian Vocational Training Agency EU European Union ECU European Currency Unit ETF Employment and Training Fund ICR Implementation Completion Report MAS Ministre des Affaires Sociales Ministry of Social Affairs MFPE Ministere de la Formation Professionnelle el de /'Emploi Ministry of Vocational Training and Employment MENA Middle East and North Africa OFPE Qffice de la Formation Professionntielle el de I'Emploi Office of Vocational Training and Employment SAR Staff Appraisal Report USAID United States Agency for International Development VT Vocational Training  FOR OFFICIAL USE ONLY Table of Contents Preface Evaluation Summary ...............i PART I. PROJECT IMPLEMENTATION ASSESSMENT A. Project Objectives 1 . .. B. Achievement of Project Objectives . . . . 2 C. Implementation Record ....3 D. Project Sustainability . . . . 4 E. Bank Performance ....5 F. Borrower Performance ....5 G. Assessment of Outcome ....6 H. Future Operation ....6 1. Key Lessons Learned . . . 7 PART ll. STATISTICAL ANNEXES Table I Summary of Assessments . .10 Table IA ETF Actions, By Economic Sector . .11 Table 1B ETF Actions, by Instrument ..11 Table 2 Related Bank Loans . .12 Table 3 Project Timetable ........ 13 Table 4 Loan Disbursements: Cumulative Estimated and Actual .. 13 Table 5 Key Indicators of Project Implementation .. 14 Table 6 Key Indicators for Project Operation .14 Table 7 Studies Included in project ..15 Table 8A Project Costs ..15 Table 8B Project Financing .16 Table 9 Status of Legal Covenants . 17 Table 10 Compliance With Operational Manual Statements .18 Table 11 Bank Resources: Staff Inputs . 18 Table 12 Bank Resources: Missions .19 ATTACHMENT Borrower's Contribution to the ICR: Note on the Impact of the Employment and Training Fund .20 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINING PROJECT (Loan No. 3255-TUN) Preface This is the Implementation Completion Report (ICR) for the Employment and Training Project in Tunisia, for which Loan 3255-TUN in the amount of US$12.0 million equivalent was approved on September 4, 1990 and became effective on March 21, 1991. The loan was closed on June 30, 1995, after one extension from its original closing date of June 30, 1994. It was almost fully disbursed (97.6%, with US$288,179.42 canceled), and the last disbursement took place on December 6, 1995. Co-financing was provided by USAID during the initial phase of the project. The ICR was prepared by Mr. Francis Steier, MN1HR of the MENA Region, and reviewed by Ms. Roslyn G. Hees, MN1HR Division Chief and Mr. Fritz Rodriguez, Acting MN1 Project Adviser. The borrower provided a completion report that is included as an appendix to the ICR. Preparation of this ICR was begun prior to the Bank's final completion mission in November, 1995. It is based on material in the project file, visits in the field, and interviews with Tunisian officials and Bank staff. The Borrower contributed to the preparation of the ICR by organizing meetings and visits in the field, preparing its own evaluation of the project's execution and initial preparation, and commenting on a draft of the ICR left by the completion mission. Febniaiy 28, 1996   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINING PROJECT (Loan No. 3255-TUN) Evaluation Summary Introduction The project was one of the very first in the Bank that used a fund approach for insertion and training; its main operational features - training fund, decentralized operations and "bottom-up" demand - were highly innovative at the time of Board approval. Project Objectives As formally stated in the Staff Appraisal Report (SAR), the objectives of the project were to: (i) accelerate the adaptation of the labor force through more effective training and labor market intermediation; and (ii) improve existing human capital by developing in-company training activities. In order to achieve its objectives, the project included two components. The first component created a regionally based Employment and Training Fund (ETF) to finance sub-projects aimed at facilitating the placement of the unemployed into existing job opportunities, as well as improving productivity of existing workers through systematic in-company training efforts. The second component set up an institutional development program aimed at strengthening key services to enterprises (selection, placement and in-company training), developing job and training information and orientation of young people and adults, setting up a labor market insertion monitoring system and strengthening project management. Summary of Findings, Future Operations and Key Lessons Learned It is clear that the project achieved its first objective; achievement of the second objective cannot be as easily assessed, but indications are positive. The project did accelerate the adaptation of the labor force through more effective training and labor market intermediation: the total number of individual beneficiaries of all insertion/training actions was 34,161 (compaKed to 30,000 envisaged in the SAR), of whom 24,893 were inserted, resulting in an average insertion rate of close to 73%. The ETF project also improved existing human capital by developing in-company training activities, but the degree to which companies now internalize the new training philosophy remains to be seen. The two project components were fully implemented. The project was off to a slow start, however, and even though project implementation got up to full speed as of May 1993, the closing date had to be extended by one year, to June 30, 1995. Several factors caused the early delays, and they had been - in general terms - suggested as possible risks in the SAR: the decentralized nature of the project, and possible changes in project management structures.  ii In April 1995, the project received an European Union (EU) financing of 3.85 million ECUs, using the same 'Manual of Procedures" Due to the success of the project, the Tunisian Government is now preparing a legal framework for continuation of project activities under nornal budgetary financing. The Tunisian budget will now finance most of the continuing ETF activities. A number of lessons can be learned in the design and implementation of future similar operations. They can be drawn from key factors that were critical to the success of the project, as well as from those that could use further improvement. There are five major lessons to be learned from the factors of success: (a) The project benefited from its simple design, as well as the economic vision that underpinned its design and implementation (as opposed to one geared towards meeting social needs). (b) The grass-roots "bottom-up" approach ensured flexible implementation, as well as local project ownership. (c) With its flexible project design, the ETF allowed modifications during implementation to reflect institutional changes, as weUl as ongoing evaluations of project impact. (d) The project became an integral part of the Tunisian Employment Agency's operations; this considerably increased its effectiveness. The project management system was efficient, with respect to both ongoing and post completion monitoring of beneficiaries. (e) The fund approach resulted in local staff learning how to