Document o f The World Bank FOROFFICIAL USEONLY Report No: 38924 - AR PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHEAMOUNT OFUS$200MILLION TO THE ARGENTINE REPUBLIC FORA LIFELONG LEARNINGAND TRAINING PROJECT May 31,2007 HumanDevelopmentSectorManagementUnit Argentina, Chile, Paraguay, UruguayCountryManagementUnit LatinAmerica andthe CaribbeanRegionalOffice This document has a restricted distribution and may be usedby recipients only inthe performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS (ExchangeRateEffectiveMay2,2007) CurrencyUnit = ArgentinePeso ARS$l = US0.32 FISCALYEAR January1 - December31 ABBREVIATIONS AND ACRONYMS AEA Adult EducationActivity AGN National Audit Agency (Auditoria General de la Nacidn) BIRF InternacionalBankfor Reconstruction and Development (Banco Intemacional de Reconstruccidn y Desarrollo) BP BankProcedures CAA Curricular Alignment Activity CAS Country Assistance Strategy CECAM Quality and Modernization Center of the Argentine Federation of Municipalities (Centro de Calidady ModernizacidnMunicipal) CEDLAS Centro de Estudios Distributivos, Laboralesy Sociales de la Universidadde la Plata CFAA Country Financial Assessment Report CNA Competency NormalizationActivity CQ Selection Basedon Consultants' Qualifications COSUSETEC Technical Supervision and Control CoordinationUnit (Coordinacidn de Seguimiento Ticnico, Supervisiony Fiscalizacidn) DA Designated Account EO Employment Offices EPH Permanent HouseholdSurvey (Encuesta Permanente de Hogares) FAP Fiduciary Action Plan FM FinancialManagement GDP Gross Domestic Product GECAL Offices of Employment andJob Training (Gerencia de Empleoy Capacitacidn Laboral) ICB InternationalCompetitive Bidding IDB Inter American Development Bank IEs ImplementingEntities IFPS Professional Training Institutes (Institutos de Formacidn Profesional) INAI National Institute of Indigenous Affairs (Instituto Nacional deAsuntos Indigenas) INDEC National Institute of Statistics and Census (Instituto Nacional de Estadisticas y Censos) IPP Indigenous PeoplesPlan IPPF Indigenous Peoples PlanningFramework IRAM Argentine Institute for NormalizationandCertification (InstitutoArgentino de Normalizacidny Certijkacidn) IUFR InterimUnauditedFinancialReports LCS Least Cost Selection MIS Management Information System MOF MinistryofFinance i FOR OFFICIAL USE ONLY M O L Ministryof Labor MTESS MinistryofLabor, Employmentand Social Security NCB National CompetitiveBidding NDOPT National Directorate of Professional Training NGOs Non-governmental Organizations OAA Argentina Organization of Accreditation OECD Organization for Economic Cooperation andDevelopment OP Operational Policy PFM Public FinancialManagement PRODYMES Programof Decentralization and Improvement of SecondaryEducation(Programa de Descentralizacidn y Mejoramiento de la Educacidn Secundaria) PROMER Rural Education ImprovementProjet (Proyecto deMejoramiento de la Educacidn Rural) QBS Quality-based Selection QCBS Quality- andCost-Based Selection REGICE Register of Training and Employment Institutions (Registro deInstituciones de Capacitacidny Empleo) RENACI National Register of Indigenous Communities (Registro Nacional de Comunidades Indigenas) SBD StandardBiddingDocument SE Secretariat of Employment S I P Integrated System for Retirement and Pensions (SistemaIntegrado de Jubilaciones y Pensiones) SOE sss Statementsof Expenditure Single-source Selection TTL Task Team Leader UEMAT Evaluation, Monitoring andTechnical Assistance Unit UEPE ExecutingUnit for Projects with External Financing UEPEX Argentina Budget Execution Software for Multi-lateral LendingOperations UNDP UnitedNations Development Programme UTeCC TechnicalUnitfor Certificationand Competencies (Unidad Tkcnica de Certijkacidn de Competencias) Vice President: Pamela Cox Country ManagerDirector: Axel van Trotsenburg Sector Director Evangeline Javier Sector Manager: Eduardo Velez Bustillo Task Team Leader: TheresaJones has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. ii ARGENTINA LifelongLearningand TrainingProject CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . ................................................................. 1 A. Country and sector issues .................................................................................................... 1 B . Rationale for Bank involvement ......................................................................................... 5 C. Higher level objectives to which the project contributes .................................................... 6 I1. PROJECT DESCRIPTION ............................................................................................. 6 A. Lendinginstrument............................................................................................................. 6 B. Project development objective and key indicators., ............................................................ 6 C. Project components ............................................................................................................. 8 D. Lessons learned and reflected inthe project design.......................................................... 19 E . Alternatives considered andreasons for rejection ............................................................ 20 I11. IMPLEMENTATION .................................................................................................... 20 A . Institutional andimplementation arrangements. ............................................................... 20 B. Monitoring and evaluationo foutcomes/results ................................................................ 22 C . Sustainablllty . . ..................................................................................................................... 23 D Critical risks andpossible controversial aspects . ............................................................... 24 E . Loan conditions and covenants ......................................................................................... 25 I V . APPRAISAL SUMMARY ............................................................................................. 26 A . Economic and financial analyses ...................................................................................... 26 B. Technical........................................................................................................................... 27 C. Social................................................................................................................................. 29 D Environment...................................................................................................................... 30 . E . Safeguard policies............................................................................................................. 30 F . Policy Exceptions andReadiness...................................................................................... 32 Annex 1: Sector and ProgramBackground ............................................................................. 33 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies .................44 ... 111 Annex 3: Results Framework and Monitoring ........................................................................ 45 Annex 4: Detailed Project Description and ImplementationArrangements ........................ 51 Annex 5: Total Project Costs..................................................................................................... 70 Annex 6: Financial and DisbursementArrangements ............................................................ 71 Annex 7: Procurement Arrangements ...................................................................................... 83 Annex 8: Economic and Financial Analysis ............................................................................. 90 Annex 9: Social Assessment and Safeguard Policy Issues ..................................................... 103 Annex 10: Output Based Activities ......................................................................................... 111 Annex 11:Documents in the Project File ............................................................................... 110 Annex 12: Project Preparation and Supervision ................................................................... 113 Annex 13: Statement of Loans and Credits ............................................................................ 114 Annex 14: Country at a Glance ............................................................................................... 116 Annex 15: Map IBRDNo .33362............................................................................................. 118 iv ARGENTINEREPUBLIC LIFELONGLEARNINGAND TRAININGPROJECT PROJECT APPRAISAL DOCUMENT LATINAMERICA AND CARIBBEAN LCSHE Date: March 31, 2007 Team Leader: Theresa Jones Country Director: Axel van Trotsenburg Sectors: Vocational education (80 %), Sector ManagedDirector: Eduardo Velez Secondary Education (15%); Primary Bustillo Education (5%). Themes: Education for the knowledge economy. Project ID: PO95514 Environmental screening category: Not Required Lending Instrument: Specific Investment Loan For LoansKredits/Others: Total Bank financing (US$m.): 200.00 INTERNATIONAL BANK FOR 190.4 9.6 200.0 RECONSTRUCTION AND DEVELOPMENT Total: 350.4 9.6 360.0 Borrower:Argentine Republic 1ResponsibleAgency: Ministryo f Labor, Employment and Social Security I IFY Estimateddisbursements (Bank FY/US$m) 2008 2009 2010 2011 2012 2013 Annual 25 35 35 40 40 25 Cumulative 25 60 95 135 175 200 Expected effectiveness date: November 30,2007 Expected closing date: December 31,2013 Does the project depart from the CAS incontent or other significant respects? [ ]Yes [x ] No V Re$ PAD I.B Does the project require any exceptions from Bank policies? Re$ PAD IKG [ ]Yes [XINO Have these been approved by Bank management? [[ ]Yes [XINO ]Yes [ IN0 I s approval for any policy exception sought from the Board? Does the project include any critical risks rated "substantial" or "high"? Ref:PAD III.D [XIYes [ ] N o Does the project meet the Regional criteria for readiness for implementation? Ref:PAD I K G [XIYes [ ] N o J Project development objective Re$ PAD II.B The proposed Project aims at supporting the Government o f Argentina to consolidate, strengthen, and increase the coverage o f a lifelong learning and competency-based training system for disadvantaged adults 18 years or older with the objectives for those who participate to: (i)enhance employability (for unemployed); and (ii)improve career opportunities (for employed). Project description Re$ PAD II.C,Annex 4 A. Expand and Strengthen Competency-Based Training and Certification System. The proposed Project would support the further expansion and strengthening o f a competency-based certification and training system. There are three subcomponents: (1) establish in 30 economic sectors, competency-based training and certification systems, through development, validation and registration o f occupational norms, training and certification o f evaluators, and ensuring the functioning o f qualified third-party assessment centers and certification organizations; (2) align the supply o f training with the competency-based approach and strengthen professional training institutes; and (3) train, assess and certify workers. B. Basic Education Services and Certification for Adults. This Component aims at offering economically active adults, particularly the vulnerable and disadvantaged, the opportunity to complete their basic and/or secondary education usinginnovative policies and strategies. C. Promotion o f Youth Employment through Work Experience and Training. This Component i s targeted to youth between 18 and 24 years o f age excluded from full participation in the economy because o f their low education and skills level and low or nonexistent work experience. There are three subcomponents: (1) providing employment and career orientation to youth through municipal employment offices; (2) facilitating training and/or education opportunities; and (3) organizing internshipswith employers. D. StrengthenManagement Information System,ProjectAdministration and Studies. There are two subcomponents: (1) installation o f an integrated management information system (MIS), including its operation and development o f users; and (2) project administration, including studies for impact evaluations and to support the development o f a longer-term strategy for a lifelong learning system inArgentina. Which safeguard policies are triggered, if any? Re$ PAD I K F , Annex 9 Indigenous Peodes: OP 4.10 Significant, non-standard conditions, if any, for: Ref:PADIII.E vi Boardpresentation: None Loadcredit effectiveness: None Covenants applicable to Project implementation: Not later than two months after the effective date the Borrower will establish, and thereafter maintain, during the execution o f the Project, a technical coordination unit to manage Project implementation. The Borrower shall, through the Ministryo f Labor, monitor the implementation o f the CNAs, the CAAs, and the AEAs, on a periodic basis, all under terms acceptable to the Bank. Specifically, the Borrower shall (i) review through the Ministryo f Labor, jointly with the Bank and not later than (ii)12 months after the effective date and yearly thereafter, the amounts to be paid for fees and (iii) months after the effective date the eligible costs for the CAN, CAA, and AEA, and 24 the unit costs, and (iv) adjust them as necessary, ina manner satisfactory to the Bank. All protocolswith provinces, municipalities, and adult education public/private entities contain a clause specifying the commitment to comply with the requirementso f the P P F and carry out the IPPs when applicable. Only participating provinces, municipalities, and adult education public/private entities would receive proceeds o f the loan. A participating province or municipality or adult education public/private entity i s one who (i) has signed the framework agreement and/or a (ii) periodic protocol; or (iii) implementation agreement. other The Borrower, through the Ministry o f Labor, shall ensure that the concurrent audits o f the Project are carried out every six months, inaccordance with terms o f reference satisfactory to the Bank. Within 12 months after project effectiveness, the Ministry o f Labor would have carried out a systems audit o f the Management Information System (MIS), according to terms o f reference satisfactory to the Bank, and would have provided and discussed the results o f said audit with the Bank, and inthe event that the results o f the audit show that the systems applications pose, inthe Bank's opinion, substantial risk to the implementation o f the Project, within twelve months thereafter, carry out a second audit. DisbursementCondition for ExpenditureCategory of Stipends:the approval and issuingby the Borrower o f the specific requirements for implementation of the youth internship subprojects. vii I.STRATEGICCONTEXTANDRATIONALE A. Countryandsector issues 1. With the economy recovering from the crisis o f 2001-2 and aided by improved competitiveness, the Argentine Government i s shifting policy towards a focus on employment as the principal means to foster equitable and inclusive development. The proposed Lifelong Learning and Training Project would support this shift by trying to develop in close coordination with employers and workers, flexible learning opportunities for the unemployed and poor workers to acquire labor-market relevant skills inwhich core competencies would be developed. The Project aims to improve the quality and relevance o f training services (including adult education) and increase coverage among the economically active population, and in the process make progress towards the eventual goal o f installing in Argentina a lifelong learning and training system linked to employment. If successful, the Project would improve employability for the unemployed andpoor workers and contribute to higher economic productivity. Box 1. Key Concept LifelongLearning' - Learning i s a cumulative process whereby individuals gradually assimilate increasingly complex and abstract entities (concepts, categories, and patterns of behavior or models) and/or acquire skills and competencies. Lifelong learning i s learning activity that i s undertaken throughout life and improves knowledge, skills and competencies within personal, civil, social and/or employment-related perspectives. The concept lifelong learning involves a reconfiguration of traditional views of learning, the recognition of learning, and management o f the learning system. The OECD has identified four distinguishingcharacteristics of lifelong learningpolicy: 0 A systemic view: This is the most distinguishing feature of lifelong learning. The lifelong learning framework views the demand for, and the supply of, learning opportunities, as part of a connected system, covering the whole lifecycle and comprising all forms of formal, non-formal, and informal learning. 0 Centrality of the learner: This requires a shift o f attention from a supply-side focus, for example on formal institutional arrangements for learning, to the demand side of meetinglearner needs. 0 Motivation to learn i s an essentialfoundation for learningthat continues throughout life. It requires attentionto developing the capacity for "learning to learn" through self- paced and self-directed learning. Multiple objectivesof educationpolicy: The lifecycle view recognizes the multiple goals o f education - such as personal development, knowledge development, economic, social and cultural objectives - and that the priorities among these objectives may change over the course of anindividual's lifetime. 'QualificationsSystems: Bridges to Lifelong Learning (OECD, 2007). 1 Economic and Sector Background 2. Effective macroeconomic management has helped to establish four years o f fast and pro-poor growth in Argentina. The structure o f the economy has changed substantially. Currency depreciation favored tradable sectors, notably manufacturing. In addition, the accompanying reduction in labor costs and recovery in domestic demand fueled growth in construction and retail. These activities have absorbed more labor, and less skilled workers, than was the case with the dynamic sectors duringthe 1990s. As a result, unemployment has dropped significantly and, although informality remains widespread, jobs growth is now higher in the formal sector, relative to the informal sector. 3. Inorder to sustain growth over the medium-term, Argentina needs to improve the investment climate and raise productivity levels and quality o f exports, as well as goods and services for the internal market. Perhaps most important, substantial gains could be realized through determined policy efforts to expand human capital through formal education and lifelong learning and training opportunities. The Government has identified education and training as major priorities in achieving its goals of poverty reduction and job creation, and to ensure improvements are made, i s proposing an increase in funding through the Education Finance Law, recently passed by Congress. The Argentine education system has ensured access to early childhood and primary education. However, secondary school repetition and drop-out rates remain high: fifty percent o f students entering secondary school do not graduate; for families in the poorest population quintile, only one in four students graduate. About 10millionArgentines inthe labor force (45 percent of the population 15-64 years old) do not possess the equivalent o f a nine-grade lower secondary education degree and 15 million adults (68 percent o f the population 15-64 years old) do not possessthe equivalent o f a twelve-grade upper secondary education degree. 4. Secondary education i s becoming a minimum requirement for access to good jobs in Argentina. This is evident from the widened wage gap between skilled and unskilled workers duringthe 1990s. Argentina needs to invest inthe less skilled through additional education and training for school leavers that have not completed secondary education. In addition, the knowledge economy i s generating new skill requirements, such as sophisticated problem solving skills and the capacity to understand and implement information and productivity-enhancing technologies. Countries need access to global knowledge in order to raise productivity, competitiveness and living standards. Global knowledge i s accessed through both formal and non-formal education and training. Addressing the large group o f working age adults without secondary education, as well as equipping workers (employed and unemployed) to deal with the demands o f the knowledge economy, requires a model o f lifelong learning and training that encompasses learning throughout the life cycle. The focus o f lifelong learning recognizes that since trade, technology, and global competition have increased, so have the pace o f change and need for workers to adapt their skills over the life cycle. 5. The current distribution o f training opportunities in Argentina i s more unequal than for education. About a third o f the working age population has taken at least one training course within the last five years. But for lower and lower middle-class households who comprise 52 percent o f the working age population, only about 20 percent have ever taken a training course, and even then, one third took it more than 5 years ago. The scarcity o f training, especially one 2 based on labor competencies, inthese households impairs their labor competitiveness and helps to explain poor job quality and high exposure to unemployment. In Argentina, generally only formal employees have on the job training opportunities. Training quality and insufficient links with employers are also a problem. Although the number o f youth and adults participating in training in Argentina has increased, employers complain o f excessively academic and insufficiently practical curricula. There is a need to expand public efforts to reduce large productivity disparities between formal and informal workers by improving basic competencies, as well as technical skills. Simulations show that inArgentina, takinginto account labor market earnings, informal employment, labor force participation, and unemployment, the rates o f return on lifelong learning are large for youths and adults. (See Annex 1 for more information on recent labor market trends (including unemployment, informality and demand for skills), returns to education and access to skills training). Institutional Frameworkfor Training 6. InArgentina, the provision o f vocational training services is divided into two main systems: (i)formal education (secondary technical education and non-university tertiary technical education); and (ii) non-formal "professional" training, which takes place outside o f the formal educational system. Formal technical education includes careers linked to a broad set o f technical areas and i s associated with a diploma or other formal credential (secondary, tertiary). Incontrast, non-formal training aims to provide qualifications invery specific skills recognized by the labor market in the short term. Non-formal training can be provided on-the-job by the firms themselves or off- the-job by a public or private training provider. 7. Vocational training services constitute a complex institutional framework. They are offered by a wide range o f institutions, including publicly financed (by national or provincial governments), private institutions that are subsidized by the public sector, public and private associative institutions, and private unsubsidized institutions (Table 1). 3 Table 1. VocationaVTechnical Education and Training in Argentina System Provincialgovernments Nationalgovernment Private/NGOs/Associations Secondary level with HigherTechnical Institutes technical orientation - Secondary technical Formal (traditional structure) education - Polimodal with Trayectos T6cnicos Profesionales Technical tertiary non- universityinstitutes Off-the-Job Training Training centers Programs inthe Social Private training institutes (Institutos de Formacidn Sector: -- Training Private academies Profesional- IFPs) -Developmentcomponent Training centersmanaged o fJefas y Jefes de by workers unions, Hogar (2002-today) nongovernmental Nonformal Programs inthe Labor/ organizations education Employment Sector: - ProyectoJoven - (1994-2001) Talleres Ocupacionales (1995- - 2003) Cridito Fiscal (1996- today) On-the-Job Training provided to their Training employees, primarily by , large firms Source: Buildinga SkilledLaborForcefor SustainedandEquitableEconomic Growth, Economic ReportNo., May 2006) 8. Provincial governments in Argentina have authority over service provision, financing, regulation, and supervision o f all non-university education inboth public andprivate institutions. This includes formal vocational andtechnical education-upper secondary technical (Polimodal, three years) and technical tertiary non-university level (three to four yearsband non-formal training (professional training institutes). The latter provide training linked to employment comprising courses o f variable duration (70-300 hours) to train people, primarily at the operator level, for an occupation. These institutions can have public or private management. Provincial financing responsibilities include paying for teacher salaries, school maintenance, and infrastructure; managing staff assignments; supervising personnel; and tending to the general administration and management o f the system. In the case of private institutions or nongovernmental organizations (NGOs), provincial governments usually partially or totally finance salaries but not capital investments. 