Turkey - Industrial Schools Project

Document of The World Bank FOLR OFFICIAL USE QLNLY Report No. 5482-TU REPUBLIC OF TURKEY INDUSTRIAL SCHOOLS PROJECT STAFF APPRAISAL REPORT April 18, 1985 Education and Manpower Development Division Europe, Middle East and North Africa Region This doeument bas * rsicted distuibti- anmd may be wed by reipients ody in the perfornuce of their offici dudes. its ontents my not otherwise be disclosed without Wodd Bmk duthorizton.  REPUBLIC OF TURKEY Currency Equivalents US$1 = 420 Turkish Lira (TL) (December 1984) 100 TL = US$0.238 Fiscal Year January I - December 31 GLOSSARY CNCM: Computer Numerically Controlled Machines DEAME: Directorate of Educational Aids, Materials and Equipment DIEBS: Directorate of Investment, Establishment and Building Services DTVE: Directorate of Technical and Vocational Education EFRTC: Education, Film, Radio and Television Center ESEPC: Educational Science Equipment Production Center ICB: International Competitive Bidding IVTSM: Industrial and Vocational Training Sector Memorandum LCB: Local Competitive Bidding METEP: Mesleki ve Tekr.ik Egitim Projesi (Vocational and Technical Education Project) MIT: Ministry of Industry and Trade MOE: Milli Egitim Genclik ve Spor Bakanligi (Ministry of Education) MOL: Ministry of Labor MPWH: Ministry of Public Works and Housing NBE: National Board of Education PIU: Project Implementation Unit PPAR: Project Performance Auidit Report SAC: School Advisory Committee SEE: State Economic Enterprise SEGEM: Industrial Training and Development Center SIDO: SmaLl Scale Industry Development Organization SIB: State Investment Bank SIS: State Institute of Statistics SPO: State Planning Organization TA: Technical Assistance TAC: Trade Advisory Committee TEK: Turkiye Electrik Kurunu (Turkish Electricity Authority) TSKB: Industrial Development Bank of Turkey TTC: Technician Training Center TTTC: Technical Teacher Training College UND?: United Nations Development Program UNIDO: United Nations Industrial Development Organization YoK: Council for Higher Education  FOR OFICIAL USE ONLY REPUBLIC OF TURKEY INDUSTRIAL SCHOOLS PROJECT STAFF APPRAISAL REPORT Basic Data (1983) Country Data Per-Capita GNP US$1,230 Total population 48.0 million. Population growth rate 2.21 p.a. Total labor force 20.7 million Literacy rate (% of adults) (1980) Men 961 Women 51% Total 731 School Enrollment and Expenditure Data Female Enroll- ment as X of Total Total Enrollment Total Enrollments 1/ as Z of Age Group Enrollment * '000) Level and Age Group Primary (grades 1-5, ages 7-11) 6,517 110 47 Lower secondary (grades 6-8, ages 12-14) 1,518 45 35 Total secondary (grades 9-11, ages 15-17) 828 26 .35 General 500 10 42 Vocational and industrial 328 10 25 Higher education (grades 12+, ages 18+) 322 8 34 Public Expenditure on Education and Training Central government eapenditures on education as percentage of total governme-t expenditures 1/ 16.2% Central government expenditures on education as percentage of GNP 3.3% Central government capital expenditures on education as percentage of all capital expenditures 1/ 12.8% Central government recurrent expenditures on education as percentage of all recurrent expenditures 1/ 17.0% 1/ Including expenditure on SEEs. 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 authorzation.  REPUBLIC OF TURKEY INDUSTRIAL SCHOOLS PROJECT STAFF APPRAISAL REPORT Loan and Project Summary Borrower: Republic of Turkey Amount: USt57.7 million Terms: Seventeen years, including four years grace, at the standard variable interest rate Project Description: The proposed project supports the Government's efforts to improve industrial productivity and to increase the supply and quality of skilled manpower. The project would provide equipment and refurbishment for 39 secondary-level industrial schools. Technical assistance would be included for curriculum and program development, overseas fellowship training and special studies. Benefits and Risks; The proposed project would help meet the demand for skilled workers and junior technicians by producing some 2,500 additional graduates annually from 1991. It would increase access to training for low income-level groups in outlying provinces and is expected to result in an increase in the enrollment of women in the industrial schools system. It would also strengthen the management and planning capacity of the MOE and would help develop appropriate curricula and new industrial training programs in the industrial schools. There are no significant risks attached to the project.  -ii- US$ Million Estimated Proiect Costs: Local Foreign Total Industrial Schools Facilities 6.36 38.91 45.27 Curriculum and Program Development 0.25 2.64 2.89 Textbook Translation & Production 2.11 1.13 3.24 Special Studies 0.04 0.20 0.24 Incremental Recurrent Costs 2.00 - 2.00 Total Base Costs 10.76 42.88 53.64 Physical Contingencies 1.07 4.29 5.36 Price Contingencies 3.17 10.53 13.70 Total Project Cost 15.00 57.70 72.70 US$ Million Financing Plan: Local Foreign Total Bank - 57.70 57.70 Government 15.00 - 15.00 Total 15.00 57.70 72.70 Estimated Disbursements: US$ Million IBRD Fiscal Year 1986 1987 1988 1989 1990 1991 1992 1993 Annual 2.5 1.5 4.2 7.0 11.0 14.0 12.5 5.0 Cumulative 2.5 4.0 8.2 15.2 26.2 40.2 52.7 57.7  REPUBLIC OF TURKEY INDUSTRIAL SCHOOLS PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. GLOSSARY BASIC DATA LOAN AND PROJECT SUMMARY I. ECONOMIC DEVELOPMENT AND INDUSTRIAL TRAINING ........................ 1 Economic Development ............................................ I Industrial Schools ................... 1 Demand for Qualified Manpower ................................... 3 Issues in the Industrial Schools ................................ 