prepare and evaluate project proposals; it encouraged innovation, as well as competition between public and private VT providers and between regions. Lessons can also be gleaned from project weaknesses. A future project should: (a) Include project implementation and impact indicators. No such indicators were given in the Staff Appraisal Report (SAR). The mid-term review did suggest some impact indicators, but these were not systematically monitored thereafter. A more detailed impact monitoring system would be desirable; it would among others help determine priorities among instruments, and thereby increase overall effectiveness. (b) Anticipate the practical implications of institutional issues. These were suggested in general terms under the "Risks" section of the SAR, but specific issues were not foreseen. They included structure and personnel changes in the project management institutions, lack of project accounting framework, insufficient numbers of qualified implementing staff, insufficient reimbursement for travel expenses of local implementing staff, and impact of Tunisian procurement regulations and Central Bank requirements for reimbursements of project expenditures.  iii (c) Improve project accounting system. Although the overall costs of the project are now up to date, the budget is too global, and it cannot at present be used for analytical or planning purposes. For example, there is no way to know total amounts spent for specific beneficiaries, on specific instruments, by region or sector.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINNG PROJECT (Loan No. 3255-TUN) PART I PROJECT IMPLEMENTATION ASSESSMENT A. Project Objectives 1. As formally stated in the Staff Appraisal Report (SAR), the objectives of the project were to: (i) accelerate the adaptation of the labor force through more effective training and labor market intermediation; and (ii) improve existing human capital by developing in-company training activities. The project was one of the very first in the Bank that used a fund approach for insertion and training; its main operational features - training fund, decentralized operations and "bottom up" demand - were highly innovative at the time of Board approval. 2. In light of Tunisia's continuing economic liberalization and implementation of an outward- oriented development strategy, issues of employment and labor productivity were deemed to require considerable attention. By focusing on the structure of labor intermediation, the project complemented past Bank interventions in the areas of macro-economic policies, population, education and training. The project was to assist the Government in its efforts to improve labor market operations by testing regional-based mechanisms aimed at improving labor market insertion opportunities and improving human capital in existing enterprises. The shift of responsibilities toward local governments in identifying employment opportunities and the move toward private labor market intermediation were new directions for the Government's, as well as international donors', employment promotion efforts. 3. In order to achieve the proposed objectives, the project included two components, to be implemented by the Ministry of Vocational Training and Employment (Ministere de la Fonnation Professionnelle et de l'Emploi, MFPE), through the intermediary of its Office of Vocatienal Training and Employment (Office de la Formationi Professionnelle et de I'Emploi, OFPE). The first component (US$19.6 million, 90% of total base costs) was to create a regionally based Employment apd Training Fund (ETF) to finance sub-projects aimed at facilitating the placement of the unemployed into existing job opportunities, as well as improving productivity of existing workers through systematic in-company training efforts. Five types of sub-projects, referred to as "instruments", were envisaged at first for financing:  -2 - A. Training for placement in an enterprise. B. Training for installation in self-employment. C. In-company training/extension services. D. Sub-contracting to training/placement companies. E. Allowances for job interview and relocation close to work site. A sixth instrument (F - In-company training for enterprises undergoing economic restructuring) was added after May 1, 1991. 4. The second component (US$2.2 million, 10% of total base costs) set up an institutional development program aimed at strengthening key services to enterprises (selection, placement and in- company training), developing information and orientation of young people and adults, setting up a labor market insertion monitoring system and strengthening project management. B. Achievement of Project Objectives 5. The project objectives were well defined, and consistent with the overall Bank strategy in Tunisia's social sectors. They were an integral part of the Government's objectives, and were supported by USAID in the form of a pilot phase of the project. The project was quite innovative in Tunisia, and was initially met with opposition from major players in the field: public vocational training providers, who feared the appearance of new (private) providers; and some OFPE staff, who feared the decentralization aspect implicit in the project, and the possible resulting loss of control over some of the agency's operations. During appraisal, in fact, concerns about the implications of the project were expressed in some quarters, but in the end all officials involved backed the project fully. 6. Another feature of the project was its built-in flexibility, on two fronts. First, the project foresaw the possibility of including new instruments in the ETF mechanism. Second, the project was managed by a highly decentralized agency. 7. It is clear that the project achieved its first objective; achievement of the second objective cannot be as easily assessed, but indications are positive. The project did accelerate labor force insertion through more effective training and labor market intermediation: the total number of individual beneficiaries' of all instruments except E was 34,161 (with 2,542 sub-projects), of whom 24,893 were inserted, resulting in an average insertion rate of 73% (Table IA). In addition, 13,859 workers benefited from instrument E (allowances for job interview and relocation close to work site). The average (direct) cost of training/adaptation per beneficiary during the period was 543 TD, while the average insertion cost (per inserted worker) was 735 TD; these costs are comparable to or below the corresponding costs for other Tunisian insertion programs. 8. The ETF project did improve existing human capital by developing in-company training activities for new recruits, but the degree to which companies that benefited from the project now train These numbers are as of June 30, 1995. They do not include the 3,356 beneficiaries of some 190 actions which have been undertaken before that date, but not yet completed.  -3- their existing work force remains to be seen (see section G). Human capital improvement can be deducted from the high insertion rates and the fact that a majority of ETF beneficiaries were unskilled long-term unemployed. 