Turkey - Employment and Training Project

/ < ') -) t/ / - (' / Document of The World Bank FOR OFFICIAL USE ONLY MI CRUF I COlE COPY Re7port No.: 103.1-TU Type: (SAR) Report No. 10331-TU litle: EMPt OYMENT &, TRAININIG PRCi]EUT Author: MERTAJ[GIH, fV. Ex't.: .>-3'14 Room:IlA -1111 Dept.:EC1HR STAFF APPRAISAL REPORT REPUBLIC OF TURKEY EMPLOYMENT AND TRAINING PROJECT NOVEMBER 6, 1992 Human Resources Sector Operations Division Central and Southern Europe Departments Europe and Central Asia 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 - Turkish Lira (TL) Value of USS 1.00 1987* TL 674.5 1988* TL 1,422.3 1989* TL 2,121.7 1990* TL 2,629.0 Dec. 1991 TL 5,200.0 Oct. 1992 TL 7,500.0 V/ Anmual Average ABBREVIATIONS AND ACRONYMS ATHB Research and Technical Services Unit (Arasirma ve Teknik Hizmet Blriml) of the Occupational Standards Commission CIAC Career Information Advisory Committee CIU Career Information Unit DSPW Directorate for the Status and Problems of Women EC European Community ICB International Competitive Bidding IIBK Turkish Employment Agency (Is ve Is$i Bulma Kurumu) LCB Local Competitive Bidding METARGEM Vocational fraining Research Center (Ministry of Education) MOE Ministry of Education MEKSA Foundation for Promotion of Vocational Training and Small Industries MSK Occupational Standards Commission (Meslek Standartlarl Kurumu) NPC National Productivity Center OECD Organization for Economic Cooperation and Development OSI Occupational Standards Institute PCU Project Coordination Unit SIS State Institute of Statistics SOE Statement of Expenditures SPO State Planning Organization TISK Turkish Confederation of Employer Associations TMSE Turkish Standards Institute TOBB Union of Chambers of Commerce, Industry, Maritime Commerce and Commodity Exchanges of Turkey TURKIS Turkish Confederation of Employees Unions TUSIAD Turkish Industrialist and Businessmen Association YOK Council of Higher Education (Yoksekagretim Kurulu) REPUBLIC OF TURKEY FISCAL YEAR January 1 - December 31  FOR OMCIL USE ONLY REPUBLIC OF TURRY EMPLOYMENT AND TRAINING PROJECT STAFF APPRAISAL REPORT Table of Cgnt= Loan and Project Summary . . . . . . . . . . . . . . . . . . . . . . . . i I. EMPLOYMENT AND TRAINING ISSUES AND STRATEGY .1 Background .1.... . . . . . . . . . . . . . . . . . . . . . . . Employment and Training Issues .... . . . . . . . . . . . . . . 2 Training ..... . . . . . . . . . . . . . . . . . . . . . . . 2 The Unskilled Unemploye .... . . . . . . . . . . . . . . . . 3 Career Guidance Counselin. 5 Labor-Market Information. 6 Occupational Standards and Certification. 7 Women's Employment. 8 Employment and Training Strategy ... . . . . . . . . . . . . . . 8 II. THE PROJECT ........................... . 10 Project Objectives .... . . . . . . . . . . . . . . . . . . . . 10 Rationale for Bank and Government Involvement .10 Project Components .... . . . . . . . . . . . . . . . . . . . . 12 A. JOB-INSERTION TRAINING ..12. . . . . . . . . . . . . . ... 12 Job-Insertion Training Fund ..... . . . . . . . . . . . . . . 12 Technical Assistance .... . . . . . . . . . . . . . . . . . . 15 B. DIVERSIFICATION OF EMPLOYMENT SERVICES. 15 C. EMPLOYMENT AND COUNSELING SERVICES .17 Davelopment of Improved Employment Services .17 Development of Counseling Services .18 Implementation of Improved Employment and Counseling Services 18 Automation of Employment Services .19 Project Coordination .20 D. LABOR-MARICET INFORMATION .20 Improved SIS Employment Statistics .20 Labor-Market Information Data Base .22 Labor-Market Research and Dissemination .22 E. OCCUPATIONAL STANDARDS AND CERTIFICATION .23 F. WOMEN'S EMPLOYMENT PROMOTION .... . . . . . . . . . . . . . . 25 Environmental Impact .26 Tis report Is brsed an findings of an appraitsal mission *blh visited Turkzey in Ifveu1s4/D*ccV. 1901. The mission compriued of Michael oertaugh (Missian Lader, ZeCnomdst), Dowid ProtKOLL (Laborg-Nsket SpecialLet). Patricoia loysteuber COp rtions Officer). and Mb*ios brg (Io o-in-Devalcst Specialist). The report also reflecta ea*lier inputs by cenAultonts WillIm_ CLetenoff. FhLiP Jarvis. nd Fr k Sevacqua, as well the finding of a post-approisal mission by Miohael Mertturb, RaLph Egbhiso. en*d David Fretwell. In July. 1992. Poer r<viewrs for tho project are J r E 0pp.heho and Arvil Ven U_. Ralpb 8arbison is Division Chief; Michael H. Wishes In DepartmDt Director. 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.  Table of Contents (contIM1n2U 1II. PROJECT COSTS AND FIANCING . . . . . . . . . . . . . . . . . . . . 27 Basis of Cost Estimates . . . . . . . . . . . . . . . . . . . . 27 Duties and Taxes . . . . . . . . . . . . . . . . . . . . . . . . 29 Contingency Allowances . . . . . . . . . . . . . . . . . . . . . 29 Fore'gn Exchange Component . . . . . . . . . . . . . . . . . . . 29 Incremental Recurrent Costs . . . . . . . . . . . . . . . . . . 