4 Curriculum Development and Reform .......................... 4 Industrial Liaison ......................................... 5 Provision of Instructors ................................... 5 Finance . ................................................... 6 Budgetary Support . ............................................... 7 Government Education/Training Strategy and Bank Lepiding .... ..... 7 Strategy .............................................7: ...... 7 Bank Lending Strategy ...................................... 8 II. THE PROJECT .......................................................... 1 Introduction .................................................... 11 Objectives and Scope ............................................ 11 Industrial Schools .............................................. 12 Instructors . ..................................................... 14 Additional Technical Assistance ................................. 15 III. PROJECT COSTS, FINANCING, MANAGEMENT AND IMPLEMENTATION .... ......... 17 Cost of the Project ............................................. 17 Summary of Project Costs ................................... 17 Basis of Cost Estimates .................................... 18 Customs Duties and Taxes ................................... 18 Costs and Areas Per Student and Use Factors ................ 18 Contingency Allowances ..................................... 18 Foreign Exchange Component ................................. 19 Recurrent Costs ............................................ 19 This report is based on the findings of an appraisal mission which visited Turkey in November/December 1984. The mission comprised Messrs. C.A. Sinclair (economist, mission leader), S. Sigurdsson (architect). A. Power (technical educator), and A. Gow (consultant, industrial training specialist).  Project Financing ..................... ........ 20 Management and Implementation .................................. 20 Management Structure .............................. 20 Management Functions ............................. 21 Site Acquisition .............................. 21 Maintenance ............................. 21 Procurement ............................ . 21 Technical Assistance ............................. 23 Implementation Schedule ............................. 23 Disbursements ................................................... 23 Accounts and Audits ............................ 24 IV. BENEFITS AND RISKS ............................ 25 Benefits ............ ................ 25 Quality of Training ..25 Manpower Supply ..25 New Trades ... 25 Equity . .25 Institution Building ..25 Utilization ..25 Upgrading of the Industrial School System . .26 Risks .... 26 V. AGREEMENTS REACHED AND RECOMMENDATIONS .............................. 27 Annexes: 1 Compar_tive Education Indicators ................................ 29 2 Enrollment, Number of Teachers, and Number of Secondary Schools by Type, 1983/84 .............................. 31 3 Ministry of Education Actual and Budgetted Expenditure on the Industrial Schools, 1981-89 (TL Million) .... ............. 32 4 Number of Places Equipped, Requipped, Total Additional Enrollment, and Estimated Additional Output from Project Supported Institutions .................................. 33 5 Locations of Project Industrial Schools ......................... 34 6 Project Component by Category of Expenditure (TL Million) ....... 35 7 Cost Per Student ........... ..................................... 36 8 Related Documents and Data Available in the Project File ........ 37 Schedules: I Technical Assistance Schedule ................................... 38 II Implementation Schedule ... ..................................... 39 III Estimated Schedule of Disbursements .......... ................... 40 IV Implementation Plan ......................................... 41 Charts: I Organization of the MOE ........................................ 43 II MOE School System ............................................... 44 Map No. IBRD 18811  I. ECONOMIC DEVELOPMENT AND INDUSTRIAL TRAINING Economic Development 1.01 In order te stabilize the economy and rationalize the fiscal and monetary system, Turkey began a program of structural adjustment in 1980. As a result of this program, Turkey's current account deficit was reduced from US$3.2 billion in 1980 to US$2.1 billion by 1983, and in 1985 it is expected to be about US$1 billion. This improvement has largely been achieved by the rapid growth or exports; in 1985 exports are expected to grow by 31% over the 1984 level to US$7.5 billion. Despite the previous success of the exporting sector, further improvement in the balance of payments is likely to be constrained by the decline of migrant worker remittances (down by 3.4Z in the first seven months of 1984 compared with the first seven months of 1983) and the repayment of external debt, due to peak in 1985. For these reasons it is essential that Turkey maintain the development of export industries. The new Government, elected in November 1983, has confirmed its emphasis on maintaining economic growth, promoting the private sector, particularly export-oriented industries. Exports are expected to grow annually at about 111 in the next five years, concurrently with improved levels of industrial productivity. The manufacturing sector accounts for about 22Z of GDP, 11% of total employment and 60% of total merchandise exports. Export industries are mainly in the private sector (80Z of commodity exports), particularly in light manufacturing industries. In order to sustain the growth of the manufacturing sector and to retain its competitiveness in international markets, improved levels of productivity are essential. 