9. Table IA summarizes results of the program by economic sector; insertion rates range from 54-55% (construction and hotel trades) to a high of 82% in the leather industry. Table IB describes the distribution of ETF interventions, by instrument. Instrument A holds the lion's share of total number of interventions (with 79%), while instruments B and D covered 10% each. The share of instruments C and F was statistically insignificant, due in part to the grass-roots, demand- driven, nature of the project and the high success rates of instrument A. C. Implementation Record 10. The project benefited from a pilot phase, covering 7 Govemorates (out of 23), and using only the first of the six instruments (training-insertion) from early 1990 until April 30, 1991. This phase was financed by USAID. On the basis of the successful implementation of this limited phase, the program was extended to the whole country and with the five remaining instruments on May 1, 1991. 11. The two project components were fully implemented. The project was off to a slow start, however, and even though project implementation got up to full speed as of May 1993, the closing date had to be extended by one year, to June 30, 1995. Several factors caused the early delays, and they had been - in general terms - foreseen as possible risks in the Staff Appraisal Report (SAR): the decentralized nature of the project, and possible changes in project management structures. In order to correct the political dimension of decentralization - i.e. the tendency of some Governorates to use the ETF for social purposes like traditional employment programs - MFPE decided to apply more rigorously the selection criteria in the Fall of 1992. Other causes for delay were technical in nature, and their impact on implementation had not been fully anticipated: (a) Change in the structures of the managing institutions. and change in personnel. At the time of negotiations, the OFPE, which was to be the project managing authority, was shifted from the Ministry of Social Affairs (Ministere des Affaires Sociales, MAS) to the newly created Ministry of Vocational Training (Ministere de la Formation Professionnelle et de l'Emploi, MFPE). In early 1991, implementation was delayed due to the change in Minister, and the resulting change in statutes of the OFPE. In March 1993, in order to complete the overhaul of the vocational training (VT) and employment system, the vocational training and employment functions of OFPE were delegated to two new agencies, the Agence Tunisienne de la Formation Professionnelle (ATFEP) and the Agence Tunisienne de l'Emploi (ATE), respectively. The latter became responsible for the ETF project. (b) Problems with accounting and auditing. This was caused, at first, by a lack of sub-project accounts, caused by the small amounts involved linked to the highly decentralized nature of the project. The problem was compounded by a lack of specialized personnel and later by insufficient monitoring tools (hardware and  -4 - software). The first audits (for CY91 and CY92) were received by the Bank in September 1994. (c) Insufficient local and central personnel. This issue was addressed in September 1992, by hiring the necessary personnel at both levels ("economats"). (d) Insufficient reimbursement for travel expenses incurred by OFPE personnel. By the very nature of ETF, OFPE personnel were required to travel extensively throughout the governorates, yet Tunisian regulations did not provide sufficient travel allowances (per diems), thereby hampering OFPE's work. (e) Slow purchases of necessary equipment. Vehicle acquisition was considerably delayed due to Tunisian import regulations and quotas (cars were finally acquired in July 1992); similarly the acquisition of computer hardware and software was also delayed, among others, for procurement reasons, thereby hampering project monitoring and management. Until May 1992, the central monitoring unit had only one personal computer. Ultimately the funds envisaged under the second component were fully utilized as agreed with the Bank. (f) Tunisian Central Bank procedures. Since the ETF consisted in a multitude of decentralized projects, a minimum of two months was necessary for the preparation of invoices to the Central Bank for payment. This forced OFPE to prefinance ETF activities from its normal operating budget, thereby resulting in a freeze of ETF activities at the end of the 1991, which was not conducive to a positive project image. The problem was solved in November 1992 when the Bank gave its non-objection to pre-financing, which enabled the Central Bank to issue the necessary advances to OFPE. 12. In January 1994, prompted by the experience of the ETF and its institutional development program, the ATE instituted a new three-year program (called "SERVIR"), a full-fledged, and demand-driven, service approach towards its "clients" (firms and job seekers). This in tum resulted in new structures and new approaches for all ATE activities, including the ETF project. The latter included intemal measures (e.g. reinforcing technical and budgetary follow-up of ATE interventions) and extemal ones (e.g. assistance to enterprises in identifying, designing, monitoring and evaluating the impact of ETF interventions). D. Project Sustainability 13. In April 1995, the project received a European Union (EU) financing of 3.85 million ECUs, using the same "Manual of Procedures". Although the closing date of the EU project is December 31, 1998, it is foreseen that EU funding will be exhausted in about one year. It is also foreseen that part of the activities of the ETF will be continued through the joint World Bank - Govenmment financing provided under the Employment and Training II Project (with a possible further contribution from the European Union).  - 5 - 14. The ETF project was a pilot project, and MFPE and ATE consider that its demonstration effect has been successful. The Tunisian budget will now finance most of the ETF activities. E. Bank Performance 15. Bank performance was satisfactory throughout preparation and supervision. The latter was carried out under three Task Managers, but continuity was ensured, among others, by the use of the sarne consultant. Extensive consultations were undertaken in Tunisia during preparation, and supervision was adequate, both in terms of resource use and responsiveness to issues that arose during implementation. The Bank responded expeditiously to the Borrower's requests, and all project related studies, including the mid-term review report, received extensive comments from Bank staff F. Borrower Performance 16. The Borrower's overall performance was excellent with regard to analyzing issues and designing solutions. With respect to the implementation of these solutions, however, the early problems of institutional change and rigidities of the management agency's structure, as well as insufficient staff during the pre-1993 phase of the project, were an obstacle. 