29 Project Financing ...... . . . . . . . . ..29 IV. PROJECT MANAGEMENT AND IKPLEXENTATIO . . . . . . . . . . . . . . 31 Project Coordinating Unit (PCU) ...... ........ .. . . 31 Job-Insertion Training . . . . . . . . . . . . . . . . . . . . . . 32 Diversification of Employment Services . . . . . . . . . . . . . . 33 Employmant and Counseling Services. . . . . . . . . . . . . . . . . 33 Labor Market Information ........ ........ ... . . 35 Occupational Standards and Certification . . . . . . . . . . . . . 36 Women's Employment Promotion ....... ....... .. .. . 36 Loan Administration .............. . .. ...... 37 Project Budget and Accounts . . . . . . . ... . . . . . . . . . 37 Audits . . . . . . . . . . . . . . . . . . .. . . 37 Progress Reporting . . . . . . . . . . . . . . . . . . . . . . . 37 V. PMOCURE NT AND DISBURSEHE . . ............... . 38 Project Procurement . . . . . . . . . . . . . . . . . . . . . . . . 38 Job-Insertion Training . . . ................ . 38 Equipment and Vehicles ....... ......... .. . 38 Technical Assistance and Fellowships . . . . . . . . . . . . 39 Books, Materials, Staff Trainlng, Travel, Subsistence . . . 39 Contract Review and Approval . . . . . . . . . . 40 Loan Disbursements .. .40 Special Account and Project Accounts . . . . . . . . . . . . . . 41 VI. BlE ITS AND RISKS ....................... . 42 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 RLsks .................. . 42 VII. AGREEMNTS REACHED AND RECOMMENDATION . . . . . . . . . . . . . . . 43 Agreements Reached . . . . . . . . . . . . . . . . . . . . . . . . 43 Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . 4 ANNEX A Selected Documents Available in the Project File ANNEX B IIBK Structure and Programs ANNEX C Detailed Project Cost Tables ANNEX D IIBK Branch Offices ANNEX ' Schedule of Projected Disbursoments ANNEX F Implementation Schedule ANNEX G Summary of Project Technical Asslstance Requirements NAP: IBRD 23363  REPUBLIC OF TURKEY EMPLOYMENT AND TRAINING PROJECT STAFF APPRAISAL REPORT Loan and Project Summary Borrower: Republic of Turkey Amount: US$ 67.0 million Teras: Seventeen years, including a five-year grace period, at the ..6D standard variable interest rate. Project Objectives: The proposed project has four objectives: a) to improve allocative efficiency through liberalized employment services, b) to improve the absorption of unemployed, unskilled workers in productive employment, c) to improve the efficiency of labor- market decisions by providing better information for several categories of users, including secondary students who must choose between alternative education And training options with different employment implications, employers wishing to recruit employees with specific job skills, training providers who must plan the offering and content of training courses, and collective bargaining agents who must reach decisions on appropriate levels of staffing and remuneration, and d) to promote women's productive employment. Project Description: Iumroved allocative efficiency through liberalized euDloyment services would be achieved by the development and phased implementation of a strategy to diversify employment services. Improved absor2tion of unemployed. unskilled workers in oroductive emlovment would be accomplished by: a) generalizing the pilot program of job-insertion training developed by IIBK, and b) strengthening public employment services, including the introduction of employment counseling for job seekers and screening of job seekers, the modernization of job placement practices, and improved management of employment services. IgRroved efficiency of labor-market decisions would be achieved by: a) developing and introducing career counseling services in labor offices and secondary  - ii - schools, b) developing and adopting employer-relevant occupational standards and certification, and c) producing and disseminating information from various sources on labor-market trends. Women's productive emRloyment would be promoted under the project by: a) deliberate actions to meet the needs of women's employment under the other project activities, and b) conduct of research and dissemination of research findings on how to alleviate the constraints on women's employment. Beneflts and Risks Benefits: The project would promote the integration of the unskilled unemployed into productive employment, and would improve the efficiency of labor- market choices through improved information on employment prospects, on training requirements, and on job-seekers' skills. It would make a particular effort to provide better employment opportunities for women. In addition to the equity benefits for the unskilled unemployed, the project would contribute to macroeconomic performance through the improved efficiency of labor markets. For example, the development of occupational standards and certifi- cation under