1.02 In analyzing the causes of low industrial productivity, the Bank's Industrialization and Trade Strategy 1/ report identified several issues including inadequate industrial training capacity. Bank sector work on industrial training has confirmed this finding, and identified four main issues in the industrial training sector: (i) the absence of pre-service industrial technician training; (ii) the lack of in-service industrial training programs at all skill levels below the professional level; (iii) the lack of an integrated national industrial training system; and (iv) inadequate industrial and vocational training facilities at the pre-service secondary school level. The first three issues are currently being addressed through the Industrial Training Project (Loan 2399-TU, effective in September 1984). The fourth issue, inadequate industrial training facilities at the pre-service secondary level, is addressed in this project. Industrial Schools 1.03 The Directorate of Technical and Vocational Education (DTVE) of the Ministry of Education (MOE) is practicallv the sole industrial training entity at the skilled manpower and junior technician levels. A small number of large industrial enterprises have "industrial schools" attached to their plants I/ Turkey: Industrialization and Trade Strategy, IBRD Report No. 3641-TU dated February 18, 1982.  where the training provided is directed to their immediate needs. The main burden for preparing youths for industrial employment is with the MOE's DTVE (Chart I), which oversees industrial training in some 316 secondary level industrial schools (1983/84) (Annex 2 and Chart II). 1.04 The industrial schools focus on training for employment, and are used to very good purpose as industrial training centers, supporting a broad range of training programs integrated with industry. The main issues facing the DTVE are the need to expand the capacity of the industrial schools in order to meet the current and prospective manpower needs of the developing economy, particularly in the manufacturing/exporting sectors, and the need to upgrade training programs and equip the industrial schools in order to raise the level of training. 1.05 The Government is in the process of expanding the number of industrial schools and enrollments, from about 142,000 (177 of all secondary level enrollment in 1983/84) to an estimated 220,000 (24% of all secondary level enrollment in 1990/91), and, at the same time is undertaking a broadly based upgrading program of both physical facilities and training elements of the system. 1.06 The industrial schools offer three- and four-year programs, which provide pre-service training for skilled industrial occupations and junior technicians. There was a total enrollment of some 133,200 students in the three-year program, and 8,400 in the four-year program in 1983/84. Girli represent 4% of enrollment in these schools, and enroll mainly in the electrical, electronics, chemistry, and technical drawing trades. The three-year industrial programs offer training in some 24 trades, while the four-year industrial programs offer courses in nine of these. Admission to both programs is based on a nationwide entrance examination given to all applicants who must have completed successfully eight years of schooling. In 1983 there were twice as many applicants as there were available places in the industrial schools. 1.07 The industrial schools also provide the required instruction in theory and workshop practice for the national apprenticeship program. In 1983/84, there were 52 apprenticeship training centers, 40 of which were operated within the industrial schools, and 12 were operated on separate premises. Apprenticeship training lasts three to four years, and in the 1983/84 academic year there were 6,700 apprentices enrolled in the centers. 1.08 During the evenings, the industrial schools premises are used for upgrading adult workers in industrial skills, and they are also used for industrial pr-ctical trade schools training of which there were 53 in 1983/84 with an enrollment of about 5,900 students. The minimum requirement for entry to this program is a primary school diploma. Courses are modular, and have an 80% workshop content, and cover 28 trades. The lengths of courses range from 8 to 20 months. The objective of this training program is to assist the transfer of workers from one skill to another by ungrading. In addition, of the 316 industrial schools, 14 are used as in-service training centers for instructors, primarily during school vacations. A consequence of the multi-purpose use of the industrial school facilities is a very high level of utilization of equipment and facilities, and a relatively low recurrent cost per student (about US$200 per year at 1984 prices).  1.09 In terms of nwabers and budget, the industrial schools represent the largest training compo:,ent of the industrial training system. The success of these industrial schools is critical to the development of Turkey's exporting/manufacturing industry, since these schools are the major feedstock for trained skilled and semi-skilled industrial manpower. The proposed project addresses the upgrading needs of some 39 industrial schools. Demand for Qualified Manpower 1.10 The nature of recent economic development, which emphasizes medium scale manufacturing/exporting industries, has placed a premium on manpower capable of working to international standards with modern equipment, and on skills required by automatic processing equipment, such as electronics, control and instrumentation, industrial hydraulics, and numerical control. Training facilities for these skills are in many cases absent, and a major element in the Government's upgrading and development program is the establishment of trades training in areas of manpower shortages such as these. While the quality of the existing training program is generally high, the lack of essential training equipment is a major impediment. Accordingly, an important objective of the DTVE is the improvement of the quality of training in the industrial schools through the provision of adequate training equipment. 