17. The mid-term review was carried out, as specified in the Legal Agreement, by an independent local consulting firm. The terms of reference were drafted by the Borrower and received extensive comments from the Task Manager. The Borrower worked closely with the consultants. The review was thorough in its descriptive aspects, but was found by the Bank to be lacking in its analytical impact. Among the questions that remained unanswered after the review were: (a) What was the value added of the ETF in termns of skills? (b) Could other instruments have produced the same results (e.g. a reform of the Vocational Training tax giving enterprises the means to finance their own internal training)?; and (c) What was the impact of the ETF on the private training sector? 18. The MFPE will assess these questions fully in its forthcoming evaluation of the project. 19. Initial audit reports were prepared with considerable delays, as those for CY91 and CY92 were received by the Bank in September 1994. As pointed out earlier, key reasons included the lack of project accounts, as well as insufficiently trained staff and monitoring tools. Full audit reporting complimnce was achieved for CY93 and beyond.  -6 - G. Assessment of Outcome 20. In addition to responding to the question of whether project objectives were met (section B), an assessment of project outcomes would need to answer four broad sets of questions. The first would review the impact of the project on potential groups of beneficiaries - e.g. economic sectors, regions, age, educational and gender groups. The second would assess possible modifications in the supply of Tunisian VT, i.e. whether as a result of the project: (i) private vocational training supply was increased, (ii) the behavior of public suppliers was "privatized", and (iii) enterprise behavior was modified to the point of increasing in-company training. The third issue of interest is whether the project achieved its institutional development objectives. Finally, was the ETF the most economical way of achieving these objectives, i.e. how does the real cost per person trained compare to those trained under other programs? 21. The sectoral distribution of ETF interventions was discussed in section B. A regional analysis of ETF interventions suggests that the project was more used in govemorates with high unemployment rates, and that insertion rates in those govemorates were also higher. The project was also successful at targeting younger persons, as close to 52% of all beneficiaries were less than 25 years of age, while another 28% were less than 30. More than half (54%) had primary education only, while 19% had achieved a first cycle secondary education, and 7% were illiterate. Women have benefited considerably from the project, (63% of all beneficiaries) but a more complete evaluation is currently being undertaken, through a Bank IDF grant, by the Ministry of Women's Affairs and the Family. The evaluation is studying the impact of two kinds of instruments: on-the-job training and placement, and preparation for self-employment. 22. On the second question, it is worth noting that the bulk of the training provided under all instruments (except E) was supplied by private VT enterprises. It is not yet possible, however, to evaluate the long-term change in behavior on the part of public VT providers. The project does not seem to have had a major impact on enterprise behavior with respect to on-the-job training for their existing employees, as instruments C and F were little used. 23. In response to the third question, the answer is unambiguously positive, as the project did contribute to a considerable change in employment services institutions and behaviors. The synergy developed between the project and ATE and the advent of the SERVIR system as a result of project experience are commendable. 24. The last question would require further analysis, and an improvement of the ATE cost accounting system in order to be able to determine total costs involved with ETF operations. Recent studies have suggested that among the programs managed by the ATE, ETF average direct costs by inserted worker were the lowest. H. Future Operation 25. The next ETF operation, currently being prepared, needs to draw from the lessons of experience (see section I). It will expand the use of instruments C and F.  -7 - I. Key Lessons Learned 26. Although the overall project performance was satisfactory, a number of lessons can be learned by bo.;l the Bank and the MIFPE and ATE in the design and implementation of future similar operations. They can be drawn from key factors that were critical to the success of the project, as well as those that could use improvement. 27. There are five major lessons to be learned from the factors of success: (a) Ihe project benefited from its simple design, as well as the economic, i.e. global, vision that underpinned its design and implementation (as opposed to one geared towards meeting social needs). (b) The grass-roots, "bottom-up", approach ensured flexible implementation, as well as local project ownership. (c) With its flexible project design, the ETF allowed modifications during implementation to reflect institutional changes, as well as ongoing evaluations of project impact. (d) The project became an integral part of ATE operations; this considerably increased its effectiveness. The project management system was efficient, with respect to both ongoing and post completion monitoring of beneficiaries. (e) The fund approach resulted in local staff learning how to prepare and evaluate project proposals; it encouraged innovation, as well as competition between public and private VT providers and between regions. 28. Lessons can also be gleaned from project weaknesses. A future project should: (a) Include project implementation and impact indicators. No such indicators were given in the Staff Appraisal Report (SAR). The mid-term review did suggest some impact indicators, but these were not systematically monitored thereafter. A more detailed impact monitoring system would be desirable; it would among others help determine priorities among instruments, and thereby increase overall effectiveness. (b) Anticipate the practical implications of institutional issues. These issues were suggested in general terms under the "Risks" section of the SAR, but specific issues were not foreseen. These included structure and personnel changes in the project management institutions, lack of project accounting framework insufficient numbers of qualified implementing staff, insufficient reimbursement for travel expenses of local implementing staff, and impact of Tunisian procurement regulations and Central Bank requirements for reimbursements of project expenditures.  - 8 - (c) Improve project accounting system. Although the overall costs of the project are now up to date, the budget is too global, and it cannot at present be used for analytical or planning purposes. For example, there is no way to know total amounts spent for specific beneficiaries, on specific instruments, by region or sector. Februarv 28. 