4 9. Since 1998, in the context o f the Higher Education Law (Ley de Educacidn Superior), the national government has promoted the creation o f Higher Technical Institutes in the provinces (postsecondary technical education and short skills programs recognized by the labor market). The national government has financed the infrastructure cost o f these institutes, with the local governments, inturn, financing the associated recurrent costs. 10. During the 1 9 9 0 ~ ~ the national government introduced several programs aimed at providing training to specific groups (Proyecto Joven, Talleres Ocupacionales) or at giving companies incentives to train workers. The Fiscal Credit Regime (Crkdito Fiscal) has two national programs: (i) Fiscal Credit Regime for Training, a program that provides financial support to small and medium sized enterprises through the reimbursement o f a percentage of their expenditures on human resources training via a tax credit certificate; and (ii) Fiscal Credit Regime for Technical Education, a program through which the Ministry o f Education seeks to finance training projects that link the human resources training provided by companies and the procurement o f equipment bythe participatingtraining entities. 11.Today, the main national training program is a component o f the Jefas y Jefes de Hogar program, a large national workfare program launched in 2002 as a social safety net in the aftermath of the crisis, and managed by the Ministry of Labor. A number o f private institutions offer courses in a wide range o f specialties, curricula, and duration. These institutions are not regulated by the national or provincial governments, and little information is available about them. B. Rationale for Bank involvement 12. The proposed Lifelong Learning and Training Project is closely aligned with the objective o f social inclusion, the second pillar o f the Country Assistance Strategy (Report No. 34015-ARY May 4, 2006, discussed by the Board on June 6, 2006). The Project builds on recent analytical work (Building a Skilled Labor Force for Sustained and Equitable Economic Growth: Education, Training and Labor Markets in Argentina, Report No. 31850-AR, May 5, 2006). In particular, the report proposed measures to increase the linkages between the education system and labor market and improve the vocational education and training system. It presented evidence that showed that, in contrast to the average industrial country, the rates o f return to lifelong learning are substantial at the secondary school level for both youths and adults in Argentina2. It also identified a need to increase the employability o f graduates o f higher level education and training. The proposed Project complements the ongoing Heads o f Household Transition Project, which is promoting the participation o f beneficiaries in training and adult education courses, as well as strengthening municipal employment offices to provide job orientation interviews and support active job search by beneficiaries. Ongoing education projects include support to secondary education in the province o f Buenos Aires, as well as to rural education. 'Theaverage return to investment inschooling inArgentina i s also highand has increased over the last ten years. In2002, the averagerate ofreturnonanadditional year ofschoolingwas 11.5percent, while the averagefor middle-income countries was 10.7percent. The returns to one additional year o f schooling inArgentina are slightly higher for men (12 percent) than for women (11percent). 5 13. In addition, the Bank brings to the Project design its lending experience in other lifelong learning and training programs, in particular the ongoing Chilean Lifelong Learning and Training Program (PO6827l),the Mozambique Technical and Vocational Education and Training Project (P087347) and the proposed Mexico Lifelong Learning Project (P086058). C. Higher level objectives to which the project contributes 14. Lifelong learning for all has become a widely shared policy objective among OECD countries and beyond. It i s seen as a necessary condition for individual success in the labor market and social well-being as well as a basis for social inclusion. It is also believed that the competitiveness o f national economies depends heavily on the capacity o f societies to encourage and facilitate lifelong learning. Since certain groups o f the Argentine population (unemployed, low-skilled and informal workers, women and youth) are experiencing difficulties inundertaking learning activities, the proposed Project would help develop lifelong learning activities and improve the skills and competencies o f the population. In this regard, some governments and stakeholders among the OECD believe that national qualifications system, as would be supported under the proposed Project, can be a tool for promoting lifelong learning. Thus, if successful the Project would contribute both to higher employment and productivity levels in the Argentine economy and lower poverty. In addition, the Project would promote more equitable growth by ameliorating the current gaps inaccess to relevant training between higher-wage, better-educated and other workers. This would be expected to promote employability and higher earnings for the unemployed and lower-wage, including informal, workers. 11. PROJECTDESCRIPTION A. Lendinginstrument 15. The lending instrument proposed i s a specific sector investment loan o f $200 million. B. Project development objective andkey indicators 16. The need to maintain the volume o f skills supply while raising its level i s the core justification for raising the investment in human capital and lifelong learning. From the individual's point o f view, these skills bringemployability and among other things, better wages and more rewarding career opportunities. Employability is a key component for re-enteringthe labor market in countries like Argentina where even after strong improvement, unemployment rates remain uncomfortably high, including for young people. The proposed Project aims at supporting the Government o f Argentina to consolidate, strengthen, and increase the coverage o f a lifelong learning and competency-based training system for disadvantaged adults 18 years or older with the objectives for those who participate of: (i) enhancing employability and (ii) strengthening career ladder opportunities. A career ladder creates "maps" o f job opportunities that are linked to increasingly higher levels o f education and training within particular occupational fields. Project activities are intended to enable individuals to get jobs and/or open upbetter career paths, thereby enablingthem to improvetheir welfare. 6 What is Employability? Increasing employability would imply improving the knowledge, skills and behavior that will serve individuals as they transition to the labor market. The employability skills which employers need in entry-level positions include basic (e.g. reading, communications, writing) and higher order skills (e.g. decision- making, problem-solving). The behaviorandtraits that employersneed are those associated with dependability, positive attitude, self-confidence, motivation, adaptability and punctuality. Rather than preparing an individual for a specific job, these competenciescut horizontally across industries inboth the formal and informal sector and vertically for many types of positions (Sherer 1987). They are lifelong skills that will serve individuals at the different stages of their employment trajectories. 17. The activities to be supported under the Project are closely related and should concretely contribute to the implementation by the Ministry o f Labor o f one prong o f the two-pronged transition strategy for the Heads of Household Program3, announced by the Government in October 2004. Under the transition strategy one prong is that the Ministry o f Labor i s to increase its efforts to help beneficiaries o f the Heads o f Household Program find employment through several specific activities, including by completing their education, technical training, on-the-job training in specific sectors, and other individually-oriented employment services. The other prong o f the transition strategy is to move those Program beneficiaries who currently require a different type o f longer-tern safety net, linked to building human capital for children, to Familias, a conditional cash transfer program managed by the Ministry o f Social Development, and currently being financed through a $700 million loan from the Inter-American Development Bank. 18. These objectives translate into the following key indicators to be reached in a period o f 5 years. A complete set o f indicators are inAnnex 3 (Results Framework and Monitoring). (1) 300 competency-based occupational standards registered by sector groups (2) 150training institutions certified (3) Participationo f 250,000 workers incompetency-based training courses (4) Certification o f 70,000 workers accordingto competency-based occupational standards (5) Within a year, no less than 25 percent o f certified adults obtainingregistered employment or higher salary (6) Award o f 100,000 secondary or primaryeducation certificates to out-of-school adults. (7) Within a year, no less than 50 percent o f adults receiving basic education certificates continuing training or education, obtaining registered employment or higher salary (8) Participation o f 145,600 youth inyouth internships (9) Within a year, no less than 50 percent o f youth participating in internships are employed PresidentialDecree No. 1506/04 7 Bythe end o fproject implementation, the goal o f the Ministry o f Labor is for about 4 percent o f the active economic population (about 736,000 adults) to benefit annually fiom lifelong learning andtraining opportunities. C. Project components 19. The Project would improve the quality and relevance o f training services (including adult education) and increase their coverage, while in the process supporting progress towards the eventual goal o f installing in Argentina a lifelong learning and training system linked to employment. 20. The overall strategy o fthe Ministry o f Labor, supported by the Project, to develop the workforce skills o f disadvantaged workers contains the following key elements: 0 Make qualifications more transparent andportable through processes o f setting standards by employers andworkers, and evaluatingand certifylng competencies; 0 Move non-formal training to a modular, competency-based, standards-driven system in order to link better training offered and market demand; 0 Promote quality, flexibility, and cost-effectiveness amongtrainers, trainees and workers through testing, certification and accreditation; and Offer "second chances" so that youth and adults can recover from bad starts inlearning. The Project would support the following activities: A. Expand and Strengthen Competency-Based Trainingand Certification ($110.9 million; $70.2 million Bankfinancing) 21, The component includes three subcomponents: (1) establish in 30 economic sectors, competency-based training and certification systems, through development, validation and registration o f occupational norms; training and certification o f evaluators; and ensuring the functioning o f qualified third-party assessment centers and certification organizations; (2) align the supply o f training with the competency-based approach and strengthen professional training institutes; and (3) train, assess and certify workers. A.1Establish Competency-based CertiBcation ($11.2million, $6.8 million Bankfinancing) 22. Building on the pilot Program o f Training and Certification o f Competencies financed through a grant from the Inter-American Development Bank, the Ministry has expanded and strengthened competency-based certification to about 70 occupations in 14 sectors, resulting in the approval and registration o f 172 occupational standards. The proposed Project would support the further expansion and strengthening o f competency-based certification, within the sectors already participating, to new occupations and new locations inthe country; and to new economic sectors relevant for GDP growth and the generation of formal jobs, as selected by the Ministry o f Labor4. The objective is to install competency-based certification in30 key sectors over the next A table listing the economic sectorswith which the MinistryofLabor is working is includedinAnnex 4. 8 five years, registering 300 competency-based standards in about 120 occupations during the implementationperiod ofthe Project. Box 2. Qualifications Framework-Key Concepts ' The competency-based certification and training system whose expansion and strengthening in Argentina would be supported under the proposed Project is a qualifications system. A qualifications system includes all aspects of a country's activity that result inthe recognition of learning, including, the means o f developing and making operational national policy on qualifications, institutional arrangements, quality assurance processes, assessment and awarding processes, skills recognition and other mechanisms that link education and training to the labor market and civil society. Qualifications systems involve several key concepts and interrelationships which are explained below. Competence i s an ability that extends beyond the possession of knowledge and skills. It includes: 1) cognitive competence involving the use of theory and concepts, as well as informal tacit knowledge gained through experience; ii)functional competence (skills or know-how), those things that a person should be able to do when they work in a given area; iii)personal competence involving knowing how to conduct oneself in a specific situation; and iv) ethical competence involving the possession o f certain personal and professional values. Standard i s a key term for establishing confidence inqualifications systems and inlearning provision. It describes the benchmarks or expectations o f learning that have been established with stakeholders (Le. employers and workers). In Argentina it i s defined as the job performance requirements agreed among actors on both the production and employment side to be utilized in processes o f assessment, of certification, of training, of recruitment of workers andprofessional career development. Relationship and Sequence of StepsInvolved in Assessment and Certification Learning i s assessed (evaluated) against standards or criteria by an expert, or a group of experts (evaluators), who follow establishedprocedures. Achievement in learning i s validated (cevtified) when assessment of learning i s approved or confiied by relevant professional authorities (Certification Organizations) by having met predetermined criteria, followinga standardassessment procedure. Qualification i s the formal outcome of an accreditation or validation process. A qualification confers official recognition of value in the labor market and in further education and training. A certi$cate is anofficial document that records qualificationandvalidationoflearning. Annex 4 includes a diagram outlining these and other key processes of competency-based training andcertificationinArgentina. Qualifications Systems: Bridges to Lifelong Learning (OECD 2007) 9 23. Accordingly, this subcomponent will support three activities. The first (A.l(a)) is the carrying out o f competency normalization activities by participating sector organizations (business associations and unions) to: (i) ensure and monitor the implementation o f activities leading to the definition, validation, and registration o f competency-based standards for selected occupations; (ii) to train and certify evaluators; and (iii) register Assessment Centers, the to licensed testing entities to measure and assess the attainment o f individuals o f the skill levels specified by the competency-based standards. The second (A.l(b)) i s the work o f the technical units established by the participating sector organizations to promote effective demand andbuild capacity for competency-based training and assessment and certification. The third i s (A.l(c)) to register and accredit Certification Organizations which would provide a recognized certificate to individuals who have successfully attained the competency-based standard and accredit the Assessment Centers. The functions, composition, operational characteristics and interrelationships o f these entities are detailed inAnnex 4. 24. Under activity (A.l.(a)) the Project would use an output-based disbursement mechanism to finance payments from the Ministry o f Labor to participating sector organizations for competency normalization activities (CNA) implemented by the sector organizations. The CNAs comprise two activities necessary to install a competency-based certification system: (i) registration o f occupational norms and (ii) training and certification o f evaluators. CNA unit the costs include all o f the service and operating costs needed to carry out the competency normalization activities. These unit costs are an average o f the service and operating costs required for implementing each o f the CNAs and have been established by the Ministryo f Labor on the basis o fhistorical costs. These unit costs havebeen reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. The unit costs, by CNA, are included in the Operational Manual and described in full in Annex 10. Details o f the operational/institutional aspects o f the financing mechanism for these activities are presented inAnnex 4. The Project also would finance Assessment Center registration fees. 25. Eligible expenditures for subcomponent activity (A.l(b)) include specialized consultancy services, promotional materials, and operating costs to support the work o f the technical units; training o f sector experts by the Ministry inthe competency-based approach; and the equipment and supplies neededby the Certification Organizations andAssessment Centers to carry out their functions. For activity (A.l(c)), the Project would finance the fees for the registration and accreditation o f Certification Organizations. A.2 Align Training with Competency-basedApproach and Strengthen Professional Training Institutes ($30.5 million, $20.6 million Bankfinancing) 26. A substantial effort will be required to align the current training supply with the competency- based approach if professional training institutes (Institutos de Formacidn Profesional- IFP)5 Within the proposed Project, IFPs are split evenly between private andpublic sector management. Public institutions are generally annexes o f technical schools underthe jurisdiction o f Provincial Departments o f either Non-formalor Adult Education, dependingon thejurisdiction. Private institutions are largely linkedto a particular economic activity though either business associations or unions, who manage the administration. There are also 10 are to be able to prepare individuals for certification. The Evaluation, Monitoring and Technical Assistance Unit (UEMAT) within the Directorate o f Institutional Quality o f the Ministryo f labor has developed a framework to assess quality and pertinence for professional training institutes along a set o f interventions, and applied it to about 150 IFPs using third-party qualified institutions. The Ministry o f Labor also has contracted qualified tertiary level institutions, mostly universities, to assist 50 o f these training institutes to address the quality and pertinence gaps identified, inparticular to help them incorporate a competency-based approach. 27. Buildingon this experience, this subcomponent would include, first, A.2(a) the development and publication o f curricular designs and didactic materials by sector organizations, in collaboration with IFPs or other training agencies, needed to align training with the 300 norms registered (curricular alignment activities - CAAs). C A A unit costs include all o f the service and operating costs needed to carry out the curricular alignment activities. These unit costs are an average o f the service and operating costs required for implementing the C A A and have been established by the Ministry of Labor on the basis o f historical costs. These unit costs have been reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. The unit costs are included in the Operational Manual and described in full in Annex 10 of this PAD. Details o f the operational/institutional aspects of the financing mechanism for these activities are presented in Annex 4. Other activities are: A2.(b) training o f staff inthe IFPs on the competency-based approach and the technical assistance and equipment necessary to support about 400 IFPs to implement the competency-based approach, as well as other quality improvements; and A2.(c) the certification o f a targeted 150 IFPs. For the latter two activities, the Project would finance the consultancy services to fine tune and apply the methodology used to assess quality and pertinence for about 600 IFPs over the life o f the Project, as identified by the sector organizations who have signed agreements with the Ministry o f Labor to participate in the competency-based system, and to support quality improvements in about 400; equipment for IFPs; and IFP accreditation fees. A.3 Train,Assess and Certifv Workers($69.2 million; $42.8million Bank$nancing) 28. The subcomponent will support the training, assessment and certification o f workers according to competency-based standards. The target at the end o f Project implementation is to reach a certification level o f 15,000 individuals per year. This target entails the training o f about 250,000 workers in competency-based standards throughout the life o f the Project, the assessment o f about 100,000 o f these trained workers leading to an accumulated level o f certification o f about 70,000 workers. Workers would be identified by the participating sector organizations through the promotional activities o f the technical units (paragraph 23) or would be referred by the municipal employment offices, based on individual needs and career aspirations, as well as localjob opportunities. cases o f mixed management, inwhich the public sector pays the salaries of instructors/teachers and sector representatives pay operating and maintenance costs, for example inthe city of Buenos Ares. 11 29. The Project would finance competency-based training, which would be organized through the participating sector organizations (the same as mentioned for Subcomponent A.l above), on the basis o f a description within the protocols signed with the Ministry o f Labor (the same as mentioned for Subcomponent A.l), which would identify the number and type o f course, the number o f participants, and reporting requirements (by trainee) inthe Management Information System (MIS). The Ministry has a schedule o f standard course fees which include the costs o f instruction, teaching materials, inputs, and insurance. These standard course fees have been reviewed and found acceptable by the Bank and are included in the Operational Manual. The schedule o f costs would be updated at least annually to incorporate courses for additional registered occupational standards and to take into account other modifications. The Ministry would also use Loan resources to finance trainee/worker assessment and certification fees. Trainees would be identifiedina variety o fways. Box 3. Advantages of Competency-BasedTraining The Case of Australia6 - In 1995, Australia introduced a system of competency-based vocational education and training. The system was streamlined into Training Packages that describe the skills and knowledge needed to perform effectively inthe workplace. These training packages take the form of nationally endorsed standards and qualifications for recognizing and assessing people's skills ina particular industryor enterprise. In terms of lifelong learning, one distinctive advantage of competency-based training qualifications i s that they can be assessed wholly or partly on the basis of previous work experience or through additional structured training in the workplace. This means that employment i s acknowledged as a site of learning able to be recognized through the national qualifications system. These qualifications in turn allow access to promotion or further education and training. As an integral part of the Australian Qualifications Framework, national quality assurance measures implemented by government authorities protect the standards of training and assessment to ensure that, irrespective of the particular learning pathway-workplace, institution, life experience-the qualifications carry the same status. I B. Basic EducationServicesand Certificationfor Adults ($48.4 million; $28.2 million Bank jinancing) 30. The objective o f the component is to promote innovations in the policies and strategies for adult education and certification, in order to improve quality and expand the opportunity for the economically active population to complete their basic and/or secondary education. The activities to be supported under the component aim to make adult education more pertinent to the needs and situation o f the working population, facilitate the access, assistance and certification o f those with most difficulties, and strengthen the capacity for local management and coordination with other actors in order to expand opportunities. The aim would be to make adult education more flexible with respect to scheduling and curricular content, move to a more modular and competency-based structure, and encourage the recognition and crediting o f previous knowledge independently o f its source, thereby making the service more relevant and responsive to the Adapted from Qualifications Systems: Bridges to Lifelong Learning (OECD, 2007). 