1.11 In order to meet more fully the need for qualified industrial manpower, the Government is embarking upon a modest expansion prqgram of industrial schools. In order to evaluate the MOE's proposed expansion - program, the Bank prepared the manpower estimates shown on Table 1.1. These estimates use the 1980 Census as the benchmark for employment, Bank estimates of growth to update employment to the base year of the projection and to project employment over the period 1985-95. Table 1.1 presents estimated manpower demand and supply in the manufacturing sector in the occupations for which the DTVE industrial schools train manpower at the skilled worker and junior technician levels. Table 1.1 indicates that with the expansion plan proposed, the industrial schools will meet approximately 86S of the estimated demand for labor from 1985 to 1995. Thus the Government's modest expansion program of the industrial schools concurrently with the improvement of the qualitative aspects of the entire system, is appropriate. Table 1.1: ESTIMATED DEMAND AND SUPPLY FOR SKILLED AND SEMI-SKILLED INDUSTRIAL MANPOWER, 1985-1995 Skilled and Sein-Skilled 1985-1995 Supply/Demand 1990/91 Supply/Demand Industrial Manpower (Z) (Z) Manpower demand 734,900 73,490 Manpower supply (all industrial schools) 632,000 86.0 64,800 88.2 of which additional output from project institutions 15,380 2,460 Source: Staff Working Papers, based on data provided by the State Institute of Statistics, the State Planning Organization, and the MOE.  - 4- Issues in the Industrial Schools 1.12 The ongoing review by the DTVE of the quality of the training program of the industrial schools has resulted in an unusually efficient and effective training system with strong links with industry. While the Bank is supportive of the DTVE industrial schools program, which is essentially sound in its objectives and content, significant improvements are possible. They have been included in proposed project. 1.13 Curriculum Development and Reform. The industrial schools program has been in operation for some 30 years, during which time a body of curricula has evolved which has been revised periodically. The National Board of Education (NBE) (Chart I) is the ultimate authority for curricula reform in Turkey, though the DTVE carries day to day responsibility for curricula development. Amendments to existing curricula are approved by the NBE. Curricula currently in use in the industrial schools are modeled on international curricula for each trade, developed by local curriculum specialists and adapted to national conditions, translated into Turkish, and printed and published by the MOE. The curriculum divides between general subjects (40X). technical theory and workshop practice (54Z) and student counselling (6Z). The present curricula are basically sound in respect of trades training, though the teaching week is unduly long (49-52 hours) and the curricula of some trades require updating. The result of this lengthy teaching week is an increased cost of salaries, and, as a result of a gradual addition to the curricula of a range of non-technical general subjects over several years, there has been a dilution of emphasis on trades training. The MOE is undertaking stcps to revise the curricula to reduce the amount of time spent on non-technical subjects which will lead to a reduction in the teaching week frcm about 50 hours to about 40 hours in 1985/86. This change would not affect che utilization of laboratories and workshops, and would make the programming of classroom usage more manageable. 1.14 A major initiative in the development of curricula is the Vocational and Technical Education Project (METEP), which was started in the early 1980s. The MOE selected some four industrial schools (of which three are schools included in the proposed project) as pilot centers for the introduction of more modular based curricula. The initial evaluation of this program is encouraging, as efficiency rates are typically higher and employers report high levels of satisfaction with graduates. The MOE is considering expanding the number of schools and specializations covered by the METEP project. The Bank endorses both the substance of the METEP project, and this approach to curricula development. The progress of the METEP project, particularly the implementation of its successful components, will be :arefully monitored by the Bank. 1.15 In order to enhance the ability of local authors of curricula materials, the MOE provides, annually, in-service training courses in curricula development; in 1983/84, 140 serving instructors and teachers attended a one-week course in curricula development. Under the proposed project, subject specialists under a technical assistance program would assist the development of these programs and with the upgrading of existing curricula. where appropriate (para. 2.08).  l.lo As a result of language differences, there is a lack of exposure to modern technical textbooks, and the general availability of modern reference textbooks is very limited. As a result, teaching approaches and content tend to apply to dated technologies, which, though in use in Turkey, are rapidly being replaced by more modern technology. In order to improve the availability of modern reference materials, the Government is embarking on a program to translate some 50 international reference textbooks into Turkish, and reproduce them using the Educational Science Equipment Production Center (ESEPC) (supported under Loan 748-TU) and distribute these to the industrial schools. As a result of these measures major qualitative improvements in the curricula can be anticipated. 