1996  -9- IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINING PROJECT (Loan No. 3255TUN) PART H STATISTICAL TABLES Table I: Summary of Assessments Table IA: ETF Actions, By Economic Sector Table IB: ETF Actions, By Instrument Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in Project Table 8A: Project Costs Table 8B: Project Financing Table 9: Status of Legal Covenants Table 10: Compliance with Operational Manual Statements Table 1 1: Bank Resources: Staff Inputs Table 12: Bank Resources: Missions  - 10 - TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of objectives Substantial Partial Negligible Not applicable Macro policies x Sector policies x Financial objectives x Institutional Development x Physical objectives x Poverty reduction x Gender issues x Other social objectives x Environmental objectives x Public sector management x Private sector development x Other (specify) x B. Project sustainability Likely Unlikely Uncertain x C. Bank Performance Higzhl Satisfactorv Deficient Satisfactory Identification x Preparation assistance x Appraisal x Supervision x D. Borrower Performance Highly Satisfactory Deficient Satisfactory Preparation x Implementation x Covenant. compliance x Operation (if applicable) E. Assessment of Outcome Highly Satisfactory Unsatisfactorv Highly Satisfactory Unsat. x  TABLE IA: ETF ACTIONS, BY ECONOMIC SECTOR (as of June 30, 1995) Sectors Actions Beneficiaries Inserted Insertion Rate (%) Textile 917 6,783 4,817 71.0 Services 403 4,288 3,276 76.4 Wood 50 164 124 75.6 Construction 53 557 297 53.3 Leather 55 586 478 81.6 Metal Work 232 1,419 1,160 81.8 Agriculture 466 7,023 5,385 76.7 Hotel Trades 189 3,915 2,172 55.5 Crafts 392 8,715 6,692 76.8 Other 80 651 492 75.6 Total 2,542 34,161 24,893 72.9 TABLE IB: ETF ACTIONS, BY INSTRUMENT (as of May 31, 1995) Number of: Instrument Actions % of Total Beneficiaries % of Total Inserted % of Total A 2,134 85.9 25,810 77.8 19,238 79.1 B 132 5.3 3,459 10.4 2,320 9.5 C 12 0.5 292 0.9 243 1.0 D 201 8.1 3,539 10.7 2,443 10.0 F 4 0.2 83 0.3 82 0.3 TOTAL 2,483 100.0 33,183 100.0 24,326 100.0  - 12 - TABLE 2: RELATED BANK LOANS & CREDITS Loan Title Purpose Year of Status Approval Preceding Operations: First Credit Finance four new secondary schools. expansion of one other, and 1962 Project closed February extension to a teacher's college for training lower secondary 1967. teachers. Second Credit Finance nine new secondary schools. 1966 Project closed December 1975. Third Project Improve relevance ofthe primary curriculum to the socio- 1975 Project closed March economic environment. 1983. Fourth Education Project Support policy of expanding training opportunities for school 1981 Project closed in leavers and for skill upgrading of the workforce. The project December 1988.. specifically supported plans for expanding and upgrading the apprentice training scheme, broaden ing the range of adult training opportunities through the establishment of new centers and the addition of new sections to existing centers, and improving the quality of vocational training through the re- equipping of poorly equipped workshops. Education & Training Project The loan supports the first phase of implementation of the May 1989 Under supervision, 92 l Government's education and training sector reform and assists disbursed. Closing date: the Borrower in carrying out reform activities during this phase. March 31. 1996. The objectives ofthe reform program are to make the provision of education more consistent with the country's medium-term development needs, more equitable and more cost-effective. It would do this through three policy changes: (a) allocation of a larger share of resources to quality basic education cycle (grades 1-9); (b) improvement in the quality and the relevance of secondary education (grades 10-13) while better controlling access to it; (c) promotion of pre-service and in-service training in collaboration with companies in the productive sectors, and mobilization of additional resources for training. Higher Education Restructuring The project aims to assist the Borrower in making its higher March 1992 Under supervision; 11% Project education system more cost-effective and responsive to the need:, disbursed. of labor markets by (a) increasing the number of technical graduates; (b) providing incentives to higher education institutions to reform their programs and curricula; and (c) strengthening the higher education system's planning and masiagement capacity and imnproving the distribution and use of resources following a norrnative system for rescurce allocation. Secondary Education Support The project aims to assist the Governnent to (a) implenient its August 1994 Under supervision; 5% Project basic and secondary education reform program aimed at disbursed achieving improved quality and efficiency; and (b) improve access to accomodate projected increases in upper basic and secondary school enrollments. Following Operations: Employment & Training II The project would consist ofthe following three main Planned for Under preparation. Project components: (a) Creation of a labor market information system April 1996 Appraisal initiated in (LMIS). This component would help build the institutional January 1996. capacity to monitor the operation of labor markets and training incentives so as to provide labor market information to individu- als, enterprises and managers from training centers. (b) Development of labor market services for displaced workers. Based on the experience of the Employment and Training Fund (ETF), the project would support a fund for the development of re-training and placement services for workers affected by economic restructuring, and (c) Reinforcement of the economici relevance of training, which would consist of. (i) financing of the reconversion and upgrading of existing training centers under the MFPE and creation of new training centers, on the basis of an as- sessment of the demand for the skills to be provided by the center and by an agreement between the MFPE and a federation of enterprises for the provision of "dual" training. (ii) Technical assistance would be provided for improving management ofthe VT tax and for the reinforcement ofthe CNFCPP. (iii) Technical assistance for the development of apprenticeships including firm- level training oftrainers, curricula and pedagogical development. ___  - 13 - TABLE 3: PROJECT TIMETABLE Steps in Project Cycle Date Planned Date Actual Identification March, 1989 March 9, 1989 Preparation (Pre-Appraisal) November, 1989 October 30, 1989 Appraisal March, 1990 March 3, 1990 Negotiations N.A. June 21, 1990 Letter of Development Policy (if N.A. N.A. applicable) Board Presentation July, 1990 Septemhe_- 4, 1990 Signing N.A. September24, 1990 Effectiveness N. A. March 21. 