12 needs o f interested adults. There are two subcomponents: (i) Support to selected Provincial Ministries o f Education to develop innovative adult education policies andprograms, to improve their quality, and expand coverage; and (ii) Support to sub-projects for adult education services that would combine the participation o f public agencies, businesses, or civil society organizations. Both subcomponents would include monitoring o f the activities being carried out. After certification, participants would be encouraged to take advantage o f the services o f municipal employment offices, where available, to obtain support either in obtaining employment (or improving their employment status) or inaccessing other training opportunities. B.l Support to Provincial Ministries of Education ($29.8 million; $20.4 million Bank financing) 31. The subcomponent would support 5 provinces7 selected according to the following criteria in the Operational Manual: (i) previous experience or interest to expand the coverage o f adult education; (ii) experience inthe implementation o f innovative approaches inadult education; and (iii)experience and interest in strengthening the quality, coverage and management o f adult education programs. Over the life o f the Project, the Ministrymay identify other provinces that would participate in this component following the same criteria. The target is to certify about 80,000 employed or unemployed adults for completion o f their primary and/or lower secondary education by the end o fthe Project. 32. The sub-component would include the following activities: (i)specialized technical assistance for the provincial Ministries o f Education inorder to help them design and implement methodologies to make the supply o f adult education more flexible and pertinent to the needs o f adults as well as to promote, manage, monitor, and evaluate the activities supported by the subcomponent; (ii) outreach activities to promote and facilitate access to adult education; (iii) preparation and publication o f didactic modules and materials to support these innovations; (iv) training o f instructors in innovative service delivery; and (v) adult education courses for workers (adult education activities). B.2 Adult Education Subprojects ($18.6 million; $7.7 million) 33. Under this subcomponent, Loan resources would be used to finance subprojects (an estimated 20) which would be implementedjointly bypublic agencies (provincial and other local governments), institutions linked to the labor market (unions, companies), or civil society organizations. These subprojects would be identified by the National Directorate for Professional Training using the following criteria, related to both prior experience o f entities and subproject content, and included in the Operational Manual: (i) articulation o f education with work and civil society; (ii)attention to populations with high barriers to opportunities for employment and training; (iii)inclusion o f gender and indigenous perspectives; and (iv) transferable innovations in service delivery. The target over the life of the Project is for 20,000 adults to certify either basic or secondary education as a result o f the implementation o f these subprojects. Subprojects would not necessarily be locatedinprovinces which are participating in SubcomponentB.1. Buenos Aires, Cordoba, Mendoza, Tucuman and SantaFe 13 34. The Project would finance: (i) consultancy services for the public and/or private sector entities implementing the subprojects in order to help them design methodologies to make the supply o f adult education more flexible and pertinent to the needs o f adults, as well as to promote, manage, monitor and evaluate the activities supported by the subcomponent; (ii) outreach activities to promote and facilitate access to adult education; (iii) preparation and publication o f didactic modules and materials to support these innovations, in particular to incorporate the content into other training courses; (iv) training o f instructors in innovative service delivery; and (v) adult education courses for workers (adult education activities). 35. Financing o f adult education activities (AEA) included inthe Subcomponents B.l and B.2 would be based on certification (in either primary or secondary education) outputs. The AEA unit costs include 40 percent of the service and operating costs needed to carry out the adult education activities. These unit costs are an average o f the service and operating costs required for implementing the AEA and have been established by the Ministry o f Labor on the basis o f a comparison o f the costs inseveral different provinces. These unit costs have been reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. The unit costs are included in the Operational Manual and described in full in Annex 10 of this PAD. Details o f the operational/institutional aspects o f the financing mechanism for these activities are presented in Annex 4. In addition, for both sub-components the Project would finance needed consultancy and printingservices, supplies, and equipment. C. Promotion of YouthEmployment ($16%6million; $86million Bankfinancing) 36. The component would try to reach about 10 percent o f the 1.7 million youth in Argentina between 18 and 24 years o f age who have not completed secondary education. These young people start employment with difficulties and are likely to remain at a disadvantage in the modern knowledge economy. There are 3 subcomponents: (i) providing employment and career orientation to youth through the municipal employment offices; (ii) facilitating training and/or education opportunities; and (iii) organizing internships with employers. Assessments and certification according to a competency based approach would be incorporatedwithin the second and third subcomponents. Bythe end o fProject implementation, the goal is to have employment services for youth being delivered in 250 municipal employment offices; to have provided information and contact with the municipal employment office for 600,000 youth; and to have arranged for the participation of 145,000 youth in internships incorporating education and/or training inbasic competencies inan estimated 1500subprojects. C.1Employment and Career Orientation ($42.lmillion; $17million Bankfinancing;) 37. This subcomponent would strengthen the capacity o f municipal employment offices to provide orientation and counseling services. In interviews, staff would help the youth identify their job interests and advise them on actions that would improve their employability. Youth deciding to participate would commit themselves to carrying out specific time-bound actions as recommended by the municipal employment office staff and agreed with the youth through a signed statement. A model for the statement format is contained inthe Operational Manual. The municipal employment offices would offer basic orientation courses on employment, education completion, and professional training; and arrange short courses on preparing curriculum, 14 interview skills, andjob search techniques. The Ministry would manage a national promotional campaign for the internships initiative and municipal employment offices would do local outreach and providetechnical assistanceto employers interested inoffering internships. 38. The Project would finance under agreements between the Ministry o f Labor and the municipality: (i)national and local promotion o f the internship initiative; (ii)specialized consultancy services for the municipal employment offices; (iii) office refurbishment, computing equipment and furniture for the municipal employment offices; and (iv) training o f the staff o f the municipal employment office in interviewing skills, counseling, relations with employers, etc. C.2Education and Training ($32.5 million, $26.0 million) 39. The Ministry o f Labor (through the UTeCC) would develop competency-based standards, trainingand certification for basic skills, as well as for selective occupations relevant for youth and train instructors so that the corresponding training courses could be delivered in existing schools and professional training institutes. Municipal employment offices would refer youth who need basic skills, wish to finish their education or receive professional training to the appropriate services, thereby enabling them to improve their qualifications in order to meet the needs o f the labor market. Staff o f the municipal employment offices would familiarize themselves with the supply o f education services and training courses intheir locality and make the necessary arrangements for referrals. The offices would endeavor to ensure the availability o f the types o f training required by the local labor market, identifying and, with the support o f the Ministry, resolving gaps. The offices would also support those interested in self- employment, primarily by referring them to existing services. 40. The Project would finance: (i) consultancy services to develop competency-based standards, training and certification for basic skills, to design courses and develop manuals and materials; (ii) training; (iii) feesfortrainingofyouth; and(iv) evaluationofyouthusing teacher course competency-based occupational standards. Activities (i) would and (ii) be managed, contracted, and financed by the Ministry o f Labor. For (iv), the Ministry would directly pay the agents carrying out the evaluations, and in the case o f (iii) activities may be part o f the agreements mentioned above signed between the municipalities and the Ministryo f Labor, or in other cases, couldbe paid directly by the Ministry o f Labor to training agencies. C.3 Internships ($93.0 million, $43.0 million in Bankfinancing) 41. The subcomponent would support the organization and implementation o f internship subprojects (subprojects). The subprojects would be submitted by employers and would comprise: the number and details o f the characteristics o f the internship (skills needed, content o f job, duration, and working conditions such as schedule); proposed training and education for the participants both on and off the job; and possibilities for assessment and certification o f competencies. The requirements and procedures to be followed inpreparing and submitting all subprojects would follow standard instructions containing selection criteria, procedures, and standard formats, the issuance of which by the Ministry of Labor is a disbursement condition for the stipend expenditure category. The subprojects would be from 3-10 months in duration and employers wouldbe requiredto appoint a tutor as part o fthe subproject. The tutor wouldbe 15 responsible for organizing and monitoring the work o f the youth and providing periodic information to the municipal employment office. Subproject costs would cover remuneration (paid by employer) and stipend payments (paid by the Ministry o f Labor) to the youth participating, the cost o f education and training activities, and would be in the range o f US$30,000 per subproject, depending on the number o fparticipants and internship duration. 42. The Ministry intends to promote these internship opportunities with employers using two strategies. One, at the national level, subprojects with large employers would be proposed by the members o f a Network o f Businesses for Youth with a Future' (the Network), following procedures and standards formats included inthe Operational Manual. The subproject proposals would be reviewed by the Executive Committee (Committee) which has been constituted by the Network. After its review, the Committee would make a recommendation to the Secretary o f Employment o f the Ministry. The employers would coordinate with municipal employment offices and/or civil society organizations in order to identify the participants and to provide access subsequently to other professional training opportunities, as well as job search support. Two, for smaller companies, not members o f the Network, and in localities where Network companies are not located, a second strategy would be used. The municipal employment offices would be responsible for helping to promote subprojects with local employers, including providing technical assistance to prepare proposals. These subprojects would be evaluated centrally by staff o f the Ministry who would make a recommendation to the Secretary o f Employment. 43. Subproject financing would be shared between the Ministry (including Loan resources) and employers, under agreements signed by the Ministry o f Labor, the employer, and the municipality. Employers would finance some portion o f on the job training and a stipulated minimum remuneration for youth during their participation in the subproject. The Ministry would use Loan funds to pay a stipend to participants (200 Argentine pesos/month, unless otherwise agreed by the Bank), train tutors and finance fees for the education or training arranged outside o f the workplace. In addition to the co-financing provided by the Ministry o f the subprojects, employers may quality for tax credits. The Loan would also finance the consultancy services needed to monitor the subprojects. Municipalities would be responsible for promoting activities for youth and for helping them with job search after completion o f the internship. * The agreement creating the Network was signed between the Ministryof Labor and 27 companies on December 29, 2006. (Convenio entre el Ministerio de Trabajo, Empleo y Seguridad Socialy Las Empresasdel Sector Privado para la Conformacidn de la T e d de EmpresasJdvenes con Futuro'? 16 Box4. Britain'sNew Dealfor the Young Unemployed The New Deal for Young People Program inthe UK aims to helpyoungpeople (between 18 and 24 years) who have been unemployed and claiming jobseeker's allowance for six months or more, to find work andto improve their longer-termemployability. The objective i s to end long term unemployment. The program, introduced in 1998, combines initialjob search assistance followed by various subsidized options including wage subsidies to employers, temporary government jobs, and full-time education and training. In return for the rights of a comprehensive, individually based service, unemployed young people have the responsibility to take up the help. The path of a participantthroughthe New Deal is composed o fthree mainsteps. On assignment to the program, the individual starts the first stage of treatment called the "Gateway". This lasts for up to four months and i s composed of intensive job-search assistance and short basic skills courses. Eachindividual i s assigned a "personal advisor", a mentor who they meet at least once every two weeks to encourageand enforcejob search. The second stage i s composed of four possible options. There i s the employer option - a six month spell insubsidized employment. Second, an individual can enroll ina stipulated full-time education or training course. Third, individuals can work inthe voluntary sector for up to six months. Finally, they may take ajob on the EnvironmentalTask Force (government jobs). Once this option period is over, individuals who have not managedto find ajob or leave thejob seeker's allowance pool for some other reason enter the "Follow through", which i s the third stage o f the program. This i s a process similar to the Gateway, taking up to 13 weeks, where job-search assistance is the maintreatment provided. Independent evaluations have shown New Deal's success and cost effectiveness. The National Institute of Economic and Social Research concluded in 2000 that, without the New Deal for Young People Program, the level of long-term unemployment would have been twice as high, and that the UK economy as a whole was richer by 500 million pounds as a result of the program. More recent studies show that the program has significantly boosted exit rates from unemployment in all regions; that overall youth unemployment has been reduced; and that young men are now 20% more likely to find work as a result of their participation in the program. Key factors identified inthis success include: (a) the key role of employment services (Jobcentre Plus in the UK); (b) compulsory work focused interviews and specially trained advisers; and (c) the principle of "something for something" -rights and responsibilities. Sources: Impacts of Active Labor Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries by Gordon Betcherman, Karina Olivas and Amit Dar (Social ProtectionDiscussionPaper Series, No. 402, January 2004, World Bank), Chapter 4 Increasing Employment Opportunity for All (UK Budget 2006, March 2006, and JobcentrePlus processedmaterials. 17 D. Strengthen Management Information Systemsfor Competency-BasedLearning and Training, ProjectAdministration and Studies ($33.lmillion; $15.7 in Bankfinancing) 44. This component includes two subcomponents: (i) installation o f an integrated management information system (MIS), including its operation and development o f users; and (ii) Project administration, including studies for impact evaluations and to support the development o f a longer-term strategy for a lifelong learning system inArgentina. D.1 ManagementInformation System ($14.4million; $7.6 million in Bankfinancing) 45. The first subcomponent would support the integration o f the systems which exist in the Ministry (System for Management o f Projects, Data Warehouse, Registro de Instituciones de Capacitacion y Empleo - REGICE, the management system for municipal employment offices, and the registries o f beneficiaries o f the programs managed by the Ministry (including the Heads o f Household Program and the Training and Employment Insurance)) and the development o f new ones required for the planning and monitoring o f the envisaged Lifelong Learning and Training System. By the end o f the Project, the MIS would have national coverage, covering more than 500,000 workers per year. It is estimated that it would reach a level of 3 million transactionslmonth, would be available 24 hours a day and would have the capacity to support at any one time up to 1000users. There would be on-line help for 'allusers and it i s envisaged that 420 institutions would be connected and supported as clients. 46. The objective is to develop a system o f information, planning, management and supervision o f the activities supported by the Lifelong Learning and Training Project which would facilitate administrative processes, planning, and the promotion associated with the activities o f the different project components; monitor physical and financial targets and recognize the achievements reached; facilitate the access to information by key actors (training providers, municipal employment offices, businesses, workers); and provide information to support the implementation o f impact evaluation studies. Emphasis would be given to the development and support o f users for the system. Aside from the Ministry of Labor, as the implantingagency for the Project, other users would include training providers, adult education services, municipal offices o f employment, certification organizations, employers with work opportunity subprojects, workers interested in job leads, and employers seeking staff. In the long-run, modules o f e- government could be incorporated to facilitate registration in courses, etc. The Loan would finance software development and equipment, consultancy services, refurbishment o f physical spaces; andtraining o f users o f the MIS. D.2 ProjectAdministration and Studies ($18.7 million; $8.1 million in Bankfinancing) 47. The second subcomponent includes Project management, including the operation o f the technical coordination unit; and studies, covering the impact evaluations described more fully in Annex 3. Studies would also be undertaken inorder to contribute to the gradual development o f the institutional, technical and financial bases to sustain a system o f lifelong learning by financing needed analytical work to identi@ and understand the implications o f different options for the organization and financing o f the system, including the roles o f the public and private 18 sectors. The Loan would finance consultancy services, specialized household surveys, and operatingcosts (travel and per diems). D. Lessons learned andreflected inthe project design 48. The Bank has knowledge and experience in the area o f lifelong learning and labor competency-based training schemes, in particular derived from the OECD countries and some Bank-financed operations (Chile Lifelong Learning and Training Project (Loan 7106-CH) and the Mexico Technical Education and TrainingModernization Project (Loan CPL-3805). 49. Accordingly, the following are lessons learned which have been taken into account in the proposed Project design: (i) emphasize outcomes (as measured against approved competency- based standards for the case o f training and primary and lower secondary education completion requirements, for the case o f adult outreach programs) rather than inputs or processes; (ii) anchor the competency-based training and out-of-school educational delivery in a demand-driven approach determined by the needs, interests and characteristics o f employers, workers and adult beneficiaries; (iii)ensure recognition o f skills and knowledge acquired throughout the life o f beneficiaries independently o f the source; (iv) make service provision flexible and modular; (v) underpin with a multi-sectoral approach and networking to improve the likelihood for success; and (vi) monitor and ensure the carrying out o f impact evaluations at the onset o f project implementationinorder to measure outcomes against agreed standards. 50. The above mentioned project in Mexico contained similar components of: (a) establishing a national system of competency standards and o f skills testing and certification system; (b) modernizing training programs; and (c) stimulating demand for competency-based training and certification to private sector initiative and participation in training design and implementation. The lessons learned include the following: A strategy which is demand driven (by sectors) and targeted to the lower two levels of occupational competency (qualified worker and technician) increases efficiency. In Mexico, the process was top-down and supply-driven, with little participation o f the economic sectors. Although 600 standards were registered, halfwere never used. Simplify the certification process to increase efficiency and decentralize certification agencies to the extent possible (outside o fthe capital). Training should rankhigher inpriority than certification. Adapt international norms when possible. Certification can be a bottleneck unless the issue of who pays for the certification o f students and/or workers being trained incompetency-based curriculum i s addressed. Effective articulation between trainingleducation and employers i s vital. Tracer studies are necessary to ascertain the advantages and disadvantages o f curricular innovations and to fine-tune project designand implementationstrategies.' (Implementation Completion Report, No. 30232, October 15,2004). 19 E. Alternativesconsidered andreasonsfor rejection 51.Two alternatives were considered. One alternative was a more comprehensive approach including technical education, under the responsibility o f the Ministry o f Education. It was decided that this would prove too complicated because it would involve two national ministries as implementing agencies. However, coordination and collaboration with the Ministry o f Education is proceeding well. The second alternative was an adaptable program loan inorder to provide longer-term support for the installation o f a life-long learning system in Argentina. It was decided that it was premature to opt for an adaptable program loan, given that the Government i s focused on implementation o f the transition strategy for the Heads o f Household Program (supported by Bank loan AR-7369, approved in March 2006), including the roll-out o f the Training and Employment Insurance Program, announced inFebruary2006. 111. IMPLEMENTATION A. Institutionalandimplementationarrangements 52. The Ministry o f Labor (the Ministry) is the implementing agency for the Lifelong Learning and Training Project. Project activities would be managed within the structure o f the Ministry through the Secretariat o f Employment, specifically the National Directorate o f Professional Training. Its Directorate o f Institutional Quality i s responsible for activities related to the certification o f labor competencies and support for training institutions under Component A (Expand and Strengthen Competency-Based Training and Certipcation). Support to municipal employment offices in the context o f Component C (Promotion of Youth Employment) would be provided in collaboration with the National Directorate for Federal Employment. Within Component D (Strengthening of Management Information System, Project Administration and Studies), the Directorate o f Information Systems would have a key role in the development and implementation o f the management information system (MIS), in which Project activities would be registered and monitored. A technical project coordinator would work with the Executing Unit for Projects with External Financing (UEPE) to oversee day-to-day activities. 