1.l7 Industrial Liaison. The industrial schools enjoy unusually close ties with industry: industrial representatives are included on the Board of the METEP project; active School Advisory Committees (SACs) exist at the large majority of schools with representation from industry; students spend some 40 days on industrial placement in their third and fourth years; and industrial employers assist in the placement of students in employment. A special one week in-service program is given each year for 40 teachers on the role of school-industry links. However, these tiei would benefit from an amendment to tihe membership of the Trade Advisory Committees (TACs). The TACs are nationally based bodies which provide the MOE with advice and guidance in respect of individual trades on the quality of graduates and on the need for appropriate developments in curricula. On the basis of advice from the TACs, curricula within individual trades are .amended for all industrial schools. At present the membership of the TACs includes representation from the large employers of graduates from a particular trade training (e.g., Turkiye Electrik Kurumu (TEK) in the case of electrical trades training) large industries, as well as staff of the industrial schools and the MOE. However, industrial representation is variable, and the quality of advice givei by the TACs would be improved by the systematic representation of industrv on all TACs. The Bank has received satisfactory evidence that the SACs described under the First Education Project (Loan 748-TU) exist at industrial schools supported under that project, and at every industrial school visited by the mission, with the exception of newly opened industrial schools (para. 2.09). 1.18 Provision of Instructors. The nunber of teaching staff in the industrial schools is some 10,600 (of whom some 1,600 are womern) most of whom are graduates of a Technical Teacher Training College (TTTC) or an industrial school and have industrial experience. All instructors presently employed by the MOE in the industrial schools have acceptable teaching qualifications and current staff/student ratio is an acceptable 1:14. The main sources of supply of instructors at present are: (a) direct recruitment of qualified instructors working outside the MOE; (b) industry, which provides part-time teachers for practical work; and (c) the three Technical Education Colleges in Ankara, Istanbul, and Elazig (current enrollment in these three faculties is 3,800). 1.19 In numerical terms, the provision of instructors for the present industrial schools and the planned expansion is adequate. However, the retention and attraction of well qualified instructors is an important objective for the MOE, particularly for instructors who have marketable  - 6 - industrial skills. In 1983/84 industrial school technical instructors were on a salary scale which ranged from TL 46,000 to TL 81,000 per month. The average monthly salary of instructors in the industrial schools in the proposed project was, in 1983/84, TL 52,000, which is comparable with salary levels in the private sector for similar jobs. While there will always be a tendency for good staff to seek better paid employment in industry, the MOE has been able, thus far, to attract and retain staff. The fringe benefits and job security of an appointment with the MOE combined with current salaries have proved sufficient incentive to attract some 800 qualified applicants from industry during 3 recent recruitment drive by the Ministry. The present levels of salaries paid to industrial schools' staff are therefore an appropriate compromise between the need to retain highly qualified instructors and the need to control the recurrent costs of education. Accordingly, in order to ensure that the quality of instructors is maintained, the Government will keep instructor salaries under careful review and additional emphasis is being placed on the in-service teacher training program (para. 2.12). 1.20 Finance. During the past five years, financial resources have been extremely constrained, while enrollment has grown by 5X annually from 113,000 to 142,000. Although the industrial schooLs are staffed adequately and physical facilities are good, there is a shortage of modern training equipment and learning materials. The industrial s_hsols are mainly financed out of the MOE allocation in the Central Budget. There are three other sources of income available to the industrial schools. Firstly, at several schools visited by the mission, industry had donated a limited amount of equipment and furnishings. Secondly, industrial employers .who send employees to the schools for evening classes pay TL 7,000 (1984) per 128 hours of instruction as a contribution towards training costs. Thirdly, it is Government policy for every industrial school to operate a revolving fund to finance the purchase of materials necessary to produce items either for sale to outside agencies or required by the MOE, such as desks and chairs. The industrial schools make about 5X to 10% profit on these activities. As used in the industrial schools, the revolving funds are a very positive element of the training program, as they are a means of ensuring that objective standards are applied to the quality of instruction, and also because they are a means of financing training materials which would otherwise have to be financed by the Government. 