the project is expected to lead to improved productivity by promoting the movement of skills to their best uses in the economy. And the improved labor-market information to be developed under the project -- in particular, relating to trends in labor productivity by sectors and occupations -- will provide a more objective basis for wage determination than the current, confrontational process of collective bargaining. By reinforcing job placement capacity and providing job-insertion training as part of the job placement process, the project would help minimize the effects of worker dislocation resulting from the planned restructuring of public enterprises and other adjustment actions. Risks: Project risks relate to: a) the IIBK's limited implementation capacity and b) the need for cooperative action among numerous public-sector and private-sector agencies in order to ensure coherence of implementation among the various elements of the project. This coherence is necessary if the objectives of the project are to be met. To address the risk that project implementation could suffer from IIBK's limited implementation capacity, the project provides for management assistance to IIBK throughout implementation of the project. To address the risk of inconsistency in implementation of the project  - iii - actions, the pxoject provides for participation of other parties in the various advisory and policy- making bodies to be established under the project, including the National Employment Board and the Provincial Employment Boards for the Job-Insertion Training component, the Career Information Advisory Committee for the Employment and Counseling Services component, the Labor-Market Information Advisory Board for the Labor-Market Information component, the Occupational Standards Commission for the Occupational Standards and Certification component, and the Research Advisory Committee for the Women's Employment Promotion Component.  - iv- ESTINATED P0J1CT CMT Project Component Local Foreign Total A Froian p of Total Exchang m 8e Costs -US M ILLION-- - Job Insertion Training 36.44 6.31 42.76 15 47 Diversification of Euptoyntin 'ices 0.03 0.22 0.25 69 0.3 Employment and Counseling Servict. 28.15 12.25 40.40 30 4 Labor Market Information (SI$) 1.07 1.54 2.61 59 3 Occupational Standards & Certificatfon 2.39 1.16 3.56 33 4 Women's Employment Promotion 1.22 0.22 144. 1S 2 Total Base Costs: 69.31 21.72 91.03 2 100 Physical Contingencies 0.99 1.23 2.22 55 2 Price Contingencies 12.19 1.97 14.17 14 16 TOTAL PROUECT COSTS 82.49 24.92 107.41 23 11 FINANCING PLM CUSS WILLICf3s Category of Expenditure Government Bank TOTAL Dutie uiJ # USSE UStN Taxes Investment Costs Job-Insertion Training 16.6 31.1 47.7 0.9 Equifexnt 0.9 8.4 9.3 0.9 Furniture 0.6 0.6 0.1 Books/Haterials/Supplies 0.3 2.4 2.7 0.3 Technical Assistance - 13.2 13.2 - overseas Fellouships 3.6 3.6 Local Training 3.0 3.0 Vehicles 0.2 1.9 2.1 0.2 Travel, Subsistence 3.4 3.4 Incremental Recurrent Costs Salaries 18.6 - 18.6 Materials/Operating Costs 1.1 - 1.1 Rent/Maintenance 2.1 - 2.1 - TOTAL: 40.4 67.0 107.4 2.4 ESTIMATED DI0 US1 Xr BANK FISCAL YEARS: 1 M 1994 1995 1996 1997 199 1999 2000 ----------------------Us$ MILLIONS. ................ Arnnual: 4.0 4.1 7.9 8.0 13.4 16.8 10.5 2.3 Cumulative: 4.0 12.2 16.1 24.0 37.4 54.2 64.7 67.0 RATE OF RETIRE: Not Applicable MAP NUBER: IB 2R 3  R1PULIEC OP TURKEY EMPOYMNTAND TRAINING PROJECT gTAf APPRAISAL REPOfl I. EMPLOYMENT AND TRAIN 0 ISSUES AND STRATEGY Background 1. In 1980, following a serious external crlsis, Turkey embarked on a major economic reform program, which constituted a sharp break from earlier policies of import substitution, market intervention, and pervasive involvement of state-owned enterprises in all sectors of production. The reform program aimed to improve the efficiency of production and allocation through greater reliance on competitive market forces. It included measures intended to reduce public subsidies to the state-owned enterprises, to control the fiscal deficit, and to simplify the trade regime -- thereby exposing domestic producers to external competition. An underlying goal of the reform effort was to raise Turkey's competitiveness in European markets, thereby bolstering Turkey's bid for European Community (EC) membership. 