53. Annex 4 contains the details on implementation arrangements, including the flow o f funds from the loan. Inthe case o f Component A supporting the Expansion and Strengthening ofa Competency-Based Training and Certijlcation System, for Subcomponent A.l(Competency- based Certzpcation), the CAAs under Subcomponent A.2 (Alignment and Strengthening IFPs) and Subcomponent A.3 (Training, Assessing, and Certi5ing Workers) the implementation o f Project activities would be based on signed agreements between the Ministry o f Labor and the participating sector organizations (representing businesses and workers) and in the case o f the CAAs with the IFP. The specific activities would be carried out by the different units (sector councils, technical units) as established by the participating sector organizations in accordance with the agreements signed between them and the Ministry o f Labor. About half o f the loan financing for Subcomponent A.l would be based on a standard unit cost for outputs (CNAs) and payments associated with other activities financed by the loan (mainly consultancy and promotional) would be contracted directly by the sector organizations, in accordance with the stipulations o f the agreements signed between them andthe Ministry o f Labor. The Ministry o f Labor would centrally manage the activities o f Subcomponent A.2, with the exception o f the 20 CAAs mentioned above, which would be carried out bythe sector organizations incollaboration with the relevant IFP and financed according to a standard unit cost. The Ministry o f Labor would finance the accreditation fees for training institutes through the sector organizations. In the case o f Subcomponent A.3, the Ministry o f Labor would pay training institutes through the sector organizations the fees for competency-based training courses according to a fee schedule included in the Operational Manual and would pay the fees for worker evaluations and certifications o f competencies. Workers would be referred to training through municipal employment offices or through sector organizations such as unions or employers. 54. For Component B (Basic Education Services and Certification for Adults), the implementation o f Project activities in Subcomponent B.l (Support to Provincial Ministries of Education) would be based on signed agreements between the Ministry o f Labor and selected Provincial Ministries o f Education. The Provincial Ministries o f Education would be responsible for contracting the consultancy services and teacher training, needed to design and implement the methodologies to make adult education more flexible and pertinent, with the exception o f the printing of didactic materials which would be contracted by the Ministry of Labor. For Subcomponent B.2 (Adult Education Subprojects), the National Directorate for Professional Training would be responsible for identifyingthe subprojects. Although the Ministry o f Labor would enter into agreements with the subproject implementing entities to specify the activities to be supported as well as targets, the Ministry would contract the technical assistance provided to the subprojects, teacher training, as well as the printing o f didactic materials. For both subcomponents, the Ministry would reimburse the Provincial Ministries o f Education (SubcomponentB.l) or the public/private sector implementing entities (Subcomponent B.2), for the cost o f adult education courses (AEA) based on an agreed unit cost per adult certified (primaryor secondary level). 55. In the case o f Component C (Promotion of Youth Employment), Subcomponent C.l (Employment and Career Orientation) would be implemented mainly by municipal employment offices based on signed agreements between the Ministry o f Labor and the respective Municipalities. The Municipalities would receive support from the Ministry o f Labor in the form o f equipment, and promotional activities and via training and technical assistance based on signed agreements between the Ministry o f Labor and the Municipalities, in which they would agree to provide or facilitate access for youth to specified services. For Subcomponent C.2 (Education and Training), referrals would be made by the municipal employment offices. The Ministry o f Labor (through the UTeCC) would manage the development o f competency-based standards, training and certification for basic skills, as well as selected occupational standards and would finance the associated youth training by paying the course fees (included inthe same fee schedule for competency-based courses used for Subcomponent A.3) to service providers. 56. For Subcomponent C.3 (internship subprojects), all subprojects would follow common procedures, developed by the Ministry of Labor with the Network o f Businesses for Youth (the Network) with a Future. The issuance by the Ministry of Labor of the specific requirements for youth internship subprojects is a disbursement condition for the stipends expenditure category. The Ministry would promote the internship subprojects using two strategies. One, at the national level, large employers would propose internship subprojects through the Network, which would also review them. Employers would coordinate with municipal employment offices and or civil society organizations in order to identify the participants. For smaller 21 companies, not members o f this Network, and in localities where Network companies are not located, staff in the municipal employment offices would promote the internships among private businesses and other local employers. The stipends for youth participating in internships would be paid directly to individuals through bank debit cards by the Ministryo f Labor. The Ministry o f Labor would also cover the fees for training outside o f the work place, on a per capita basis according to set fee schedule. Agreements detailing the respective responsibilities o f the Ministryof Labor, the participatingmunicipality, and the internship employers would be signed betweenthe 3 parties. 57. Models for each o f the agreements mentioned inthis section have been reviewed by the Bank and are included in the Operational Manual. Support to the Lifelong Learning and Training Project on administrative and financial matters, would be provided by the Executing Unit for Projects with External Financing (UEPE), the office in the Ministry o f Labor which currently carries out these functions for the ongoing Heads o f Household Transition Project (AR-7369). The Director o f this Unit and his staff would coordinate with the relevant staff inthe Ministry of Labor to facilitate the use o f the Loan resources to support the eligible activities described above. This Unit would be responsible for the appropriate utilization o f Loan resources, handle the day- to-day activities o f managing procurement, hiring consultants, and financial management, including the preparation o f Financial Management Reports, prepare the documentation needed for reimbursement requests and ensure compliance with audit requirements. It would analyze and control the administrative documentation related to project implementation and would maintain all the documentation needed to support Project activities. The UEPE intends to make use o f the services o f UNDP for project management and procurement o f equipment and consultancy services. The fees for this contract would be covered bynational resources. 58. Functions o f the staff financed with the Loan proceeds will become progressively mainstreamed duringproject implementation as described inAnnex 4. B. Monitoring and evaluation of outcomes/results 59. Monitoring and evaluation o f outcomes/results under the Project would draw on 3 main data sources: (a) the management information system (MIS) to be supported under the Project, which includes for workers participating inthe Project, as well as all those accessing the services o f the municipal employment offices, labor force histories; (b) the database for social security contributions (SIJP - Sistemu Integrudo de Jubiluciones y Pensiones) which includes the employment experience o f each registered employed worker; and (c) the Ministry o f Education database for adult education services which includes information by school on enrollment, drop- outs, and results. Delivery o f specific outputs (norms; certified evaluators; curricula; individuals completing training, evaluation, and certification; adults attending education services and certified; youth receiving employment services and internships) would be registered by implementing entities inthe MIS andvalidated either through the REGICE (Register o f Training and Employment Agencies) or (on a sample basis) through the supervision o f the Ministry. The protocols (annual agreements) signed between the Ministry and some entities (among others, sector organizations, provinces, and municipalities) would incorporate a focus on specific results and monitoring and supervision procedures. The Ministryo f Labor sees the MIS as a unifying element for an eventual lifelong learning system inArgentina. 22 60. As needed, for specific impact evaluations o f Project activities, data would be collected through specially designed surveys. The Ministryhas experience in contracting and carrying out household and firm surveys. It is responsible for providing certain labor force statistics and has carried out impact evaluations, including several under previous Bank projects. There are three preliminary designs for possible impact evaluations o f Project interventions- competency-based training, innovations in adult education, and support to youth employment. In addition, qualitative studies would be carried out, for example, to assess institutional changes. Possible topics include: effect o f incorporation o f competency-based approach on businesses or sectors; changes in perceptions o f trainees or youth; business views on the competency-based approach and employment services; and the broader influence o f adult education innovations. Details on indicators, arrangements for results monitoring and the design for the impact evaluations is included inAnnex 3. C. Sustainability 61. The financial sustainability o f the Project is likely given that the increment in expenditure i s relatively small. In the case of competency-based training and certification, many of the activities to be supported by the Project are one-off investments (setting up the evaluation and certification system) or ones (occupational norms and training curriculum) for which periodic updating i s likely to require lower levels o f resources that could be expected to be provided to a larger extent from the private sector, as long as they realize the expected gains from the system. The total project recurrent cost for Component A (Expand and Strengthen a Competency- based Training and CertiBcation System) has been estimated at $6 millionper year. 62. The proposed financing for Component B (Basic Education Servicesand Certificationfor Adults) represents only 1 percent o f the estimated public spending in adult education in the country, assuming that expenditures stay at current levels. The Project also would support measures to improve the efficiency o f adult education services. In the case of municipal employment services, the types o f interventions to be supported under the Project have been shown to have a positive cost benefit ratio. In addition, after the intensive support o f the Ministry neededto transfer knowledge and methodologies, municipalities are expected to take on gradually more responsibilityfor the funding and staffing o f these offices. 63. The recurrent cost for the Component C (Promotion of Youth Employment) per internship participant i s estimated to be $500 for government and $960 for employers. Assuming that 5,000 youth would participate each year means $2.5 million o frecurrent cost for the government and $4.8 million for employers. From the government perspective, the recurrent cost for both components can be estimated at $8.5 million (US$ 6 million + $ 2.5 million), which represents 0.7 per cent o fthe 2005 budget o fthe Ministry o f Labor andis equivalent to the budget allocated to the program Acciones de Capacitacio'nLaboral lo by the Ministry o f Labor o f Argentina in 2005, which covers activities similar to the ones proposed inthe components. The conclusion i s that the recurrent cost associated with these components o f the Project can' be accommodated within the current budget o f the Ministry o f Labor without imposing an important burden on overall Government finances. The sustainability o f the expenditures funded by employers ($4.8 ~ IoThis component currently finances the training component of the Plan Jges de Hogar, the Plan Sectorial de CallficacionesProfesionales, the implementation of quality standardsand the certification of competencies. 23 million) will depend upon the effectiveness o f the internships to generate increases in labor productivity, as perceived by employers, and on the capability o f the Argentinean economy to generate new labor opportunities to absorb the youth participants which depends upon the prospects o f economic growth. D. Critical risksandpossiblecontroversialaspects RiskMitigationMeasures RiskRatingwithMitigation DeveloDment Obiectives Insufficient employment (i) Government,analyze Medium With creation, especially of causes of highinformality in stable, formal sectorjobs if economy; (ii) discuss with economic growth lags Ministries of Labor and Economy policies to enlarge formal sector, as well as to improve social protectionfor informal workers; and (iii) monitor closely the impact of growth on employment. Low employability o f (i) linkbetween Increase High unemployed individuals labor competency-based even after receiving training training and employers; (ii) tie financing to job placement results; (iii) monitor closely results; and (iv) put inplace mechanismsto adjust supply, as needed. Municipal employment (i) tunefunctioningof Fine High offices ineffective in municipal employment linkingunemployedtojobs offices; and (ii)promote good relations with businesses. Achievement Component Results Insufficient demand of new Promote actively inpotential Low economic sectors to new sectors, providing participate incompetency- evidence of achievements basedcertificationsystem (in productivity,work e. higher satisfaction). Traditional training (i) thatfinancial Ensure Medium institutes slow to move incentives support change in from supply-driven to approach; (ii) monitor closely demand-driven, activities; and(iii)organize performance-based impact evaluations. approach Insufficient intake (relative (i)Increasepertinence of Medium to schooling gaps) of adults curriculum; (ii) disseminate completingtheir primary adequately; and(iii) ensure andor secondary education quality service linked closely to improved employability. 24 Provinces or other agencies Promote actively with Medium not willing to offer more potentialprovinces, flexible andpertinent adult providingevidence of education achievementsof more flexible andpertinentadult outreach education schemes Provinces do not give (i) provinceswith Select Medium priority to financing adult demonstratedinterest inadult education. education; (ii)encourage lower-cost, more efficient and flexible delivery mechanisms; and(iii) partially in finance the Project. Insufficient cooperation of Maintain close dialogue with Medium the nationalMinistry of education authorities-at the Educationin nationalandprovincial levels. improvinglexpanding education services for the out of school population Given variety o f Expand scope of audit, Substantial implementing agencies, including concurrent audit, large number and and reinforce internal control geographical distribution of framework. beneficiaries, financial management fails to meet adequate standards Given variety of Assess capacity for Substantial implementing agencies and implementingagenciesto the lack of experience of ensureappropriate training some with Bank and do ex-post reviewstwice procedures,procurement a year. management fails to meet adeauate standards Overall Risk Substantial E. Loanconditions andcovenants 64. No conditions o f effectiveness apply except the mandatorylegal opinion. Loan covenants: 65. It would be covenanted that the Borrower shall, not later than two months after the Effective Date, establish and thereafter maintain, during the execution o f the Project, a technical coordination unitto manage Project implementation. 66. It would be covenanted that the Borrower shall, through the Ministry of Labor, monitor the implementation of the CNAs, the CAA, and the AEA, on a periodic basis, all under terms acceptable to the Bank. Specifically, the Borrower shall (i) review through the Ministry o f Labor, jointly with the Bank and not later than (ii) months after the effective date and yearly 12 25 thereafter, the amounts to be paid for fees and (iii) months after the effective date the eligible 24 costs for the CNAs, CAA, and AEA, and the unit costs, and (iv) adjust them as necessary, in a manner satisfactory to the Bank. 67. It would be covenanted that all protocols with provinces, municipalities, and adult education publidprivate entities contain a clause specifying the commitment o f the relevant provisions taken by the provinces or municipalities to carry out the Indigenous Peoples Plan (IPP). Only participating provinces, municipalities, and public/private entities would receive proceeds o f the Loan. A participating province or municipality or public/private entity is one who (i) has signed the framework agreement and/or a (ii) periodic protocol; or (iii) implementationagreement. other 68. It would be covenanted that the Borrower, through the Ministry o f Labor, shall ensure that the concurrent audits o f the Project are carried out every six months, in accordance with terms o f reference satisfactory to the Bank. 69. It would be covenanted that within 12 months after project effectiveness, the Ministry o f Labor would have carried out a systems audit o f the Management Information System (MIS), according to terms o f reference satisfactory to the Bank, and would have provided and discussed the results o f said audit with the Bank, and inthe event that the results o f the audit show that the systems applications pose, in the Bank's opinion, substantial risk to the implementation o f the Project, carryout within twelve months thereafter, a second audit. 70. Disbursement Condition for Expenditure Category o f Stipends: the approval and issuing by the Borrower o f the specific requirements for implementation o f the youth internship subprojects. IV. APPRAISAL SUMMARY A. Economic andfinancialanalyses 71. The proposed Project has four components: (A) Expand and Strengthen Competency-Based Training and Certification; (B) Basic Education Services and Certification for Adults; (C) Promotion o f Youth Employment; and (D) Strengthen Management Information System, Project Administration and Studies. The private benefits of the Project would be obtained through increasing the earnings possibilities for participants inthe activiti.es - the additional skills would improve their employability (both the chances o f finding a job and moving up the career ladder within a given profession) and income stream. Hence, it will be important at what time during the working cycle participants would be benefiting from the Project as the length o f the additional income stream would vary. 72. In addition to such private benefits, the activities supported by the project would also have wider benefits. First, the Project specifically aims to reach the unemployed, informal sector workers, as well as young labor market entrants without a completed formal education. Thereby, positive poverty and equality effects can be expected which could (in addition to the private income referred to above) constitute a social benefit in itself. Second, with the stock o f skilled workers improving, productivity and growth effects would materialize above the direct income 26 increases to beneficiaries, especially ifknowledge and skill accumulation produce externalities at the workplace for production processes and other workers. Annex 8 shows that today's productivity level inArgentina is, ininternational comparisons, low and that this is neither due to physical nor human capital endowments per se but rather due to the skill level (or the quality o f human capital). Annex 8 also reports on international evidence regarding the causality chain from skills upgrading to economic growth and the reduction o f inequality. Lastly, youth interventions like the ones included under Component C have been shown to produce wider social benefits regarding social integration and improved social development - as they provide an effective system o f second chances that give interested young people the hope and the incentiveto catch up from bad luck or bad choices. 73, International empirical evidence regarding the quantification o f private benefits arising from improved access to lifelong learning opportunities, which could be used to evaluate the project activities ex ante, is scant. Further, estimating the magnitudes o f these benefits would not be possible without makingunsubstantiated conjectures given that the Project considers innovative, modular and flexible options for service delivery to adults and youth. Instead, Annex 8 reports calculations that estimate the necessary minimumincrease inthe income o f project beneficiaries so that the project would be economically viable. The cost per component and total estimated beneficiary numbers are used to derive per capita project costs which are then annualized, assuming a standard discount rate. Results show that the necessary annual income increases would have to be only modest for activities under ComponentA and B (inthe most conservative scenario, around 8 percent o f income of workers in the bottom half o f the income distribution). Economic viability in the narrow sense (only looking at the private benefits o f the pro'ect) is hence very likely. Necessary income increases for youth activities under ComponentC1 would 1 have to generate a higher, permanent annual income increase of around $370 (23 percent o f average income o f the bottom half o f workers in the income distribution). However, as mentioned above, integration and social development benefits would likely be largest for this very group o f beneficiaries as well, i.e., young labor market entrants without completed formal technical and secondary education. B. Technical 74. The proposed Project sets out to improve the employability o f the unemployed and strengthen career opportunities for the employed. Its design correctly recognizes that achieving both objectives starts with helping youth and adults recover from a bad start when early education opportunities are either not available or not exercised because o f bad decisions. It provides for "second chances" to those who fail to seize "first chances" for building this foundation. The focus on lifelong learning correctly recognizes how the world has changed and that trade, technology, and global competition are speeding the pace o f change and the need for workers to adapt with new skills over the lifecycle. The design reflects global best practice inits l1These calculations are lower bound estimatesbecauseunit costs are calculated using only those participants projected to complete the full cycle of activities, i.e., reaching certification for Components A and B, and participating in youth internships for Component C. However, it is likely that many other participants in Project activities would realize benefits as well, for example, from taking a competency-based training course, completing an extra year o f schooling, or employment services. 27 focus on the outcomes o f training (not just the inputs). It builds on experience from two pilot programs12 supported by the Inter-American Development Bank and from the support to adult education and public employment services initiated under the Heads o f Household Program. 75.The emphasis on competency-based training models with employers and workers engaged in setting standards promises to strengthen the linkage between the training offered and market demand. The movement o f non-formal (outside o f the education system) training systems to a modular, competency-based, standards-driven system is considered best practice. Such reforms promote the integration o f education and training placing them on a level playing field and focusing on standards that are relevant to the market set by employers and workers. Also to be supported under the proposed Project i s taking this a step further with national qualifications frameworks that provide equivalencies for past learningindifferent modes. These reforms have promoted flexibility, easy entry and exit, quality, cost-effectiveness enabling workers to move vertically and horizontally within education and training over the life cycle as part o f a lifelong learning system. In addition to improving the relevance of training, it would contribute to quality improvement through use o f a testing and certification system that would sort out good from bad training. To the degree the sector committees are sustained and monitor changes in market demand for skills, the project can also improve flexibility o f the workforce. 