1991 First tranche release (if applicable) N. A. N. A. Midterm review (if applicable) June, 1993 June 27-July 17, 1993 Second (and third) tranche release (if N.A. N.A. applicable) Project completion December 31, 1993 December 31, 1994 Loan closing June 30, 1994 June 30, 1995 TABLE 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL (US$ million) FY91 FY92 FY93 FY94 FY95 FY96 J TOTAL Appraisal Estimate 1.20 3.60 5.00 2.20 12.00 Actual 0.00 1.0 5.54 2.07 2.03 1.05 11.71 Actual as % of estimate 0% 28% 101% 95% N/A N/A 97.6 % Date of final disbursement 12/06/95  - 14 - TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Key implementation indicators in SAR/President's Report Estimated Actual N/A N/A N/A Modified indicators (if applicable) l N/A N/A N/A Other Indicators (if applicable) N/A N/A N/A TABLE 6: KEY INDICATORS FOR PROJECT OPERATION Key operating indicators in SAR/President's Report Estimated Actual Number of beneficiaries 30,000 34,161 Modified indicators (if applicable) . N/A N/A N/A Modified indicators for future operations (if applicable) N/A N/A N/A  - 15 - TABLE 7: STUDIES INCLUDED IN THE PROJECT Purpose as defined at Study appraisal Status Impact of study 1. Existing Review of existing Completed in Extension of ETF to employment promotion schemes September 1991, whole country promotion schemes financed by USAID 2. Mid-term Review Overall evaluation of Completed in July Most project 1993 recommendations implemented TABLE 8A: PROJECT COSTS Estimate at Appraisal (US$M) Actual (US$M) Components l Local | Foreign Total Local' Foreign ' Total Currency Exchange Currency | Exchange A. ETF 28.6 3.3 31.9 N/A N/A 18.5 B. Institutional 0.8 1.8 2.6 N/A N/A 2.2 development l Total base costs 29.4 5.1 34.5 N/A N/A 20.7 Physical contingencies 0.0 0.0 0.0 N/A N/A 0.0 Price contingencies 0.0 0.2 0.2 N/A N/A 0.6 Total Project Costs _ 29.4 5.3 34.7 | N/A N/A T_21.3 Breakdown between local currency and foreign exchange not available at time of ICR. Sub-Total: government + IBRD  - 16 - TABLE 8B: PROJECT FINANCING Source of Financing Estimate at Appraisal (US$M) Actual (US$M) Local Foreign Total Local Foreign' Total Currency Exchange Currency Exchange Government 9.6 0.1 9.7 N/A N/A 9.6 Enterprises 8.5 0.0 8.5 N/A N/A N/A IBRD 8.5 3.5 12.0 N/A N/A 11.7 USAID 3.6 0.9 4.5 N/A N/A N/A TOTAL 30.2 4.5 34.7 N/A N/A 21.3 * Breakdown between local currency and foreign exchange not available at time of ICR. Sub-Total: Government + IBRD  - 17 - TABLE 9: STATUS OF LEGAL COVENANTS Original Revised Agreement Covenant Present Fulfillment fulfillment Description of covenant Section Type Status date date 3.02A 5 C 03/21/91 N/A Establishment of supervisory I________ _________ authority and of the ETF. 3.02B 10 C 03/21/91 N/A Preparation of ETF procedural manual. 3.03A 5 C 12/31/90 N/A Appointment of Project Coordinator. 3.03B 5 C N/A N/A Maintain a Project Manager in each beneficiary governorate. 3.04 5 C 12/31/91 N/A Creation of the ETF National Committee. 3.05 10 C N/A N/A No new contractual or similar arrangements to be entered into under recruitment contracts program. 3.06(1) 13 C 12/31/92 N/A Preparation of study on cost- benefit analysis of the current employment promotion programs transmitted to the Bank. 3.06(2) 13 C N/A Carnying out of study's recommendations to increase the impact of employment promotion programs. 3.07(1) 13 CD 05/31/93 07/17/93 Mid-term review. 3.07(2) 13 CP Partial Carrying out of mid-term fufillment review's recommendations to increase the impact of ETF. 3.08 5 C 06/30/91 N/A Reduction of the maximum allowable period available to MFPEs employment offices to identify a suitable candidate before a commercial enterprise may advertise a notice for employment. 3.09 4 CP Partial Cost of in-company training fulfillment and staff selection services to be recovered by MFPE services. . n i - _  - 18 - TABLE 10: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS Statement number & Title | Describe & comment on lack of compliance N/A N/A TABLE 11: BANK RESOURCES: STAFF INPUTS Planned Revised Actual Stage of project cycle US$ US$_eek_US Weeks ] US$ Weeks US$ Weeks US$ Through appraisal 74.0 185.0 78.7 196.8 51.3 107.5 Appraisal - Board 66.0 165.0 62.5 156.3 10.5 23.0 Board - Effectiveness 5.0 12.5 17.5 43.8 3.6 9.1 Supervision 44.5 111.3 62.3 155.8 44.1 112.0 Completion 7.0 17.5 TOTAL 189.5 473.8 228.0 570.2 102.3 306.9  - 19 - TABLE 12: BANK RESOURCES: MISSIONS Performance rating Stage of project cycle MIY No Days ui Speciahzed Types of problems persons field staff skills represented Implem Delo status ojc Through appraisal 07/89 3 11 Economists OFPE wants to expand network without resolving existing inefficiencies first. 11/89 4 11 Economists Issue of extending welfare programs. Appraisal through Board approval 03/90 3 15 Economists Board approval through effectiveness Supervision 05/91 2 23 Economists N/A I Back-to-Office 06/91 2 7 Economists Implementation delay due to change in Ministry . and reorganization _____ ___ __ j ____ _ __ ____ ____ ____ _ __ ____ ____ __ j of O FPE. Back-to-Office 09/91 2 5 Educator/Financial Analyst Supervision 09/91 2 12 Economists N/A 1 Delays in sub- I I I ~~~~~~~~~~~~~~~~~~~project preparation; insufficient I I ~~~~~~~~~~~~~~~~~~~resource j __ __ j __ _ _ _ _ _ _ _ _ _ j allocation. Back-to-Office | 12/91 1 3 Economist I I Mismanagement in !__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ! !_ _ !__ _ ! _ _ _ _ j _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ O FPE. Supervision 04/92 1 6 Economist TN/A I | Not enough human | resources in | accounting section | to handle volume | of sub-project ______________ ______________ j ______ ______ j ______ ___________ _ w orkload. Supervision 11/92 2 | 7 Economists J N/A 1 T OFPE is split into I I j~~~~~~~~~~~~~~~~~~~~~ 2separate entities, |and MFPE |overwhelmed by tasks. Back-to-Office | 02/93 1 6 Economist | | | Designation of an 1 11 _ I I I I audit ftrm. Supervision | 12/93 [2 |4 Economists IN/A I Supervision 05/94 2 5 H.R. Econ.; Economist N/A I L^ck of resources I and unavailability of accounts led to |audit not being 05/94 ! , l |done. Supervision 1 11/94 | 2 T 6 J H.R. Econ.; Economist S HS 1 Delay in receipt of I _ _ _ I _ _ _ I _ _ _ | _ _ _ _ _ _ _ _ _ _ _ I _ _ _ _ j _ _ _ _ J audi, report. Back-to-Office 03/95 2 6 | H.R. Econ.; Impl. Spec. [ Completion | 11/95 1 7 Education Economist N/A | N/A   - 20 - IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TUNISIA EMPLOYMENT AND TRAINING PROJECT (Loan No. 3255-TUN) THE BORROWER'S REPORT December 1995   -21 - REPUBUC OF TUNISIA MISTRY OF VOCATIONAL TRAINING AND EMPLOYMENT IMPLEMIENTATION COMNPLETION REPORT NOTE ON THE IMPACT OF THE EMPLOYMENT AND TRAINING FUND 1. Background to the Creation of the Employment and Training Fund (ETF) 1. As a result of the economic adjustment process in Tunisia, unemployment has become a matter of major concern to the authorities. The challenge consists in promoting employment, mainly by improving national vocational training facilities, encouraging private sector investment, and fostering the micro- and small-enterprise sector. Concem with promoting employment mounted under the pressure of a rising unemployment rate, which the 1989 Population and Employment Census put at 15.3%, and under the prospect of additional demand for jobs. 2. In order to keep unemployment within tolerable limits, the Govemment has introduced numerous employment promotion programs over the years as a way to help meet the demand for jobs. T'here have been three types of programs: Public works programs: Introduced in the 1960s, these programs provide a subsistence wage in exchange for temporary work in reforestation, soil conservation, maintenance of public infrastructure, and other public works. Their main limitation is that they have not succeeded in creating opportunities for long- term employment. * Assistance to promote self-employment and micro-enterprises: This dates from the creation in 1981 of the National Fund for Handicrafts and Small-Trade Promotion and regional rural and urban development programs. * Programs to foster employment of first-time job-seekers: These have taken the form of the Employment/Training Contracts (CEF) introduced in 1981, and two types of Professional Intemships (SIVP), the first (dating from 1987) for higher- education graduates and the second (dating from 1988) for secondary school graduates entering the workforce. These programs were strengthened in 1993, giving rise to better intemal rates of return and a higher degree of impact on the population groups targeted. They share the common characteristic  -22 - of supporting specific categories of job-seekers or potential employers, and therefore serve as mechanisms for dealing with unemployment from the job-seeker side of the market. 