2. These efforts produced results. Real GDP growth averaged about 5 percent between 1980 and 1986, and exceeded 7 percent in 1986 and 1987. In 1988 there was a current account surplus fcvr the first time in 15 years. But the fiscal discipline which marked the early years of the reform gave way to a more expansionary policy as the 1987 and 1991 elections approached. This interruption of the reform process reversed many of the early achievements of the reform. By 1990, the current-account deficit had returned, inflation exceeded 60 percent, and state-owned enterprises continued to require massive operating subsidies. Unemployment, which had risen earlier in the decade, abated -- to an overall rate of 7.2 percent in 19901. Economic output grew at 9 percent in 1990, reflecting the combined effect of a tight monetary policy, expansionary fiscal policy, and large foreign capital inflows. But the situation again deteriorated in 1991 as public-sector borrowing requirements rose to 15 percent of GNP, output growth slowed to less than 1 percent, and the rate of inflation rose to 70 percent. I/ Bousehold Labour Force Surve, October, 1990. The uwi1loymt rate was sightly higher for .ls (7.5 percent) than for fnales, (7.2 perrmt), ad much higher In urba areas (10. percent) than in ural areas (4.8 percent). The awerage wwmloymamt rate was particularly high for general secondary school graduates (17.7 percent). Unemployment _n graduates of secondary vocatioal training programs was somewhat lower (13.9 percent), but the results of the 1W7 7lsebold Income and Ipenditure survey show that average earings of vocational secondua graduates are sinifLcantly lower thn earnings of general secondary graduates.  -2- 3. Following the October, 1991 elections, one of the first acts of the new coalition Government was to confirm its commitment to the main goals and policies of the reform strategy adopted in the early 1980s. But there has been little progress in implementation of policies under this strategy. Public enterprise reform is one key area requiring urgent government action. Successful implementation of public enterprise reform is likely to require the creation of suitable programs to train and redeploy workers who would be displaced by the reform, as well as of programs to provide temporary income support during the transition to new jobs. EmRloyment and Training Issues 4. Training: Average labor productivity in Turkey today is less than one-twelfth as high as the average in the six original EC members, less than one-third as high as in Greece, and less than one-half as high as in Portugal, the country with the lowest average labor productivity among the current members of the EC. During the past decade, the Government has invested heavily in training programs designed to raise worker productivity and support the development of a liberal, externally competitive economy. Most of the Government's investments in this area have focussed on fermal programs of pre- service training at the secondary and post-secondary levels. The Bank has supported this effort through four projects in the 1980s -- two for post- secondary technician training, and two for secondary-level training for skilled workers in industry, commerce, and tourism.2 5. The Government's pre-service training programs -- including those supported by past projects -- have provided specialized training to young people in a specific occupation which they were expected to pursue throughout their working lives. But the acceleration of changes in technology and in the structure of the ecoromy implies the need for a more adaptable labor force, and for better problem-solving skills in all occupations if the gap in labor productivity with the EC is to be closed. Increasingly, there will be a need for Job changes -- often involving occupational changes -- throughout an individual's working life. Even within occupations, the content of work is changing and will contirnue to change. There are three important implications for education and training programs: (a) The labor force needs a better grounding in basic literacy, problem-solving skills, and trainability in specific tasks. Currently, 79 percent of the labor force has a five-year primary education -- the legal minimum -- or less; 15 percent of the labor force is illiterate. The length of compulsory education needs to be extended, and its scientific content improved. The Government's education af These projcts are the Industrial Training Project (Loan 2399-TU), the Industrial Schools Project (Loan 2535-TU), the Second Industrial Training ProJect (Loan 2922-TU), and the Won-Formal Vocational Training Project (Loan 2776-TU). Implementation of these projects is gonerally satiafactory, but few results are yet available on their perforsmnce in terms of Job placement of graduates; only one of the projects in completed.  program als to address both thes needs -- an effort which the Bank is assisting.3 (b) Vocational education and training at the secondary level should be altered to provide skills which are generic to a broad occupational area, rather than limited to a narrow specialization. In the future, as Turkey follows the example of other OECD countries, specific tralning for skilled workers will tend to be provided at the post- secondary level. (c) Flexible programs of training need to be ma' available to provide job-specific skills throughout an - vidual's working life. The Turkish Employment Agenp-. (Iq ve Iu