76. A recent Bank review o f evaluations o f employment services,l3including counseling, placement assistance, job matching, labor exchanges, and other related services, in OECD, as well as in transition and developing economies, concluded that they generally have positive impacts on the post-program employment and earnings o f participants. Costs are relatively low so the cost-benefit ratio is often favorable. Comprehensive packages o f services, programs that are oriented to labor demand and linkedto real workplaces, and careful targeting are good design features. The evaluations show that program impacts are usually more positive when the economy i s growing. Some studies indicate that positive effects are more frequent for women. An important caveat is that large informal sectors as well as the relative weaknesses o f public institutions in developing countries, may affect the performance o f job assistance programs in these countries. More research is needed inthis area. C.Fiduciary 77.As requiredby OP/BP 10.02, a Financial Management (FM) assessment of the arrangements for the Project was carried out inline with the Financial Management Practices inWorld Bank- Financed Investment Operations, a document issued by the FM Sector Board on November 3, 2005. The objectives o f the evaluation are to determine whether the financial management arrangements are satisfactory for the proposed Project. 78. The implementing agency for the Project would be the Ministry o f Labor through the Secretariat for Employment. Financial management and procurement functions would be the l2Programa de Fomacidn y CertiJicacidnde Cornpetencias andFomjuer: Formacibn y Oportunidades. l3"Impacts o f Active Labor Market Programs: NewEvidence fiom Evaluations with Particular Attentionto Developing and Transition Countries", by Betcherman, Olivas, andDar, January 2004, SocialProtection Discussions Paper Series, World Bank. 28 responsibility o f the Ministry's dedicated administrative unit for multilateral operations: the Project ExecutingUnit for Loans with External Financing (UEPE). 79. The proposed FM arrangements are considered adequate and the Borrower has sufficient capacity and resources to implement the proposed project. Assigned staff is experienced andhas implemented previous Bank-financed projects supporting several workfare-type employment programs; systems are adequate for the Project requirements. For subcomponents requiring funds to be made available to participating sector organizations, provinces, municipalities, or adult education publidprivate sector entities, the use o f funds will be regulated by protocols signed between the participating entities and the Ministry o f Labor. The list o f output-based activities appears in Annex 10, using unit costs developed by specialized staff in the Ministryo f Labor, based on prior experience inthe activities to be supported under the project. Additional fiduciary measures suitable to this specific approach have been developed to mitigate risk and contribute to fluid project implementation. Those measures include: an enhanced internal control framework, system audits and concurrent audits. 80. The financial management risk rating i s substantial. The rating is mainly due to the variety o f entities participating in the Project and the related complex cash flow processes. The large number and wide geographical distribution o fbeneficiaries and the fact that loan funds would be made available to numerous entities participating in the Project increase its complexity. To mitigate these complexities and their fiduciary impact, additional fiduciary measures are incorporated and include inter alia an expanded scope o f audit and a reinforced internal control framework. The detailed risk analysis is provided inAnnex 6. 81.With respect to procurement, an assessment o f the Borrower's capacity was carried out and the results are in Annex 7. Given the nature o f the Project involving provinces, municipalities and sector organizations who are not familiar with Bank-financed operations, the overall procurement risk has been rated as High, and would require ex-post reviews twice a year. The Bank's review shall cover no less than 1in5 contracts signed. D.Social 82. Inthe areas o f competency-based training and certification and adult education, the Ministry has prior experience working with various stakeholders. Also, Project preparation included specific assessments and meetings with stakeholders. Annex 9 summarizes the views, particularly on implementation issues, o f the principal groups - national and provincial authorities, beneficiaries of social programs, training institutions, private companies and unions. 83. Stakeholders highlighted the positive features o f the competency-based approach, including makinglabor intermediation and training content transparent andpertinent, andbringingabout a social and institutional recognition o f the labor competencies o f workers. Most employers believed that complementary measures were needed for the unemployed and other vulnerable groups. Stakeholders identified a role for the state to finance installation and implementation o f the system in the first phase and to promote the methodology and approach in order to make it broadly accessible. Women who had participated in a competency-based pilot highlighted the 29 importance o f counseling and o f remedial measures to resolve obstacles to employment, the usefulness of the approach, and its effectiveness in"activation". 84. For adult education, stakeholders recognized achievements since mid-2003: use o f more flexible mechanisms and a broader menu o f options, greater attention to this area at the provincial level, inclusion o f compensatory measures, and bringing services closer to the community. Difficulties remained. Training needed to be better linked with economic context. More information was needed on results. More actors (municipalities, nongovernmental organizations, and unions) should be involved. There should be more promotional and orientation activities. The traditional pedagogical model was inadequate and services were not pertinent. Funds were sometimes scarce because o f delays at the national level or because o f provincial procedures. There was a tension between the difficulty o f changing the current system andthe low effectiveness o f isolatedinnovation. E.Environment 85. The project will not finance any significant construction activities. For the purposes o f Operational Directive 4.01 the operation has an environmental category of Cywhich does not require an environmental assessment. The civil works to be financed would be mainly minor construction works to adapt existing facilities to accommodate the equipment needed for the training and certification system based on competencies and the MIS o f the Ministry o f Labor, such as updatingelectrical systems, and to meet service quality standards. F.Safeguardpolicies 86. According to the 2001 Population Census, 2.8 percent o f households contained at least one person who recognized themselves as indigenous. Education attainment among the indigenous population lags that for the Argentine population as a whole. Among the indigenous population 10 years old or above, the share o f illiterates i s 9 percent, three times greater than the national level. Nearly 80 percent o f the indigenous population 15 years old or above have not completed secondary education, while this is true for less than 70 percent o f the population as a whole. A third o f the indigenous population have not completed primary or have never attended school, while this is true for less than20 percent o fthe total population. 87. The proposed Project triggers the World Bank's Policy on Indigenous Peoples (OP 4.10) because some communities o f indigenous peoples meeting the criteria in OP.4.10 are present in two of the provinces (Tucuman and Mendoza) that would participate in Component B (Basic Education Services and Certification for Adults). In addition, the inclusion of additional provinces by the Ministry o f Labor during project execution and the adult education subprojects, depending on their location, could trigger OP 4.10. Inthe case o f ComponentC (Promotion of Youth Employment), for the first two subcomponents C.l (Employment and Career Orientation) and C.2 (Education and Training), the location o f activities will depend on the location o f municipal employment offices. The inclusion o f specific municipalities (as specified in the IPPF) in the activities to be supported under C.l and C.2 also would trigger OP 4.10. After a screening carried out in coordination with the Bank, the Government prepared an Indigenous Peoples Planning Framework (IPPF) and submitted it for Bank review and approval 30 (the original IPPF i s included in the list o f project documents and a summary is included in Annex 9). This IPPF has been submitted to the Bank Infoshop and publishedby the Borrower in compliance with OP 4.10. 88. For those provinces, municipalities, or adult education publidprivate entities which have been, or in the future are, identified as triggering OP 4.10, the framework or other agreements that would be signed with the Ministry o f Labor in regard to the Project, would include a requirement to undertake a social evaluation o f the communities o f indigenous populations, and where required, prepare an Indigenous Peoples Plan (IPP), in accordance with the requirements set out in the Indigenous Peoples Planning Framework (IPPF). The IPP would be an integral parto fthe protocols (annual operational agreements) or other implementation agreements signed between the province, municipality, or adult education publidprivate entities and the Ministryo f Labor for implementation o f the Project. The framework agreement and/or the protocol (or other implementation agreements) need to be signed before loan funds are advanced or transferred to a province, municipality, or adult education publidprivate entity and would require the prior no objection o f the Bank. If during the course o f Project implementation, additional indigenous communities are identified that meet the criteria established in OP 4.10 (para 4), the same requirements would apply to the corresponding provinces, municipalities or public/private entities. 89. The IPPs would incorporate strategies o f promotion and communication adequate for indigenous communities in order to guarantee their full understanding o f the Project. In particular, the following i s envisaged: (a) the use o f existing material in the original language; (ii) training o f local agents to register participants in these communities; (iii) promotion and communication campaigns; (iv) mechanisms to provide information and respond to complaints, at the national as well as the provincial level; (v) training for tutors to work with the participants from these communities; and (vi) a description o f the specific modality that would be used to offer these services ineachindigenous community (inthe case o f ComponentB). Safeguard Policies Triggered by the Project Yes No EnvironmentalAssessment (OPBP 4.01) [I [XI NaturalHabitats (OPBP 4.04) [I [XI Pest Management (OP 4.09) 11 [X 1 Physical CulturalResources(OPBP 4.11) [I [XI InvoluntaryResettlement(OPBP 4.12) [I [XI IndigenousPeoples (OPBP 4.10) [XI [I Forests(OPBP 4.36) 11 [XI Safety of Dams (OP/BP 4.37) [I [X 1 ProjectsinDisputed Areas (OPBP 7.60)* [I [XI Projectson InternationalWaterways (OPBP 7.50) [I [XI By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claimson the disputedareas 31 G.PolicyExceptions andReadiness 90. No policy exceptions are contemplated under this Project. The Government showed a high level of commitment during Project preparation. Some components build on activities initiated under the ongoing Heads of Household Transition Project (Ln. 7639-AR). The Ministry of Labor has prepared an Operational Manual for the Project acceptable to the Bank. 32 Annex 1:Sector and ProgramBackground ARGENTINA: LifelongLearningandTraining Project 1. This annex describes the country context for lifelong learning and training activities in Argentina. In particular, it covers: (i) in the labor market (including for youth) and the trends demand for skills; (ii) the extent of the education gap, as well as the coverage and performance o f the adult education system; (iii) the estimated returns to education and to lifelong learning; and (iv) the access o f the workforce to training opportunities. The analysis shows that Argentina's growth rate and pattern have been favorable for employment creation, initially benefiting less skilled workers, but now translating to demands for higher skilled workers as well. However, a large group o f the population, including both young and adult workers, lacks basic levels o f formal education. Many workers do not now have access to training opportunities. In order for the 4.3 million workers currently unemployed or in the informal sector, to obtain decent jobs with better protection against risks, it will be crucial for them to finishtheir secondary education andobtainjob-relevant skills. Labor MarketTrends 2. The Argentine labor market was seriously affected by the 2001-2 economic crisis, and some labor market performance indicators are still recovering from the deterioration which occurred at that time. However, in general terms, the economic recovery has been characterized by a qualitative change in the structure o f the economy favoring employment growth to a greater extent than was the case prior to the crisis. Currency depreciation favored tradeables, notably manufacturing. Inaddition, the recovery in domestic demand fueled growth in construction and retail - more intensive in the use o f less skilled workers than the sectors which were more dynamic inthe 1 9 9 0 ~ for~ example, banking. More recently, there i s evidence that demand for skilled workers i s also on the rise inareas such as hightech industry. 3. Since the late 1 9 9 0 ' ~changes in activity, unemployment, employment, and working ~ conditions have differed significantly depending on gender and age group. Recently, labor force participationhas increased mainly as a consequence o f a flow o f low and semi-skilled prime-age women into the labor market (Figure Al.1). Women's labor participation increased 18 percent between 1998 and 2006, while the participation rate o f men increased by only 0.4 percent. The age-specific increases shown inFigure A1.llargely mirror the changing pattern o f female labor force participation. 33 FigureAl.1: Laborforce participationby genderandage groups ( %ofpopulation) , , , , , , , , , , , ~~~ - 0 n18-24 age age 25-65 --0- mles d - females Source: CEDLAS and Bank's staff calculations based on the EPH. 4. Though decreasing, unemployment and informality remain high, especially for the young. The increase inunemployment in the late 1990s and early 2000s was mainly due to the economic recession, culminating in the crisis. Although youth unemployment still exceeds unemployment for 25-64 year olds, with the economic recovery unemployment rates have decreased for all groups (see Figure Al.2). FigureA1.2. Employmentandunemploymentrates (% of EconomicallyActive Population) 50 - 40 - O O O 30 - * * 20 - -enpbyment - age 18-24 unenpbymntage 18-24 -X- -empbyment age 25-64 --3ic--.unenpbymntage25-64 Source: CEDLAS and Bank's staff calculations based onthe EPH. 5. Since the crisis, employment rose 9 percent for prime-age workers (aged 25 to 64). However, youth employment rates have remained stable. Thus far, employment creation has not been strong enough to absorb the higher participation o f females in the labor force and to reduce unemployment rates across all age groups (Figure Al.2). 34 6. Women still face higher risk o f unemployment as well as a longer unemployment spell. Since 1998, the unemployment rate o f women has generally been higher than that o f men, with the gap betweenthe two increasing since the crisis (Figure A1.3)14. FigureA.1.3. Womedmen unemploymentgap ratio - 2.0 Source: CEDLAS and Bank's staff calculations based on the EPH. 7. A high unemployment rate i s not the only characteristic for workers below the age o f 25. Youth vulnerability also manifests itself inhigh labor informality. The informality rate for young workers i s almost double the one for prime-age workers, even though recently the gap has decreased slightly (Figure A1.4). In2006, almost seven young workers out o f ten hadinformal jobs. Inthe case o f adults (age 25 to 64), four out o f ten were working in the same conditions. The informality gap between men and women has remained stable; five out o f ten women were informal versus three out o ften male workers in2006. FigureA1.4. Informalityby age groups (YOof Employed) -P-age18-24+I-age 25-64 Source: CEDLAS and Bank's staff calculations based on the EPH. 8. Unemploymentand labor informality are strongly related to the skills of labor market participants. Unemployment for prime-age workers i s strongly related to years o f education (FigureAl.5) with the risk o f unemployment significantly lower for those workers with 14 years or more o f education. A similar reduction can also be observed for younger workers, albeit the riskofunemployment appearsto beincreasingwith educational achievement beyondnineyears. l4The gap is measuredbythe ratio between women and men's unemployment rate. 35 Figure A1.5. Rate of Unemployment by age groups and years of education, 1"semester 2006 (%) age 25-64 0 10 20 30 40 50 Hless than 9 years m9-13 years Source: Bank staff calculations based on the EPH. 9. Labor market informality i s strongly linked to human capital endowment for all age groups (Figure A1.6). While homogenously lower for workers with more education, the gap between the informality rate for older and younger workers is more pronounced at higher levels o f education. Figure A1.6. Informality rate by age groups and years of education, 1'' semester 2006 -in% t 0 10 20 30 40 50 60 70 80 90 100 less than 9 years n9-13 years Source: Bank'sstaff calculations basedon the EPH. 10. Unemployment duration, on the other hand, appears to be less correlated with formal skills than with the gender and age o f labor market participants. The unemployment duration gap between workers with more than 14 years of education versus workers with less than 9 years o f education has decreased from 45 percent to 17 percent inthe last 8 years. 36 11. From 1998 until the 2001-2 economic crisis, the average unemployment spell had increased (Figure A1.7). Women and adult workers, on average, were jobless more than one year, according to data for the second half o f 2003. Though the unemployment duration has since declined, it was still above pre-crises levels at the beginning o f 2006. The most recent data indicates that for male unemployed, the average duration o f unemployment was 9 months, while the duration for an unemployed woman was three months longer. In terms o f age groups, average unemployment duration for a young worker was 7 months and 10 months for a prime- age worker. FigureAl.7. Average Unemployment Durationby Age Group and Gender (months) 16 , 14 - 12 - 10 - 8 - O O 0 0 6 8m 8m 4 -- 8x 8 2 . 0 --8--.age 18-24 -0-age25-65 -m-males-0-females Source: Bank staff calculations based on the EPH 12. The most recenteconomic growthpatternin Argentina (through 2006) has increasedthe demand for workers within the construction sector, as well as in some higher skill areas. Economic sectors with a high participation o f qualified positions have performed well after the crises, particularly recently, with unmet demand for skills now appearing to be growing. 13. Figure A1.8 shows net employment changes from 1998 to 2006 and from 2003 to 2006. Since the crisis, in addition to construction, employment growth was significant in skill-intensive industries (hightech industryand skilled services). 37 Figure A1.8. Changes in employment by economic sector (YO) Construction Utilities & transportatlon Skilled services Publlc admlnist -30 -20 -10 0 10 20 30 40 50 60 ?< 2006-11 1998 BI 2006-11- 2003-11 - Source: CEDLAS and Bank's staffcalculations basedonthe EPH. 14. The importance o f the economic growth pattern for the demand for skills can be assessed based on the necessary job qualifications in such sectors. The sectors with significant growth after the crisis include those with an important participation of technical positions in total employment in comparison with other economic sectors (Figure A1.9), mostly at the operator level. Figure A1.9. Workers by economic sector and type of job qualifications, 1'' semester 2006 (%) domesticservants education & health public adninistration skilled services utilities & transportation comnerce construction industry hightech industry low tech primry activities 0 15 30 45 60 75 90 rn professional x technical Source: Bank's staff calculations basedonthe EPH. 38 15. A significant share o f labor demand remains unsatisfied. The trend observed inthe Survey o f Large Enterprises, reveals that the level o f positions not covered by firms has remained stable over the last two years. While short term fluctuations (from one quarter to the next) can be observed (and a recent increase in the importance of operational qualifications for unfilled positions), the overall pattern shows the importance as well of a demand for technical qualifications to occupy unfilled positions. Figure A1.lO. Unsatisfied demand by levelof position's qualification 70 ,18 2005-1 2005-ii 2005-iii 2005-N 20064 2006-ii 2006-iii 2006-iv -firm that dkl searchs, and were not able to cover positions -6 professbnai +technical - -x- -operationai Source: INDEC. Schooling Levels 16. Schooling levels have increased but a high education deficit remains." The schooling levels of the Argentine population increased significantly over the 1990s. Argentina has the highest average level o f education in the Latin America region (8.8 years average attainment for the total population aged 15 and over). The average overall schooling levels in the labor force increased to 11 years in 2002, from 10 years in 1992. Nevertheless, a significant share o f the population has not completed secondary education. According to the 2001 population census, 7.8 million adults inArgentina have not completed secondary education, o f which 2.4 million are between the ages o f 20 and 49. For the age group 20-29 years old, about 40 percent have incomplete secondary studies; for those 30 years old and above, the share rises to more thanhalf. 17. In Argentina adult education is the responsibility o f provincial governments. There i s no special curriculum, only a modification o f what exists for the school system as a whole, for example, by eliminating electives, and reorganizing materials somewhat in order to enable adult students to complete the primary level in 3-4 years and in 2-4 years for the secondary level. Over the last ten years, some efforts also have been made to support a model which i s partly done outside of the classroom inorder to reduce the requirements o f class time. Inrecent years, there has been an increase in the registration o f students in schools o f adolescents and adults. Between 1997 and 2005, enrollment in adult education rose from 470,000 to 600,000, with most l5The analysis inthis section is basedon reports "Building a Skilled Labor Force for Sustained andEquitable Economic Growth. Education, Training and Labor Markets inArgentina", World Bank,May 2006, and"Evolucion Reciente y SituacionActual de la Educacion de Adultos en Argentina" Irene Kit, April 2007. 39 o f the increase taking place prior to 2000. Enrollment at the primarylevel i s about 40 percent o f the total, while the share at secondary level is 60 percent. In the case o f primary studies, this increase was particularly pronounced among adolescents (15-19 years old) who had dropped out o fthe regular classes. 18. The coverage o f this part o f the education system i s still extremely low in comparison with numbers o f the economically active population lacking complete secondary education, and there has not been a significant improvement inthis aspect o f educational attainment. In2005, about 100,000 adults completed secondary education inArgentina, representing only about 4 percent o f the 2.4 million people between 20 and 49 who have not completed secondary school. Efficiency in the adult education system i s very low. At the primary level nearly 60 percent of students either drop-out or are not promoted to the next level. The share is slightly better at the secondary level, but still low at about half. 19. This information highlightsthe need for policies that would make education more attractive for adults. The new Education Law (2006) promotes innovative models in this area that depart from the traditional model which is extremely rigid in terms o f the supply of services. Positive features o f the Law are the inclusion o f adult education as a separate service model and the inclusion o fpartial distance learning as a method. Returns to Education and Lifelong Learning 20. The average return to investment in schooling in Argentina is high and has increased over the last ten years, regardless of the economic cycle or changes in the unemployment rate. In 2002, the average rate o f return o f an additional year o f schooling was 11.5 percent, slightly higher than the average for middle-income countries o f 10.7 percent. The returns to schooling are slightly higher for men than for women. Returns to education at the lower levels o f the wage distribution have increased over time, and the gap between returns at the top and bottom has narrowed. Education i s becoming a better investment at the lower ends of the income distribution. For women, returns may be higher at the bottom end, reinforcing the judgment that education i s a good investment inArgentina. 