3. The attention paid by the authorities to unemployment problems associated with structural adjustment lending has resulted in the introduction of an employment strategy that calls among others for far-reaching structural reforms. These began in 1990 with the creation of the Ministry of Vocational Training and Employment, followed by a reorganization of the former Office of Vocational Training and Employment. By 1993, this restructuring had led to establishment of the following specialized entities: the Tunisian Employment Agency, the Tunisian Vocational Training Agency, the National Center for In-Service Training and Vocational Advancement, and the National Center for Trainer Training and Training Theory and Practice. The country's firm commitment to a policy of economic liberalization has made bolstering its vocational training and retraining capabilities a prime necessity if Tunisian busines, enterprises are to command all possible means of improving the competitiveness and quality of their products. 4. The unportance of the human factor in the reform program undertaken by the Government in order to liberalize the economy and capture highly developed and competitive markets has created a need for ways of responding to the demands of an economic system undergoing massive changes. The creation of the Employment and Training Fund in 1990 was a major step toward this goal. EkF provides a wide range of services: training for placement in companies, training for self-employment, in-company training/extension services, subcontracting to private training/placement companies, and allowances for relocation/refresher training/retraining for the staff of companies in difficulty. ETF is therefore in a position to respond to the complex manpower needs of the economy in an innovative manner -more so than previous programs. ElF objectives are to finance training programs that will lead to the placement of job- seekers; improve productivity by raising the competence level of existing skills; and implement an institutional development program designed to increase the effectiveness of governmental agencies responsible for labor market promotion. II. Establishment of the Employment and Training Fund 5. From the beginning of 1990 until April 30, 1991, EJTF was regarded as being in a pilot phase. This period was devoted exclusively to program "A" (i.e. training for placement in an enterprise) and involved seven regions of the country, where 96 subprograms involving 1,794 job- seekers were carried out. With financing from USAID, an evaluation survey of this phase was conducted by the Maghreb Development Financing Institute (ED) in September 1991; it confilmed the success of this approach, and called for expansion of the program. 6. As of May 1991, E1F activities were extended throughout the country: training for job placemelit, subcontracting to private training/placement companies, training for self-employment,  -23 - in-company training/extension services, allowances for relocation of job-seekers, and refresher training/retraining for the staff of companies in difficulty. World Bank financial support was made available for ETF under the terms of a Loan Agreement with Tunisia, ratified by Law No. 91/4 of February 12, 1991. The funds allocated for the program covered the period from May 1991 up to December 31, 1993 as far as commitment authority was concemed, and up to June 30, 1994 for payment authority. The goal set for this period was to train 30,000 job-seekers and integrate them into the active population. 7. The initial allocation pattem of ETF funding was as follows (in thousands of dinars): Source of Financing Training for Structural Total Placement in an Reinforcement Enterprise National budget 9,000 170 9,170 World Bank loan 9,000 2,000 11,000 TOTAL 18,000 2,170 20,170 ETF activities were conducted on a decentralized basis, in each of the country's 23 governorates. The ETF Manual of Procedures, required under the terms of Article m, Section 3.02 (b), of Loan Agreement 3255-TUN, was finalized in March 1991 with World Bank approval. Implementation of ETF as financed by the World Bank proceeded in two stages: 8. The results of the initial phase, extending from May 1, 1991 to April 30, 1992, were evaluated through two surveys of companies and trainees conducted by a private consulting firm in May 1993. The survey sample was representative of that period's program beneficiaries. The following findings were obtained: * ETF provided flexible and appropriate solutions to requests made by companies with respect to training for job placement and also helped previously unsuccessful job-seekers. * A job placement rate of 72.4% was achieved, with the following breakdown: placements with companies where in-service training took place, 59.0%; placements with other companies, 6.4%; and self-employment, 7.0%. * The majority (61.5%) of ETF beneficiaries were young people under age 25; only 5 % were 40 or over.  - 24 - * A total of 65.8 % of beneficiaries had not had schooling beyond grade six of the primary cycle, a figure which confirms that ETF is the sole source of support for this category of job-seekers. * In cost-benefit terms, ETF is the least costly program. This mid-term review shows costs as follows per beneficiary: training, D 687; placement, D 1,163. 9. A second phase began after an Executive Session of the Cabinet held on June 7, 1993, which reviewed ETF accomplishments and decided to continue the initiative, bolstering its capacity in order to actively target the needs of the economy. In order to enable ETF to operate efficiently and coherently, a series of practical steps were taken to improve its internal management and its impact. Technical and budgetary monitoring was strengthened, and assistance was provided to regional operators to ensure the economic effectiveness of ETF actions. Measures taken focused essentially on: * encouraging regional technical committees to take action to support ETF in performing its mandate of addressing the human resources needs of the economy; * introducing a requirement for budgetary clearance prior to approval of actions by regional coordinating committees; * establishing a monitoring system to follow up on developments in all areas; * establishing an accounting system specific to ETF to facilitate project audit operations; * creating a central commission in charge of promoting the project and providing assistance to the regions; * strengthening the Central Coordinating and Management Unit of ETF. m1. ETF Accomplishments 10. The accomplishments of the ETF project in vocational training and placement are apparent in the following results:  - 25 - No. of actions implemented (programs A, B, C, D and F) 2,811 No. of beneficiaries trained (completed as of October 1995) 34,861 No. of beneficiaries placed in jobs 25,043 No. of beneficiaries in training 40 No. of program E beneficiaries (relocation) 13,859 In order to evaluate the overall results and thereby gauge the importance of ETF actions, results must be broken down by economic sector, by instrument, and by region. It should be noted that actions completed as of June 30, 1995 numbered 2,573 and benefited 34,861 persons, including 25,043 trainees who obtained employment immeciately after completing their vocational training. Sector Number of Persons Persons placed Placement subprograms trained rate (%) Agriculture 501 7,071 5,405 76.5 Textiles 677 6,961 4,862 70 Leather and footwear 70 614 478 79 Handicrafts 409 9,158 6,781 74 Mechan./electr. 