1.21 In order to ensure the long run viability of the education and training system, the new Government has begun, for the first time and very recently (September 1984), to introduce fees 'or university students. The Government also underlined its commitment to the general application of cost recovery for education and training in the current Five-Year Plan. It is agreed policy between the Government and the Bank that, in principle, cost recovery measures should be progressively extended throughout the educati-= and training system, taking due account of considerations of equity and efficiency. There are several reasons to suggest that the introduction of fees, or similar cost recovery measures, to the industrial schools in particular would be beneficial to the system. These are: (a) the industrial schools are a particularly (and necessarily) expensive form of education, in which private and social rates of return are typically high. The currernt excess of demand for places in the industrial schools would enable the Government to charge fees towards these costs without diminishing  significantly the demand for training places; (b) the attribution of a price to the training available would establish a value for training both in the minds of trainees and employers, thus increasing the pronensity of employers to support the industrial schools programs financially, and increasing the commitment of traiaees to the program. Convecsely, there are several important questions :c which answers are required prior to the introduction of cost recovery measures, including: (a) how high would the administrative overheads be to a fee paying system, and would these negate the likely benefits to their introduction; (b) to what extent would fees be a regressive tax on the poorer sections of the community; (c) in the context of a general introduction of fees to the secondary level of education, what pattern of relative fees between types of schools (secondary vocational/general) would be appropriate to achieve the Government's educational objectives; (d) what would the effect on the demand for places be of different levels of fee structure; (e) to what extent could a fee structure reflect qualitative differences in the programs provided; (f) to what extent could employers be requested to: (i) contribute towards training costs; and (ii) sponsor either particular industrial programs or individual students, possibly those in deprived ar i s or from low income groups; and (g) at what point would scholarship programs be appropriate, and what would the optimal institutional mechanism for such a program be. The Government has requested Bank assistance with the futher review of this question and Bank financed sector work on education finance as it pertains to the entire education system is scheduled to begin in July 1985. In the proposed project, finance is included for a study to assist the Government address this issue in respect of the industrial schools in particular (para 2.15). Budgetary Support 1.22 In 1983, Turkey spent an amount equivalent to 3.3% of GNP on education. This is slightly lower than the average ratio for other countries at a similar stage of development. Education accounted for 16% of all Government expenditures in the same year; primary (including pre-schools), secondary and higher education receiving 51%, 22% and 24% of the budget, respectively. 1/ All technical and vocational education accounted for 18% of all expenditures at the secondary level, three-quarters of which are recurrent expenditures, mainly teachers' and instructors' salaries. In 1983 the industrial schools received 9% of all MOE expenditures, a proportion which fell to 6% in 1984. This decline is the result of the completion of a major program of construction of industrial schools. The MOE has budgetted to maintain the share of the industrial schools in the MOE budget at 6% in the aext five years. This allocation will require careful monitoring by the Government to ensure that the industrial schools receive resources commensurate to their need during the expansion 'o3gram. The proposed study of education costs (para. 2.15) will assist the Government in this task. Government Education/Training Strategy and Bank Lending 1.23 Strategy. The restructuring of the economy and the policy of developing a more open economy have affected significantly the Government's education and training objectives in recent years. The emphasis on 1/ Other items of educational expenditure, including the education of the childrer. of Turkish migrant workers abroad, accounted for some 3% of the budget.  industrial, particularly export oriented, development, has highlighted a series of weaknesses in the field of industrial training. The previous emphasis on the development of general secondary education and university expansion is now being replaced by a heightened emphasis on the manpower needs of the industrial sector. In this respect Government policy has been positively influenced by a dialogue with the Bank under economic and sector work, in particular the Industrialization and Trade Strategy Report, which identified the lack of industrial training facilities and the need for improved technology development as key issues. Accordingly, in order to facilitate the growth of the industrial sector by ensuring an adequate provision of suitably trained manpower, the Government is proposing a modest expansion of enrollment and output from the industrial schools from a 17% share of enrollment in 1983/84 to a 24X share in 1988/89. The growth of unemployment has also led the Government to place a greater emphasis at the post-primary level on vocational aspects of education, in particular the need to ensure the employability of school leavers. The recent development of the mineral, water, and agricultural resources of the eastern regions has demonstrated a requirement for skilled manpower which in many areas is lacking, due to the limited provision of education and training facilities. The Government has identified key provinces in the east of Turkey as priorities for education and training development. In the Fifth Five-Year Development Plan (1985-89) these objectives are reflected in the proposed expansion of vocational and technical training programs, and through special provision for the eastern provinces. 