21. Returns to lifelonglearning are substantial. An examination o fthe simulated profitability o f lifelong learning efforts inArgentina shows that, incontrast to the average industrial country, the rates o f return on lifelong learning are substantial at the university and secondary school levels for both youths and adults (Berlinski 2003). Taking into account labor market earnings, informal employment, labor force participation, and unemployment, simulated estimates of the returns to learning for youths and adults are large. These returns are high regardless o f unemployment risk. For youth, the average rate o f return for men between 1998 and 2002 was 10.7 percent without unemployment risk and 12.4 percent including unemployment risk. For women, these rates were 16.1 percent and 18 percent. Returns to complete secondary education for women are fairly large, and compare well to similar estimates inindustrialcountries. 22. However, highreturns do not necessarily imply that everybody will be actually compelled to pursue post-compulsory education. In fact, attendance rates are significantly higher for youths with higher parental income. The positive association between parental income and school attendance could be due to: constraints on individuals from low-income families stemming from 40 a lack o f private savings and prohibitive costs o f capital for loans to attend post-compulsory education; the reflection inpresent income o f longer term permanent differences in families and individual school readiness which determine post-compulsory school attendance; and lack of information among individuals from low-income families and a preference for low-skill/low risk jobs instead o f facing the risky prospect o f acquiring further education. Access to Skills Training 23. The current supply o f skills training i s low and few active labor market participants have access to lifelong learning opportunities. Further, job training opportunities are unequally distributed among workers based on their labor conditions, socioeconomic background, educational attainment and firms' size. 24. In Argentina, on-the-job training opportunities are generally limited to the minority o f workers in formal employment. As outlined above, the risk o f labor informality i s high for workers, especially for poorer ones with less formal education, thus a significant constraint exists for such workers to access capacity-improving training opportunities. 25. Socioeconomic background constitutes a main determinant o f workers' training participation. While individuals in low-income and lower middle-income households comprise 52 percent o f the working age population, 80 percent o f these individuals have never taken a training course and o f the 20 percent who have, one thirdtook it more than five years ago. 26. Access to training i s also related to educational attainment. As mentioned previously, adults who have not completed secondary school constitute 45 percent o f the working age population. Among workers with less than secondary education, only around 20 percent took at least one training course over the last five years, as compared to 26 percent o f secondary schools graduates, 62 percent o f workers with some tertiary education, and almost 70 percent o f workers with complete tertiary or university education (Table A1.1). Table Al.1. Characteristicsof TrainingRecipients YOof labor force Educationattainment Incomplete Complete Primary Incomplete Secondary Secondary tertiary tertiary/ /university university At least 1 training course last 5 years 6.3 14.2 26.2 61.8 69.7 Has computer skills 0.9 10.4 33.3 68.4 67.2 Has English language skills 0.0 5.2 20.8 44.1 55.5 27. Finally, access to training, even among formally employed workers, depends greatly on whether the individual works in a large as opposed to a small or medium enterprise (SME). Recent labor productivity growth in the largest firms has been the result o f a strong investment effort, not only in technology but also inhuman capital. Training on a regular basis throughout 41 the various levels o f these organizations goes hand-in-hand with technology and management innovation. 28. A survey o f 200 leading firms (Kritz, 2003) confirms the relevance o f quality training efforts. Around 50 percent o f these large firms have a regular training program for their workers, and an additional 33 percent carry out occasional training activities. Companies offer a variety o f training activities and often combine various types o f training courses. The most common are short-term courses (90 percent) and on-the-job informal training (55 percent). On average, Argentina's leading firms allocate 42 hours or 2.3 percent o f annual working time to training activities (Table Al.2). Table A1.2. Number of training hours per annum by occupation category Occupation category Average Maxirnunand minirnun Directors and top managers 53 Hightech: 80 hours Communications: 70 hours Mid-level managers I 44 II Financial Pharmaceutical industries: 8 hours services: 39 hours Capital goods: 51 hours High tech: 50 hours Pharmaceutical industries: 8 hours Financial services: 20 hours Senior employees and technicians 44 High tech: 50 hours Mass consumption: 50 hours Pharmaceutical industries: 8 hours Financial services: 18 hours Administrative personnel 36 Chemical industries: 50 hours Public utilities: 48 hours Pharmaceutical industries: 8 hours Financial services: 18 hours Production workers 40 Communications: 55 hours Chemical industries: 52 hours Pharmaceutical industries: 8 hours Mass consumption: 23 hours Sales and customer service personnel 40 Communications: 67 hours High tech: 60 hours Pharmaceutical industries: 8 hours Mass consumption: 23 hours 29. The training supported in SMEs has substantially increased in the 1990s. According to the Secretariat o f Small and Medium Enterprises (Secretaria de PequeZas y Medianas Empresas), Argentina has about 300 programs and credit lines to support SMEs. Despite this growth o f training and technical assistance programs, relatively few SMEs have access to training and consulting services. Although there were some successful national programs to foster training in SMEs, most of them have played a minor role in improving productivity or expanding employment opportunities. For example, in 1996, only 24,000 persons registered at the Proyecto Joven sixth opening, and only 1,600 registered for Aprender, while the unemployment rate reached 17 percent and more than 2 million people were jobless (Marshall, 1997) during this time period. 42 30. The institutional supply for adult education and vocational training currently i s fragmented with low and unequally distributed training opportunities for workers. A minority o f workers (formal, with higher levels o f education, higher incomes and in leading enterprises) have much better access to training than do the majority o f them. 43 Annex 2: Major Related Projects Financed by the Bank andor other Agencies ARGENTINA: LifelongLearningandTraining Project Sictor Issue Project Latest Supervision (ISR) Ratings (Bank-financed Projects only) Implementation Development Progress (IP) Objective (DO) Bank-financed Rural Education PROMER (Loan 7353) Transition from Heads of Household Ongoing (S) S EmergencyWorkfare Transition Loan7369-AR SecondaryEducation 2ndSecondaryEducationI1 Ongoing (MS) MS (PRODYMES III-A Prov. of BSAS)Loan4586-AR 3rdSecondaryEducation ((PRODYMES 11) Loan 3971- Completed (S) MS AR)) EmergencyWorkfare Social Protection VI - Heads Completed (S) S ofHouseholdProgram-Loan 7157-AR Other Agencies Training and FORMUJER (IDB) Completed Employment Services for Poor Women Competency-Based Programa Formacihy Completed Certification and Certijkacidn de Training System Competencias (IDB-FOMIN) Conditional Transfer Programa Familias (IDB) Ongoing Program Training and adult EuropeanUnion UnderPreparation education services 44 Annex 3: Results Framework and Monitoring ARGENTINA: LifelongLearningandTraining Project Table A3.1. Results Framework PDO Project Outcome Indicators Use of Project Outcome Information Through lifelong learning and Within a year, no less than 25 Assess effectiveness of technical competency-basedtraining and percent of certified adults units andpromotion activities, to certification; (i) enhance obtainingregistered employment make necessaryadjustments. employability (for unemployed); or higher salary. Check for differences inresults. and (ii) improve career opportunities (for employed). Within a year, no lessthan 50 Assess effectiveness of more percent of adults receivingbasic pertinent and flexible adult education certificates continuing education services. Check for their training or education, differences inresults. Take obtainingregistered employment remedialactions as necessary. or higher salary. No lessthan 50 percent ofthose Assess effectiveness of ininternships, employed within intervention; identify sectors 12 months after participation. providing youth opportunities. - . .. Intermediate Outcomes Intermediate Outcome Use of Intermediate Indicators Outcome Monitoring Install competency based 30 sector councils andtechnical Assess effectiveness of training, assessment, and units installed. promotion of competency-based certificationsystem in30 sectors. training and certification. Adjust as necessary. 300 norms in 120 occupations in Assess work of technical units. 30 sectorsvalidated and Make necessary adjustments. registered inthe Ministryof Labor andbeing utilized. 420 training institutions offering Assess progress of technical competency-basedtraining and support. Make changes as having completed their quality necessary. improvement process. 150 training institutions certified. Assess technical units and support; make adjustments. 250,000 workers trained in Assess technical units and competency basedcourses. training institutions; make adjustments, 100,000 adults evaluated Assess training, evaluation and according to competency-based certification services; make norms, of which 70,000 certified. necessarychanges. 45 # ofparticipants inservices, of Assess effectiveness of outreach incorporating more flexible and which 80,000 receive basic and retentionefforts. pertinent delivery in5 provinces. education certificates. Expandadult education services # o fparticipants inservices, of Assess effectiveness of outreach incorporatingmore flexible and which 20,000 receive basic and retentionefforts. pertinent delivery inno less than education certificates. 20 snecial moiects. Provideyouth employment # of youth receivingemployment Assess outreach effectiveness. services, education and training services. opportunities and internships. # o f Employment Offices making Assess effectiveness of training informed client referrals to andservice delivery of training and education services. employment offices. # o fbusinessesparticipating in Assess effectiveness of employer the Network. relationship. # o f internships provided Assess effectiveness of business network and employment offices 145,600 participants in inorganizinginternships. 1 internships # of workers covered inMIS Assess outreach and training. Inforiation System (MIS). # of agenciesusingMIS Assess outreach and training. Arrangementsfor resultsmonitoring 1. The management information system (MIS) is central to Project execution and management. Delivery o f specific outputs (norms; certified evaluators; curricula; individuals completing training, evaluation, and certification; adults attending education services and certified; youth receiving employment services and ininternships) would be registered by implementing entities in the MIS and validated either through the REGICE (Register of Training and Employment Agencies) or (on a sample basis) through the supervision o f the Ministry. The protocols (annual agreements) signed between the Ministry and implementing entities (among others, sector organizations, provinces, and municipalities) would incorporate a focus on specific results and monitoring and supervision procedures. The Ministry o f Labor sees the MIS as a unifying element for an eventual lifelong learning system inArgentina. 2. The current MIS originated with the responsibility o f the Ministry for the large Heads o f Household Program registry, including beneficiary data as well as information on individual compliance with the work (or educatiodtraining) requirement. The Directorate o f Information Systems o f the Ministry has worked to improve the MIS and to expand it to incorporate municipal employment services and lifelong learning and training activities. These efforts have been supported under earlier Bank projects and would continueunder the proposed Project. 3. Most data for Project monitoring and evaluation will be drawn from the MIS and from the database for social security contributions which permits a monitoring o f the employment 46 experience o f each registered employed worker (SIJP-Sistema Integrudo de Jubiluciones y Pensiones). The Ministryhas full access to this database and already uses it for analytical work. As needed, for specific impact evaluations o f Project activities (see below), data would be collected through specially designed surveys. The Ministry has experience in contracting and carrying out household and firm surveys. It i s responsible for providing certain labor force statistics and has carried out impact evaluations, including several under previous Bankprojects. ImpactEvaluation 4. There are three preliminary designs for possible impact evaluations o f Project interventions. Inaddition, qualitative studies would be carried out, for example, to assess institutional changes. Possible topics include: effect o f incorporation o f a competency-based approach on businesses or sectors; changes in perceptions o f trainees or youth; business views on the competency-based approach and employment services; and the broader influence o f adult educationinnovations. 5. Component A: Competency-BasedTraining: The question i s whether competency-based training is more effective than the traditional model. The proposed design is a randomization within selected sector(s), o f the phasing in o f Ministry support to training institutions to switch their offering to a competency-based approach by geographical location. Trainees in the areas where a competency-based approach is phased in later would serve as the control group for the treatment group o f individuals trained using a competency-based approach. Results between the control and treatment groups would be compared a year after training is completed, while at the same time baseline information would be used to control for the validity o f the control group and changes inother variables betweenbase line and follow-up (difference-in difference). 6. Component B: Adult Education: The question is the impact o f attendance and certification ineducation courses, particularly for more innovative services. The proposed design would use a differential promotion strategy as an instrumental variable to measure the impact on participants. The control and treatment groups would be generated based on a random selection o f the geographical areas which would first receive more intensive promotion efforts. Those locations not included initiallyinthe more intensive promotion could be included later. 7. Component C: Promotion of Youth Employment: The question i s the impact o f participation in the intervention (counseling, training, and short-term internships. One option i s to randomly select treatment (perhaps more than one to test different parts or combinations o f the intervention) and control groups among interested participants ifthere i s excess demand. Other possibilities are to use an instrumental variable, similar to what is proposedunder ComponentB or a regression discontinuity design, given the age restrictions for participation. 47 i i 8h 8 a h a .C B .-8 c) c) CY rl f0 0 0 0 3 m s f0 0 0 24 0, 0 0 W- f0 0 0 0 8 N z 20 0 0 5 0 0, rl t0 z 0 c b Table A3.3. Monitoring Indicators Indicators Information source Linkto Component - Lifelong LearningProgram -Component A - Con etency-Based Trainingand Certij rtion 1 Number o f sectors, including geographical coverage, Ministryof Labor database and per year REGICE (Registrode Institucionesde Capacitacidny A.1 Number o fNormalization Committees (Unidades Empleo) Tbcnicasde Gestidn)working Numberof competence norms registered ineachsector M O L database REGICE - Number of evaluators trained and registered by sector andgeographical coverage M O L databaseplus Indicators A.1 Number of workers certified ineach nodsector REGICE (F/M)I9 Number of individuals (employed andunemployed) MOLdatabase trained byprovince/mo/sector (F/M) - Numberof individuals evaluatedby A.3 - province/mo (FM) Number of individuals certified by province/mo (FM) NumberofHHLU beneficiaries participating by MOLMIS A.3 province/month (F/M) Number of training institutions strengthened MOLMIS --- With diagnosis Inprogramofimprovement A.2 Certified Number of Certification Units installed / certified MOLdatabase REGICE A.1 Number o f Assessment Centers working / certified or MOLdatabase REGICE -- A.1 registered Lifelong LearningProgram -Cornpone B -Adult Education Services 1 Numberofagreementswith M O L MIS database - - Provinces B.1 B.2 2 I other institutions Number of individuals registered/attending- school by province/month/level (FAG) MOLMIS database B.lB.2 3 IINumber of individuals certified (F/M) MOLMIS database I B.lB.2 I -- Primarv (Drovince/vear) u Highschool (province/year) 4 NumberofHHbeneficiaries registeredattending school byprovince/month/level (FM) 5 NumberofHHbeneficiaries certified (FM) -- Primary @rovince/year) Highschool (province/year) 6 Number of indigenous individuals registeredattending M O L MIS database B.lB.2 schoolbyprovince/level (FM) *'FHH l9 M-Femaleshlales beneficiaries are those inthe Heads o f Household Program 49 7 Numberof indigenous individuals certified (FRVI) MOLMISdatabase B.lB.2 - - Primary (province/year) High school (province/year) Number o f employment offices (EO) with youth M O L administrative records c.1 services Number o f youth beneficiaries registered (F/M) MOLMIS database c.1 Total number o f youth beneficiaries directed to other EO andM O L administrative (2.2 services/EO/month (FRVI) - records Numberofbeneficiaries who attended labor - orientation course Number o f beneficiaries who attendedjob - searchcourse Numberofbeneficiaries with supervisedjob searchactivities Numberofyouth registered to finishprimaryor high MOLMIS database c.2 school (FRVI) Numbero fyouth certified (F/M) M O L MIS database c.2 -- Primary (province/year) Highschool (movince/vear) Number of youth beneficiaries trained byprovince M O L MIS database c.2 (FW Number o f youth beneficiaries ininternships by M O L MIS database c.3 province (F/M) * - Number o f Youth beneficiaries placed inemployment EOdata (2.3 byprovince/month (F/M) Number o f Youth HHbeneficiaries placed in M O L MIS database employment with employment subsidy(FM) Number o f technical assistancevisits o f MOL EO data c.1 ("referentes') to EO/province/ semester Number o fjob vacancies available for youth EO/month EOdata c.3 Number o f businessesparticipating inthe Red M O L MIS database c.3 Number o f businessesparticipating intotal by M O L MIS database c.3 EO/Drovince Number o f youth internship subprojects: M O L MIS database c.3 ---- Presented/province/month Appraised/province/month Approved/province/month Rejected/province/month Number of youth internship subprojects in M O L MIS database c.3 executiodprovincelmonth 1 Number o f external agencies connected and using the M O L MIS database D.l information system 2 Number o findividuals registered MOLMIS databaseandEO D.1 (updated labor histories) 50 Annex 4: DetailedProjectDescriptionandImplementationArrangements ARGENTINA: LifelongLearningandTrainingProject General 1. The Ministry o f Labor (the Ministry)is the implementing agency for the Lifelong Learning and Training Project. Project activities would be managed within the structure of the Ministry through the Secretariat o f Employment, specifically the National Directorate o f Professional Training. Its Directorate o f Institutional Quality is responsible for activities related to the certification o f labor competencies and support for training institutions under Component A (Expand and Strengthen Competency-Based Training and Certification). The National Directorate i s directly responsible for activities in Component B (Basic Education Servicesand Certification for Adults). Support to the municipal employment offices in the context o f Component C (Promotion of Youth Employment) would be carried out in collaboration with the National Directorate for Federal Employment. Within Component D (Strengthening of Management Information System, Project Administration and Studies), the Directorate o f Information Systems would have a key role in the development and implementation o f the integrated management information system (MIS) for lifelong learning and training activities supported by the Ministry o f Labor. All Project activities would be registered and monitored in the MIS. A technical Project Coordinator, working with the Executing Unit for Projects with ExternalFinancing (UEPE), would oversee Project activities on a day-to-day basis. A. Expand and Strengthen Competency-based Training and Certification ($110.9 million; $70.2 million Bankfinancing) 2. This component includes three sub-components: (1) establish in 30 economic sectors, competency-based training and certification, specifically the development, validation and registration of occupational standards; training and certification o f evaluators; and ensuring the functioning o f qualified third-party assessment centers and certification organizations; (2) align the supply of training with the competency-based approach and implement other quality improvementsinprofessionaltraining institutes; and (3) train, assess and certify workers. A.1 Establish Competency-basedCertification ($11.2 million, $6.8 million Bankfinancing) 3. Starting in 2001, the Ministry financed by a grant from the Inter American Development Bank, supported the development o f competency-based training and certification in about 20 occupations in the sectors o f graphic arts, metal-mechanics, auto-mechanics and pastry making. The specific activities undertaken included: (a) defining, validating and registering with the Ministrycompetency-based occupational standards; (b) developing accredited competency-based training to align with these registered standards; and (c) setting up a qualified third-party competency-based assessment and the issuing o f competency-based certificates by third-party qualified and accredited certification units. Employers, trade associations and unions representing these sectors, together with workers, led and carried out these activities. The main results were: (a) the validation and registration o f 76 occupational standards, which include 300 51 competency units2'; (b) 2,000 workers trained according to competencies; and (c) the certification o fmore than 1,250 workers inthe above mentioned sectors. 4. Buildingon this positive experience, which is consistent with international best practice, the Ministryhas expanded and strengthened competency-based training and certification to about 50 new occupations in 10 additional sectors, including construction, forestry, fruit growing, packaging and exporting, gastronomy, tourism, shoes and leather, software and wine. So far, an additional 96 competency-based standards have been validated and registered with the Ministry and are being used for training, assessment and certification purposes. There are now a total o f about 172 approved and registered standards for about 70 occupations in 14 sectors o f the economy. Within the Directorate o f Institutional Quality, three technical units are responsible for: (a) working with sector representatives (businesses and workers) to develop competency- based occupational norms (Technical Unit for Certification o f Competencies - UteCC); (b) working with professional training institutes to improve quality, including moving towards a competency-based model (Evaluation, Monitoring and Technical Assistance Unit - UEMAT); and (c) maintaining the Registry o f Training and Employment Agencies (REGICE), a registry o f information on professional training institutes and institutions involved in the evaluation and certification o f occupational norms, accessible to the public. 5. The proposed Project would support the further expansion and strengthening o f competency- based training and certification, within the sectors already participating, to new occupations and new locations in the country; and to new economic sectors relevant for GDP growth and the generation o f formal jobs. The objective o f the Ministry i s to install competency-based certification in 30 key sectors over the next five years. The Ministrywould select new sectors drawing from: (a) additional sectors with whom they are already working on related activities (about 10 including sugar, ceramics, meatpacking, wood and furniture, call centers, and glassware); (b) those sectors which have been identified as priority because o f their impact on employment and economic growth (a group o f about 20 sectors); (c) a group o f about 8 sectors for which the goal is to improve working conditions; and (d) several emerging sectors. The critical factor that would determine the Ministry's actual selection o f new sectors would be evidence o f sufficient interest and ownership o f key stakeholders in the sector (businesses and unions) inthe activities neededto move to competency-based certification. 