265 1,537 1,168 76 Services 441 4,190 3,354 80 Construction 73 637 297 47 Wood 70 187 124 66 Hotel Sector 207 4,074 2,164 53 Other services 98 432 410 95 TOTAL 2,811 34,861 25,043 72 As the table shows, ETF activities have taken place in all economic sectors. The results are indicative of the situation prevailing in each sector in terms of human resource needs. The overall placement rate (number of beneficiaries having found employment as a percentage of the number of beneficiaries trained) is 72 %. The placement rate posted by the hotel sector, however, does not reflect the results of activities carried out therein. Labor mobility in the sector has had an impact on ETF's beneficiaries, who are in demand by establishments other than those in which they were trained and hired as a result. 11. A simple comparison of the number of actions carried out under each program in the first half of 1994 and 1995 shows a clear progression in terms of project dynamics and expansion of the scope of project activities.  - 26 - Instruments First half 1994 First half 1995 Subprograms Beneficiaries Subprograms Beneficiaries A 200 3,707 184 2,764 B 26 467 32 523 C 2 90 8 331 D 15 237 22 380 E _ _ 6 104 TOTAL 243 4,501 252 4,102 12. Moreover, a breakdown of the results of ETF activities shows that it encompasses the entire employment market at the regional and national levels. It should be noted that ETF has had more impact in the coastal regions, where the economy is more highly developed. This observation, however, in no way detracts from the significance of ETF's impact in those regions of the interior where activity has focused on economic sectors of particular significance to the region in question, e.g. agriculture and handicrafts. IV. Strengthening the Structure of Employment Services (ETF Component B) 13. This component is part of an institutional development program designed to reinforce employment services and boost their intervention capacity. The contribution of this program has resulted essentially in expert assistance, increased professionalism, and equipment supply. With funding from the loans made available for this component, which have been fully utilized in accordance with a schedule agreed to with the Bank, the following steps have been taken: * logistical strengthening of the vocational infornation center and the National Professional Employment Office; * creation of a regional employment office at Ettadhamen city; * purchase of 17 utility vehicles; * reinforcement of 13 regional information and vocational guidance units with logistical and audiovisual aids; * creation of eight one-stop vocational information booths; * equipping of two sector employment processing units at Tabarka and Tebourba; * equipping of three regional professional employment offices at Sfax, Sousse and Nabeul;  -27 - * purchase of computer equipment for employment services in the Tunis district; * conclusion of the software contract under the project to computerize employment services; * training of 158 people drawn from central and regional information technology staff; * training of 17 central staff involved in the analysis of statistical employment data (SPSS); * mid-term evaluation of ETF; * audit of ETF accounts; - periodic consultations and studies. V. World Bank Contribution 14. The success of the ETF project is attributable to the World Bank's contribution, which materialized principally in the following ways: * several project supervision missions carried out by Bank experts, which enabled corrective action to be taken to put the project on the right track and gain better control over all its components; * implementation of a policy based on a continuing process of consultation, which allowed the Tunisian staff managing ETF activities to steer the project according to rules and procedures agreed upon with the Bank, as needed; * the Bank's willingness to support the project and work towards its success, as reflected in the responsiveness of the Bank's units to all requests made by the Tunisian units in charge of the project, reflecting the Bank's confidence in the project's importance and beneficial effects; * the Bank's close follow-up on all project monitoring and auditing operations, as evidenced by the comments made by the Bank's units, which enabled actions to be either validated or corrected by taking the necessary actions. Moreover, while the organizational structure and procedures set forth in the management procedures manual have been observed faithfully, several improvements have been made in the management of the various operating programs.  -28 - These improvements have been made in line with recommendations made by the National Management Committee, in light of an analysis of the quantitative and qualitative results as measured by internal monitoring mechanisms, expert missions by the Bank, and the mid-term project review. VI. Conclusions 15. In conclusion, this project - which had already won World Bank support and is expected to contribute to improving the competitive position of Tunisian enterprises - still has significant room for development. The political will to further develop ETF flows from a desire to strengthen ETF programs in full support of the thrust of reform and liberalization of the Tunisian economy. 16. ETF is being called upon to play an increasingly pivotal role in underpinning the national production apparatus. The economy's needs in terms of improving skills and qualifications to underwrite the development and expansion of the nation's enterprises, together with the emergence of new production units, will require particular support and specific actions in vocational training, skills upgrading, and retraining of human resources. Against this backdrop, ETF is the appropriate means of helping to achieve these objectives using the various instruments available to it, particularly programs C and F, which will provide significant leverage for action benefiting enterprises. To this end, Tunisia has undertaken a process of institutionalizing ETF, thereby demonstrating a willingness to pursue the avenues of action available under this project in order to boost the national economy.     Re, oL't ' b-1: J,3j I- Tyv,e: e IC