1.24 At the same time as recognizing the nced to increase educational provision, the Government is aware of the need to ensure the financial viability of the system in the long run. The Government is taking measures to control and reduce recurrent costs and, at the same time, is seeking ways in which to raise revenue to support the industrial schools. Additional resources are both earned and received by the schools from local industry (para. 1.20). However, the Government, under the proposed project would undertake a study of further ways and means to control costs and raise additional revenues. Bank Lending Strategy 1.25 Bank lending in Turkey has so far concentrated on supporting industrial training. There have been two Bank loans. An Education loan for US$13.5 million (Loan 748-TU) was signed in 1971 and closed in 1981. This project supported 32 four-year industrial schools, the Technical Teazher Training College (TTTC) in Ankara, as well as the ESEPC, and the Education, Film, Radio and Television Center (EFRTC). The Project Performance Audit Report No. 4018 (PPAR) (dated June 28. 1982) stated that the educational impact of this project was consideraDle, particularly on industrial schools, with project equipment well used and maintained and enrollments in the industrial schools practically as anticipated at appraisal. The Industrial Training Project (Loan 2399-TU), effective September 1984, is with the Council for Higher Education (YoK), the Industrial Training and Development Center (SEGEM), and the State Institute of Statistics (SIS). The project objectives are to support pre-service training of senior industrial technicians with YoX, in-service training of technicians and professionals in industry under SEGEM,  and to assist the Government to improve the quality of their statistical services through training under SIS. The focus of the Industrial Training Project on the senior technician level end on in-service training is complementary to the proposed project, which supports skilled workers and junior technician training programs. Implementation of the Industrial Training Project is proceeding satisfactorily. 1.26 Bank lending strategy in the education and training sector is complementary to Government policy. It has, as a priority, the objective of improving the productivity of labor, particularly in the industrial sector. The Industrial Training Project (Loan 2399-TU) and the proposed Industrial Schools Project are mutually complementary and support this objective. These two projects cover much, in terms of scope, of the types of training required for the national development of pre-service skilled manual workers, Junior and senior technicians. Both projects represent a partial coverage of the total requirement for improved industrial training, and are seen as the first in a series of projects in this field. As part of this objective, the training of technicians qualified to support an advanced technological environment, and the development of an institutional environment supportive of modern technology development, are envisaged as elements of future lending activities. A second priority is the development and upgrading of the educational and training facilities of the eastern regions, in order to assist the development of those regions. A third priority is to assist the Government re-orient and upgrade vocational training programs towards employment. In each case the financial viability of the system, and the need to ensure efficiency and quality in training, are a common objective. 1.27 In the design of the proposed project, two lessons drawn from past experience have been incorporated. The PPAR for the First Education Project (Loan 748-TU) cited the lack of a well defined Project Implementation Unit (PIU) as a weakness of the project. In the proposed project, a PIU structure, and its internal and external relations and responsibilities have been discussed with the Government and are acceptable. A well qualified Director Lias been appointed and the FIU staff have been closely involved in the preparation of the project. The second lesson learned from the First Education Project and applied in the proposed project has been the careful ascertainment of Government support for proposed technical assistance. The PPAR questioned the depth of Government support to the proposed technical assistance program under the First Education Project. The technical assistance program under the proposed project was proposed by the Government, and has the wholehearted support of the MOE. Terms of reference were discussed and agreed during appraisal, and would be confirmed at negotiations.  