6. For illustrative purposes, the following table provides some examples o f sectors which are collaborating at this time with the Ministry o f Labor. During Project implementation it i s expected that there would be changes inthe list. 21A competency-based standard for a given occupationina specific economic sector includes different modules. 52 Table A4.1. Possible Sector Participantsin Competency-Based Certification and Training System inArgentina Expansion and Strengthening within the Sectors already participating Fooduroducts I Metalworking I Automobile I Shiubuilding I I sugar I Pastrv I Ceramics Fishing Construction Rubber and Plastics Leather and shoes Software Meatpacking Call Center Fruits (Blueberries, Olives, h i t s ) Textiles and clothing Graphics Tourism, hotels, restaurants Wood and furniture Glass Agricultural machinerv Wine-making I Automobile mechanics I I 7. Inthe selected sectors, following current practices, a framework agreement (acuerdo rnarco) i s first signed between the Ministryand all participating organizations within the sector (business groups and unions) describing their general intention to carry out certain actions. As part o f the framework agreement, the sector organizations agree to appoint representatives to a sector council in order to promote the development and organization o f a system o f lifelong learning. All o fthe organizations signing the framework agreement have establishedjuridical personality; the sector council does not. Subsequently, protocols (at a minimum, on an annual basis) to the framework agreement are signed with the same parties providing the details on the specific activities to be carried out. The protocols include: (i) a description o f the eligible activities and expenditures; (ii) time-bound action plan and an operational description of the activities; (iii) a the identification o f the key players inthe definition and validation o f standards, the assessment and certificationo f skills, and training; (iv) procedures governing the loan fimds which would be made available through advances or payments from the Ministry to a bank account opened exclusively for the financing o f eligible activities by one o f the organizations signing the 53 framework agreement, designated jointly by the group o f participating sector organizations; and (v) expected targets for the number and level o f occupational standards to be defined and validated and evaluators to be registered, as well as the agreed unit costs. Model framework agreements and protocols are included inthe Operational Manual agreed with the Bank. 8. As described in either the framework agreement or protocol, the same participating sector organizations would have three main responsibilities. First, they would establish a technical unit, to ensure and monitor the implementation progress of all the activities leading to the definition, validation, and registration o f competency-based standards for those occupations, within the economic sector, that the sector councils consider appropriate to be included in this scheme and are specified in the protocol. The unit would promote effective demand for competency-based training, assessment and certification among employed and unemployed workers throughout the country and select the consultants with the required technical expertise to work in the normalization committees. The unit would also gather information on training institutions that would link with the sector and coordinate the activities with the certification organizations and the evaluation centers. The unit would ensure that the members o f the sector council register on time and correctly in the REGICE the norms, certification organizations, evaluation centers and evaluators, the training institutes andthe training curricula. Accordingly, during Project implementation, a total o f 30 technical units would be established. Some o f the envisaged tasks o f the technical units would be carried out in coordination with 150 municipal employment offices located throughout Argentina. Other tasks o f the technical units would be carried out through discussions with enterprises. 9. Second, in order to develop occupational norms (part of the CNAs), the same participating sector organizations would establish committees. The committees would include seasoned professionals and workers o f the given sector as well as qualified consultants, whose main responsibility would be to chart out the functional maps o f the given occupations within the sector, and with the participation o f employers and workers, define and validate the units o f competencies leading to the envisaged standards. The validated competency-based standards would then need to be approved by the agencies representing the sector and registered with the Ministryinthe REGICE (which is part o fthe MIS o f the Project). The validity of an approved standard would be about three-years, depending on the specific sector and occupation. Once the validity expires, the standard would be revised and validated by the committees. The Project will address those competencies relevantto less qualified workers, up to the supervisor level. 10.Third, the same participating sector organizations would identify and select Certification Organizations as the validly licensed private or public institutions or enterprises providing a recognized certificate to individuals who have successfully attained the competency-based standards approved and registered for a given occupation within the sector. The Certification Organizations already have juridical personality. To ensure that the Certification Organizations perform with the required level of quality and objectivity, they, in turn, would have to be accredited. The Argentine Certification Organization (OrganismoArgentino de CertiJcacidn- OAC), with juridical personality, is the only entity in Argentina that can provide appropriate accreditation to the Certification Organizations. The aim is to select 30 Certification Organizations during the life o f the Project, 15 o f which will be accredited by OAC. The Certification Organizations would in turn, provide the accreditation to the Assessment Centers. 54 Assessment Centers, which already have juridical personality, are validly licensed individuals, private or public institutions or enterprises, which are the testing entities to measure and assess the attainment o f individuals o f the skill levels specified by the competency-based standards developed by the committees as discussed in the previous paragraph. The target i s to establish 27 Assessment Centers during the life o f the Project andto train and certify 795 professionals to assess workers; the latter wouldbe financed as part of the CNAs. 11. The subcomponent would finance payments from the Ministry o f Labor to participating sector organizations for Competency Normalization Activities (CNA) implementedby the sector organizations. The CNAs are a group o f activities necessary to install a competency-based certification system. The CNAs to be financed under this component are: (a) registration o f occupational norms and (b) the training and certification o f evaluators. CNA unit costs include all o f the service and operating costs needed to carry out the competency normalization activities. These unit costs are an average o f the service and operating costs required for implementing each o f the CNAs and have been established by the Ministry o f Labor on the basis o f historical costs. These unit costs have been reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministryo f Labor, and adjusted as necessary to reflect actual costs. The unit costs, by CNA, are included inthe Operational Manual and described infull inAnnex 10o fthis PAD. 12. Other eligible expenditures include specialized consultancy services and promotional materials to support the work o f the technical units, to be selected and acquired under Bank procedures as specified inthe Operational Manual and inthe protocols; training o f sector experts inthe competency-based approach by the Ministry; the equipment needed by the Certification Organizations and Assessment Centers to carry out their functions, to be procured by the Ministry, according to Bankprocedures as specified inthe Operational Manual; and the fees for the registration and accreditation of Certification Organizations and the registration o f Assessment Centers, the latter to be paid throughthe sector organizations 13. The flow o f loan funds, as specified inthe framework agreements and/or protocols, would be as follows. Inthe case o f output based disbursements (CNAs), the Ministry would reimburse the participating sector organizations, on receipt o f documentation o f delivery o f the output, through the account exclusively set up for this purpose by the organization designated by the sector organizations. These activities would be financed based on the number o f outputs delivered (occupational norms, trained and certified evaluators) and the agreed unit costs, as stipulated in the protocol and the Operational Manual. All outputs would be registered in the Register o f Training and Employment Institutions (REGICE). Consultancy services and the preparation and printingo f promotional materials would be contracted and paid for by the sector organizations using funds provided by the Ministry o f Labor, according to the plan o f activities, budget, required profiles for consultants and other procedures specified inthe protocol with the Ministry as well as in the Operational Manual. The Ministrywould pay registration and certification fees (for Assessment Centers and Certification Organizations) through the sector organizations, once validated as registered inthe REGICE and/or MIS. 55 A.2 Align Training with Competency-based Approach and Strengthen Professional TrainingInstitutes ($30.5 million, $20.6 million Bankfinancing) 14. Inorder to be able to prepare individuals for certification, a substantial effort will be required to align the current training supply with the competency-based approach. The Evaluation, Monitoring and Technical Assistance Unit (UEMAT) within the Directorate o f Institutional Quality o f the Ministry has developed a framework to assess quality and pertinence for professional training institutes (Institutos de Formacibn Profesional- IFP) along a set o f interventions, and applied it usingthird-partyqualified institutions, with the objective to identify what is needed to strengthen the capacity o f the IFPs and inparticular to help them incorporate a competency-based approach to training. This diagnostic and intervention framework has been applied to about 150 IFPs selected by the economic sectors who have been involved in competency-based activities. Out o f this group, only 13 percent received a ranking o f A or B (acceptable level o f service quality), about half were in category C and 40 percent incategory D (unacceptable level o f service quality). The institutions were assessed on 4 dimensions: links with the local economic and social context, professional orientation o f the training, teaching strategy for the development o f labor competencies, and capacity to prepare a program o f improvements. The Ministry has contracted qualified tertiary level institutions, mostly universities, to assist 50 o f these training institutes to address their quality and pertinence gaps. The activities needed to address these gaps are now being implemented. During 2007, the Ministry o f Labor would review each institution to assess progress. 15. Building on this experience, the subcomponent would include the following activities: training o f staff inthe IFPs on the competency-based approach; the development and publication o f curricular designs and didactic materials by the IFPs selected by the participating sector organizations needed to align training with the 300 norms registered, as described in Subcomponent A.l (Establish competency-based certification system);the technical assistance and equipment necessary to support about 400 IFPs to implement the competency-based approach, as well as other quality improvements; and the accreditation o f a target o f 150 institutions by independent third parties, either the Argentine Institute for Norms and Certification (Instituto Argentino de Normalizacidn y CertiJicacidn- IRAM) or by the Center for Municipal Quality and Modernization (Centro de Calidad y Modernizacidn Municipal or CECAM). The accreditation to be provided by IRAM or CECAM aims at ensuring that the training center has the qualified skill-mix o f trainers and training programs which meet the approved and registered occupational norms, the appropriate learning resources, and the organization, procedures and physical facilities to ensure that training i s aligned to the standards anddeliveredwith quality and efficiency. 16.Accordingly, the proposed Project would finance: (a) consultancy services to fine tune and apply the methodology used to assess quality and pertinence for about 600 IFPS selected by those sectors participating in the competency-based system over the next five years, and to support quality improvements in about 400; (b) equipment for IFPs; (c) the development and publication o f curriculum designs and the associated didactic materials; and (d) IFP accreditation fees. The consultancy services related to IFP strengthening and the training for IFP staff would be contracted by the Ministry and managed by the UEMAT. All equipment purchases would be contracted by the Ministry based on the requirements identified through the technical assistance 56 described above. Under agreements between the Ministry o f Labor and the IPFs selected by the sector organizations (described in paragraph 7 above), the Project would finance the development and publication o f curricular designs and didactic materials needed to align training with the 300norms registered (Curricular Alignment Activities -CAAs). Inaccordance with the prior mentioned agreements between the Ministry o f Labor and the participating sector organizations, a separate agreement between the Ministry o f Labor and the particular IFP would set forth the respective responsibilities o f the Ministry o f Labor and the IFP in carrying out the CAAs. C A A unit costs include all o f the service and operating costs needed to carry out the curricular alignment activities. These unit costs are an average o f the service and operating costs required for implementing the CAA and have been established by the Ministryo f Labor on the basis o f historical costs. These unit costs have been reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. The unit costs are included inthe Operational Manual and described infull inAnnex 10 o fthis PAD. Also through its agreements with the sector organizations, the Ministry o f Labor would pay IFP accreditation fees, after the result is registered inthe REGICE. A.3 Train, assessand certi_fj,workers ($69.2 million; $42.8 million Bank financing) 17. This subcomponent will support the training, assessment and certification o f workers (including unemployed, employed, and those entering the labor market for the first time) according to competency-based standards. The target at the end o f Project implementation i s to reach a certification level o f 15,000 individuals per year, providing them with the opportunity to advance through a career ladder if employed in any o f the participating sectors or to increase their employability if unemployed. About 250,000 workers would be trained according to competency-based standards throughout the life o f the Project, about 100,000 of these trained workers would be assessed, leading to an accumulated level o f certification o f about 70,000 workers. In addition, this subcomponent aims at promoting a self-financed and self-sustained competency-based human resource policy culture within the firms o f participating sectors. The 150 municipal employment offices currently being supported by the Ministry would play an important role inreferring workers to particular training courses, based on individual needs and career aspirations, as well as localjob opportunities. 18. The Project would finance the course fees for competency-based training (schedule in the Operational Manual) organized by the sector organizations, with the protocols (see paragraph 7) signed between these same agencies and the Ministry setting out the number o f courses, participants, and detailed reporting requirements for each trainee, reimbursing the costs o f the training provided through the sector organizations. The Ministry would also use loan resources to finance worker assessment and certification fees, makingpayments to the sector organizations on the basis o fregistration o f evaluations and certifications inthe REGICE and/or MIS. 57 n Box A4.1. QualityAssuranceMechanismsinthe Argentine QualificationsSystem Sector Certification Organizations are third-party entities comprised of associations, institutions, and agencies registered in accordance with procedures established by the Technical Unit for Certification and Competencies (UTeCC) o f the Ministryo f Labor and with the following objectives and functions: Objectives Guarantee quality o f design and updating o f occupational and functional maps and occupational standards Guarantee quality o f selection process and training o f evaluators, following procedures set by the UTeCC, and supervise their work Validate occupational and functional maps and occupational standards Validate the procedures and instruments for evaluation Certify evaluators Certify workers Functions Disseminate andpromote withinthe sector, the process o f setting standards, evaluation and certification o f occupational competencies Develop or update occupational standards Certify the assessmentinstitutions according to defined quality standards Ensure quality o f assessment process inall o f its phases: selection o f candidates, generation o f instruments andprocedures, and training and certification o f evaluators, according to procedures established by the UTeCC Administer registry o f candidates for certification, o f evaluators and certified workers, and maintain all necessarysupporting documentation Certify competencies o f workers assessedby certified evaluators andprovide to REGZCE Assessment Institutionsare either individuals or public or private organizations, authorized bythe Sector Certification Organization to carry out, inits name and through designation, the activities o f the design o f instruments, collection o f evidence and evaluation o f competencies according to competency-based occupational standards. These institutions should be certified by the Certification Organization and registered inthe REGZCE. They have the following functions: Comply with administrative and institutional quality standards (resources, personnel, instruments and quality assurance inthe application o fprocedures) required by the Certification Organization for accreditation Implement quality processes set by the Certification Organizations inall stages o fthe evaluationprocess: selection o f candidates, generation o f instruments and application o fprocedures Communicate to the Certification Organizationthe emission o fthe results o fthe evaluationo f the competencies o f workers by occupation competency unit or role, inaccordance with established procedures and maintain register o fresults Ensure principles o f equity, objectivity, validity and transparency inthe evaluationprocess The goal of the Registro deInstitucionesde Capacitacidn y Empleo (REGICE) (Register of Training and EmploymentInstitutions)is to develop a systemofpublic information, bothqualitative andquantitative, on Professional Training Institutes (IFPs) and the institutions setting occupational standards. Ithas the following functions (among others): Register legal and administrative status o f the IFPs, as well as management quality Pre-qualify IFPs, using a ranking system, for participation inMinistry o f Labor programs andprojects Register occupational standards, certification organizations, evaluation institutions and certified workers, following the procedures established regarding documentation and validation o f information. 59 19. The role o f third-party organizations and quality assurance mechanisms are critical for a qualifications system (see Box A4.1). The design o f the proposed Project i s consistent with this feature o f qualifications systems as it uses the required steps in the quality assurance process as the information and verification system for the output based activities (CNAs, CAA, see Annex 10). The presence o f these independent actors and the social control exercised by the respective sector organizations help to ensure the institutional and technical capacity and control framework needed within the Project to support output based disbursements for this component. A diagram o fthe keyprocesses for this Project component i s shown inFigureA4.1. B. Basic Education Services and Certification of Adults ($48.4 million; $28.2 million Bank financing) 20. The objective o f the component i s to promote innovations inthe policies and strategies at the provincial and local level for adult education and certification, in order to improve quality and expand the opportunity for the economically active population to complete their basic and/or secondary education. The activities to be supported under the component aim to make adult education services more pertinent to the needs and situation o f the working population, facilitate the access, assistanceand certification o fthose with most difficulties, and strengthen the capacity for local management and coordination with other actors in order to expand opportunities. The component builds on the experience o f the Ministrysince late 2003 inpromoting an expansion in the provision o f adult education services for the beneficiaries o f the emergency workfare Heads o f Household Program, financed through two previous loans (Ln.7157-AR and 7369-AR). This component includes two sub-components: (1) Support to selected Provincial Ministries o f Education to develop innovative adult education policies and programs, to improve their quality, and expand coverage; and (2) Support to Sub-projects for the provision o f adult education services that would combine the participation o f educational agencies with other public agencies, businesses, or civil society organizations. Both subcomponents would be managed by the National Directorate for Professional Training. B.1 Support to Provincial Ministries of Education ($29.8 million; $20.4 million Bank financing) 21. The subcomponent would support the development and implementation o f innovative provincial adult education policies and programs, in order to improve quality and expand coverage. The provinces which the National Directorate for Professional Training has identified as participants are Buenos Aires, Cordoba, Mendoza, Tucuman, and Santa Fe, because o f their prior experience and continued interest in expanding the coverage o f their adult education services, particularly by moving to more innovative approaches to adult education. However, over the life o f the Project, the Ministry could identify other provinces that would participate in this component. The target is to certify 80,000 employed or unemployed adults for completion o f their primary and/or lower secondary education duringthe life o f the Project. 22. For this sub-component, the Project would finance: (a) consultancy services for the provincial Ministries o f Education inorder to help themmake the supply o f adult education more flexible and pertinent to the needs o f adults as well as to promote, manage, monitor, and evaluate the activities supported by the subcomponent; (b) outreach activities to promote and facilitate 60 access to adult education; (c) preparation and publication o f didactic modules and materials to support these innovations; (d) training o f instructors ininnovative service delivery; and (e) adult education courses (Adult EducationActivities) for workers. 23. Following current practices, the Ministry would enter into a framework agreement (acuerdo marco) with the Provincial Ministryo f Education2* expressing their interest inworking together. Subsequently, signed two year protocol(s) to the framework agreement would provide the details on the specific activities to be carried out. The protocol would specify responsibilities and attributions o f the Ministry andthe Provincial Ministry o f Education and include, inter alia, (i) a time-bound action plan and an operational description for the execution o f activities; (ii) a list o f the eligible activities and expenditures to be covered under the proposed loan, including the required profiles o f consultants; (iii) the obligation o f the Ministryto make available funds to the Provincial Ministry o f Education to cover the eligible costs o f the adult education activities (AEA) and the obligation o f the Province to cover all other costs of AEAs; (iv) set targets o f adults certifying basic and/or secondary education; and (vi) obligate the Ministry of Labor to finance teacher training and to contract and finance the publication o f didactic materials. The National Directorate for Professional Training would be responsible for preparing and monitoring the implementationo f the protocols. Models o f framework agreements and protocols are included inthe Operational Manual. 