9 .1~~~~~~~~~~~~~~~~~~n "'o C) sI'  - 11 - II. THE PROJECT Introduction 2.01 The proposed project was prepared by the Government following a Bank project identification mission in July 1984, and a subsequent Bank preparation assistance mission in September 1984. The project was appraised in December 1984. Objectives and Scope 2.02 The proposed project would assist the Government implement priority industrial training programs to improve productivity and assist the maintenance of high rates of economic growth, particularly in t;e manufacturing/exporting sectors. The project objectives are as follows; (a) to improve the quality and increase the quantity of trained industrial manpower by equipping and re-equipping seven existing trade specializations and equipping four new trade specializations in 39 existing industrial schools; (b) to improve the quality of existing curricula and training materials, and to assist the development of programs for new trade specializations; and (c) to improve the planning and management capacity of the DTVE Dy providing technical assistance. 2.03 The project would includez (a) refurbishment, equipment, and furniture in 39 existing industrial schools, to establish 3,577 new training places and to re-eqlip 3,647 training places (Table 2.1): Table 2.1: NUMBER OF PLACES RE-EQUIPPED, EQUIPPED AND TOTAL ENROLLMENT IN PROJECT INSTITUTIONS Number of Places Additional Re-equipped Equipped Enrollment Total Enrollment Existing trades 3,632 3,292 7,620 15,080 New Trades 15 285 1,050 1,080 Total .3,647 3,577 8,670 16,160 Source: Annex 4. (b) technical assistance (Schedule I); (i) related to the above project components for industrial schools (66 man-months of specialist services and 686 man-months of fellowships); (ii) 24 man-months of specialist services and 24 man-months of fellowships to improve the management capability of the DTVE and industrial schools;  - 12 - (c) six man-months of specialist services and six man-months of fellowships, to assist the process of technical textbook translation; and (d) feasibility and project studies (20 man-months of specialist services). Industrial Schools 2.04 To improve the quality of training in industrial schools and alleviate the scarcity of skilled labor in the industrial sector, the project would provide refurbishment, equipment, furniture and technical assistance for 39 existing industrial schools (see Map and Annex 5). These industrial schools are distributed across the country, and cover the main industrial areas and the south and southeastern regions, both of which are priority areas in the Government's development strategy. The proposed project would assist the Government meet the urgent manpower requirements of industry in urban areas as well as in the regional development zones by providing additional and improved training facilities, and the access to training of lower income groups. The 39 schools were selected during appraisal from a total of some 177 requiring upgrading and for which project assistance was requested. The criteria of selection of proposed project schools were: (a) the physical state of existing workshops, classroom and school facilities; (b) the quality of existing links with industry; and (c) the priority of a region in the Government's development strategy. 2.05 In the proposed project, industrial training in 11 specializations would be supported. Of these, four are trade specializations for which existing curricula are adequate (electrical, foundry, dyeing, and printing), seven trade specializations are either new to the industrial schools or have curricula which require updating (electronics - including marine electronics and telecommunications - pneumatics and industrial hydraulics, machine tools and computer numerically controlled machines (CNCMs), control and instrumentation, and computer science). Through the provision of training equipment, training will be introduced to existing schools in specializations not presently taught through lack of equipment (machine tools and CNCM, dyeing and textiles, and computer applications) and in four specializations entirely new to the industrial schools system (pneumatics and hydraulics, telecommunications, control and instrumentation, and marine electronics). The eleven trade specializations were selected for proposed project support on the basis of: (a) national shortages of skilled manpower; and (b) skills shortages specific to the region in which the schools are located. The Bank confirmed these priority skill requirements through site visits and through discussions with Government agencies (Ministry of Industry and Trade, Ministry of Education, State Planning Organization) industrial employers, and the Chambers of Commerce and Industry. 2.06 The enrollment in project schools in supported specializations would be about 16,160, of which 8,670 would be additional and the estimated annual additional output from the three- and four-year programs together would be some 2,460 beginning in 1991 (Annex 4). The Government is supportive of women's participation in the industrial schools, and all courses are open  - 13 - equally to men and women. Women have tended to specialize in the technologically more advanced skills, such as electronics, electrical and computer applications, and as a result of the emphasis in this project on these areas, an estimated 12% of total enrollment would be women, primarily in the electronics, electrical, and computer applications specializations. The current annual drop-out rate is 4% annually, which is typical for training programs of this type. In order to minimize drop-outs, student counselling is included in the curriculum. There is an excess of applications over available places, by a factor of about 2:1, and the growth of the population and the location of the schools in reasonably large towns or cities ensure a more than adequate supply of trainees. In order to assist the Government with the further development of the industrial schools, the MOE would undertake an employment follow-up study of graduates from four industrial schools. The study would b