24. The flow of funds would be organized as follows. The Ministrywould transfer resources to the Provincial Ministries o f Education to an account opened exclusively for this purpose to finance consultancy services and the training o f instructors which would be contracted and managed by the Provincial Ministries o f Education, following Bank procedures as stipulated in the protocol and the Operational Manual. The Ministry would contract the publication o f didactic modules and materials and provide financing to the participating Provincial Ministries o f Education for adult education activities, all as specified in the protocol. Financing o f adult education activities (AEA) (Bl(e) would be based on certification (in either primary or secondary education) outputs. The AEA unit costs include 40 percent o f the service and operating costs neededto carry out the adult education activities. These unit costs are an average o f the service and operating costs required for implementing the AEA and have been established by the Ministryo f Labor on the basis of a comparison o f the costs inseveral different Provinces. These unit costs havebeenreviewed and found acceptable bythe Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. The unit costs are included in the Operational Manual and described in full in Annex 10 o f this PAD. The payment for the share of financing made by the Project for service delivery would be based on adult enrollment and the agreed complement, on evidence o f receipt o f certification (primary or secondary level), to be registered inthe MIS, and subject to supervisionon a sample basis bythe Ministryo fLabor. B.2 Adult Education Subprojects ($18.6million; $7.7million) 25. Currently inArgentina, inthe area o f adult education, in addition to the services provided by the provinces, other actors are involved, including a wide rangeo f non-governmental and private 22Depending on the Province, inaddition to the Ministryof Education, other Ministries may collaborate inthis activity, and would be signatories to the framework agreementsand protocols. 61 organizations, many working in partnership with Provinces or other local governments. Under this sub-component, loan resources would be used to finance subprojects (an estimated 20) which would be implemented jointly by public agencies (provincial and other local governments), institutions linked to the labor market (unions, companies), or civil society organizations. The National Directorate for Professional Training would be responsible for the identification o f the subprojects using the following criteria, related to both prior experience o f entities and subproject content, and included in the Operational Manual: (a) articulation o f education with work and civil society; (b) attention to populations with high barriers to opportunities for employment and training; (c) inclusion o f gender and indigenous perspectives; and (d) transferable innovations in service delivery. The target over the life o f the Project is for 20,000 adults to certify either basic or secondary education as a result o f the implementation o f these subprojects. Subprojects would not necessarily be located in provinces which are participating in SubcomponentB.1. 26. The Project would finance: (a) consultancy services for the group(s) implementing the subprojects in order to help them make the supply o f adult education more flexible with respect to scheduling and curricular content, move to a more modular and competency-based structure, and encourage the recognition and crediting o f previous knowledge independently o f its source, thereby makingthe service more relevant andresponsive to the needs o f interested adults, as well as to promote, manage, monitor, and evaluate the activities supported by the subcomponent, (b)outreach activities to promote and facilitate access to adult education; (c) preparation and publication o f didactic modules and materials to support these innovations; (d) training o f instructors in innovative service delivery; and (e) the delivery o f adult education courses (adult education activities-AEAs) for workers. 27. The Ministry would enter into a two-year agreement(s) with the subproject implementing public/private entities. The agreement would (i) specify responsibilities and attributions o f the Ministryandthe implementing agencies; (ii) atime-bound actionplanand anoperational include description o f the subproject activities; (iii) list the eligible activities and expenditures to be covered under the proposed loan; and (iv) set expected targets in terms o f adults certifymg their basic and/or secondary education. The National Directorate for Professional Training would be responsible for preparing and monitoring the implementation of the agreements. Models o f the agreements are included inthe Operational Manual for the Project. The Ministry would contract and finance the needed consultancy services, teacher training, publication costs for the didactic materials, and provide to the implementing public/private entities the financing for the eligible costs o fthe adult education activities (AEAs). 28. Financing o f adult education activities (AEA) B2(e) would be based on certification (in either primary or secondary education) outputs. The AEA unit costs include 40 percent o f the service and operating costs needed to carry out the adult education activities. These unit costs are an average o f the service and operating costs required for implementing the AEA and have been established by the Ministryo f Labor on the basis o f a comparison o f the costs in several different Provinces. These unit costs have been reviewed and found acceptable by the Bank and would be reviewed at the second year o f Project implementation or at any time by request from the Ministry of Labor, and adjusted as necessary to reflect actual costs. The unit costs are included inthe Operational Manual and described infull inAnnex 10 o f this PAD. The payment 62 for the share o f financing made by the Project for service delivery would be based on adult enrollment and the agreed complement, on evidence o f receipt o f certification (primary or secondary level), to be registered inthe MIS, and subject to supervision on a sample basis by the MinistryofLabor. C. Promotion of YouthEmployment ($167.6million; $86million Bankfinancing) 29. This component would try to reach 10 percent o f the 1.7 million youth between 18 and 24 years o f age who have not completed secondary education. These young people start employment with difficulties and are likely to remain at a disadvantage inthe modernknowledge economy. There are 3 subcomponents: (1) employment and career orientation; (2) training and/or education; and (3) internships. Assessments and certification according to a competency based approach would be incorporated within the second and third subcomponents. Youth would be counseled and assisted to participate in the activities included inthese subcomponents by the staff o f the municipal employment offices, which currently number 150, but bythe end o f 2008 are expected to total 250. At the end o f Project implementation, the goal is to have employment services for youth being delivered in 250 municipal employment offices; to have provided information and contact with the Municipal Employment Office for 600,000 youth; to have arranged for the participation o f 145,000 youth in a combined package o f training inbasic competencies and work experience inan estimated 1,500 subprojects. C.l Employment and Career Orientation ($42.1 million; $17.0 million Bank financing). 30. This subcomponent would strengthen the capacity o f municipal employment offices to provide orientation and counseling services. Municipal employment staff would help the youth to identify their job interests and would counsel them on what actions they would need to take to improve their employability. Youth deciding to participatewould commit themselves ina signed statement to carrying out specific time-bound actions as recommended by the municipal employment office staff and agreed with the youth through a signed statement. A model for the statement format i s contained in the Operational Manual. The municipal employment offices would offer basic orientation courses on employment, education completion, professional training and arrange short courses on preparing curriculum, interviewing skills, and job search techniques. The Ministry would carry out a national campaign to promote youth internships, while the municipal employment offices would do local outreach, including providing technical assistanceto employers who wishto propose internship subprojects. 31. The Project would finance: (a) national and local promotional campaign for the youth initiative; (b) specialized consultancy services to strengthen the capacity o f the municipal employment office (on average 3 full-time consultants per municipal employment office, one to manage the services, one a specialist in working with youth, and the third to work with private businesses and other employers); (c) office refurbishment, computing equipment and furniture for the municipal employment offices; (d) training for municipal employment office staff in interviewing skills, counseling, relations with employers, etc. The Ministry o f Labor would enter into an agreement with each participating municipality specifying the characteristics o f the services to be delivered by the municipal employment office, including infrastructure; the profiles/competencies o f the consultants to be hired; targets on the quantity o f services to be 63 delivered and expected results; and the administrative procedures to be followed, against which funds would be made available to the Municipality. 32. The flow o f funds would be as follows. The Ministry o f Labor would be responsible for managing and contracting the national promotional campaign, office refurbishment, computing equipment and furniture for the municipal employment offices; and training for municipal employment office staff. Following current practice for the support being provided to install municipal employment offices under the Heads o f Household Transition Project (Ln. 7369-AR), the resources for specialized consultancy services to strengthen the capacity o f the municipal employment office and for local promotional activities would be transferred from the Ministry to municipalities against the agreement mentioned above (paragraph 30) between the Ministry and the specific municipality. The municipality would open an account exclusively for this purpose. C.2 Training and Education ($32.5 million; $26.0 million Bank financing). 33. This subcomponent would support referral o f youth to training and education services. The staff o f the municipal employment offices would familiarize themselves with the supply o f education services and training courses intheir locality offeredby a range o fproviders, including public, private and voluntary sector, and to make the necessary arrangements inorder to be able to make referrals o f their clients (youth). Similarly, the staff o f the municipal employment offices would link those youth who wish to finishtheir education or receive professional training to the appropriate services that would enable them to improve their qualifications and better meet the needs o f the labor market. The municipal employment office would also be responsible for working to ensure that the type o f training required by the local labor market i s available and identifylng any gaps and to support those youth who are interested inpursuing self-employment. Inaddition, for those youth interested inself-employment, the municipal employmentoffice staff would provide training in basic skills and would link the youth with specialized technical and financial services which exist inArgentina. 34. In addition, under this component, the Ministry o f Labor (through the UTeCC) would develop competency-based training and certification for basic skills (literacy, English language, numeracy, information technology), as well as selective occupational norms (identified as necessary either by emerging sectors, such as call centers, or local governments, for example, norms related to the tourism industry) for basic entry skills that may not have been developed by the sector councils. This activity would include as is the case for Component A, the development, validation and registration o f occupational norms; training and certification o f evaluators; ensuring the functioning o f qualified third-party assessment centers and certification organizations; install the courses; and train, assess and certify workers. 35. The Project would finance: (a) consultancy services to design courses and develop manuals and materials, (b) training for teachers working inpublic schools or training institutions; and (c) delivery o f training for youth, including the cost o f instructors, materials, per diems, and course fees. The activities for which the Municipality would be responsible (arranging training for youth and makingreferrals to training and education) would be part o f the agreements between the Ministry o f Labor and the municipality mentioned above (paragraph 31). The Ministry o f 64 Labor would carry out the other activities, including contracting and financing, and would pay evaluation fees directly to the agencies responsible. C3. Internships ($93.0 million; $43.0 million in Bankfinancing) 36. The subcomponent would support the organization and implementation o f internship subprojects (subprojects), incorporating the following elements: (a) integrated in the workplace; (b) community involvement; (c) development of habits and attitudes for social inclusion; (d) promotion o f a positive experience in a decent job; and (e) a return to school studies. The requirements and procedures for subprojects would be contained in instructions covering the selection criteria, procedures and standard formats, the issuance of which by the Ministry of Labor is a disbursementconditionfor the Stipend Expenditure Category and would be part o f the Operational Manual for the Project. The work experience would be combined with education and training, with the possibility o f assessment and certification o f competencies. Subprojects would last 3-10 months and include a tutor appointed by the employer. The tutor would be responsible for organizing and monitoring the work o f the youth and providing information to the municipal employment office. 37. The Ministry would promote internship subprojects with employers using two strategies. One, at the national level with large employers, Subprojects would be proposed by individual employers through a Network o f Businesses (the Network).23 The subproject proposals would be reviewed by the Executive Committee (Committee) which has been constituted by the Network and the Committee would make a recommendation to the Secretary o f Employment. The businesses would coordinate with municipal employment offices and/or civil society organizations in order to identify the participants and to provide access subsequent to their participation to other professional training opportunities as well asjob search support for them. 38. For smaller companies, not members o f this Network, and in localities where Network companies are not located, a second strategy would be used. The municipal employment office would be responsible for promoting subprojects among private businesses and other employers inthe locality. The instructions would be the same for these subprojects, with the exception of some adjustments given the smaller size o f the employer. These subproject proposals would be evaluated centrally by staff o f the Ministry who would make a recommendationto the Secretary o f Employment. Inthe case o f a favorable evaluation, a two year agreement(s) would be signed between the Ministry o f Labor, the employer, and the respective municipality which would include inter alia: the responsibility o f the employer to finance part o f the cost o f training and the remuneration o f youth participants, follow stipulated administrative requirements, assign a tutor to monitor implementation; the responsibility o f the municipality to undertake promotional activities and assist the youth participants injob search after the internship i s completed; and the Ministryof Labor's responsibilityto finance the youth stipends andpart ofthe training costs, as identified inthe Operational Manual. The staff o f the municipal employment office would also support the personnel offices o f the businesses participating in areas related to youth employment such as: preparation o f job profiles suitable for youth 18 to 24 years o f age, and 23An agreement creating the Network ofCompanies for Youth with a Future was signed betweenthe Ministryo f Labor and27 companies December 20,2006 (Convenio entre el Ministerio de Trabajo, Empleo y Seguridad Social y las Empresas del Sector Privadopara la Conformacidn de la "Red de Empresas Jdvenes con Futuro"). 65 development o f possible career pathways within the company for staff entering without previous experience. 39. Subproject financing would be shared between the Ministry (partially drawing on Loan resources) and the employers. Employers would cover a portion o f on the job training and a stipulated minimum remuneration. The Ministry o f Labor through the loan would finance a stipend for participants (200 pesos/month o f participation in the subproject) and training arranged outside o f the workplace (partial). Employers may also quality for tax credits. The Loan would also finance the training o f tutors and the consultancy services to monitor the subprojects. 40. The flow of funds would be as follows. The Ministry would pay the youth participating in the internship subprojects directly through bank debit cards, following the same procedures as with the beneficiaries of the Heads o f Household Program, with the same cross-checks with other databases regarding employment status, etc. The Ministry would also on the basis o f the agreement signed with the employer reimburse the company on a fixed fee basis for training arranged by the employer outside o f the workplace as stipulated in the agreement between the Ministry and the company. 41. In the case o f those provinces (Subcomponent B.l), municipalities (Subcomponent C.l and C2),or publidprivate entities implementing adult education subprojects (Component B.2), for which the requirements o f the Indigenous People's Development Framework applg4 or might apply in the future, the framework agreement or protocol, in the case o f localities for which a framework agreement already exists, or implementation agreement, will include a commitment to proceed to the social evaluation o f the Indigenous people meeting the identification criteria o f OP 4.10 intheir respective provinces, municipalities, or other location as the case may be, and to prepare and carry out the Indigenous Peoples Plans according to the terms o f the Indigenous Peoples PlanningFramework (IPPF). (See Annex 9 for further details). D. Strengthen Management Information System,ProjectAdministration and Studies ($33.1 million; $15.7 inBankfinancing) 42. This component includes two subcomponents: (i) installation o f an integrated management information system (MIS), including its operation and development o f users; and (ii) project administration, which would incorporate support for development o f a longer-term strategy for a lifelong learning system inArgentina. D.l Strengthen Management Information System ($14.4 million; $7.6 million in Bank fmancing) 43. The first subcomponent would support the integration o f the systems which exist in the Ministry (System for Management o f Projects, Data Warehouse, Registro de Instituciones de Capacitacidn y Empleo - REGICE, the management system for municipal employment offices, 24Based on the criteria established inOP 4.10, at the present time and with the available information, the Provinces that trigger the policy are: Tierra delFuego, Chubut, RioNegro, Neuquen, LaPampa, Mendoza, SanJuan, Salta, Jujuy, Tucuman, Catamarca, Chaco, Formosa, Misiones and Santiago del Estero. 66 andthe registries o fbeneficiaries o fthe programs managed by the Ministry (including the Heads o f Household Program and the Training and Employment Insurance) and the development o f new ones required for the planning and monitoring o f the envisaged Lifelong Learning and Training System. By the end o f the Project, the MIS would have national coverage, covering more than 500,000 workers per year. It is estimated that it would reach a level o f 3 million transactions/month, would be available 24 hours a day and would have the capacity to support at any one time up to 1,000 users. There would be on-line help for all users and it is envisaged that 420 institutions would be connected and supported as clients. 44. The Ministry o f Labor currently operates many management information systems supporting the gathering o f information, the planning and the monitoring o f the embryonic Lifelong Learning System. The Regice (Registro de Instituciones de Capacitacidn y Empleo), was designed many years ago and in urgent need to be updated, registers information about training provided. The Emplear, recently developed, registers information about individuals seeking a job placement andor employed workers seeking career ladder advancements being trained under publicly financed schemes, designed to be the platform for the delivery o f public employment services. In addition, the Ministrymanages the substantial beneficiary registry for the Heads o f Household program, as well as informationrelated to its various components. 45. Drawing from this base and previous experience, the development o f the integrated management information system would be grounded by the following principles: 0 Information-basedmanagement 0 Construction o freservoirs o f data for the monitoring and results measurement o f each component through the implementation o fproject activities (transactions) 0 Development o f a network o fusers (instead o f a model o f information provision by local actors to the center) givingpriority to investments intraining 0 Fullandweb-based access to the management tools and information inthe system subject only the restrictions set by the system administrator 0 Incorporationo f information on local labor market trends and other non-transactional data helpful for planningpurposes 0 Integrationo f existing systems o fthe Ministryo f Labor (for example, registry o f Heads o f Household Programparticipants) 0 Strategic integrationwithin the Employment Services Platform o fthe Ministryo f Labor (originally envisaged solely for the use o f the municipal employment offices) which would increase its previous sphere o f activity 0 Monitoring o fthe development inemployment andtraining o f workers inthe framework o f their labor market histories 0 Sharing o f information among large users or sources, such as the education system and the most important training institutions and networks 0 Availability o f information for each Project component. 46. The objective i s to develop a system o f information, planning, management and supervision o f the activities supported by the Lifelong Learning and Training Project which would facilitate administrative processes, planning, and the promotion associated with the activities o f the different Project components; monitor physical and financial targets and recognize the 67 achievements reached; facilitate the access to information by key actors (training providers, municipal employment offices, businesses, workers); and provide information to support the implementation o f impact evaluation studies. Emphasis would be given to the development and support o f users for the system. Aside from the Ministryo f Labor, as the implementing agency for the Project, other users would include training providers, adult education services, municipal offices o f employment, certification organizations, employers with work opportunity subprojects, workers interested in job leads, and employers seeking staff. In the long-run, modules o f e- government could be incorporated to facilitate registration in courses, etc. The Project would finance equipment and accessories, refwbishment o f physical spaces, software development, internet and other communication services, consulting services for the development and implementation o f the system, training materials, and per diems and travel costs associated with training o fusers. D.2 ProjectAdministration and Studies($18.7 million; $8.1 millioninBankfinancing) 47. The second subcomponent includes Project administration, including the operation o f the technical coordination unit; and studies, including the impact evaluations described more fully in Annex 3 (Results Framework). Studies would also be undertaken in order to contribute to the gradual development o f the institutional, technical and financial bases to sustain a system o f lifelong learning by financing needed analytical work to identify and understand the implications o f different options for the organization and financing o f the system, including the roles o f the public and private sectors. The proposed Project would assist in the development over the medium term o f a sustainable lifelong learning and training system in Argentina including by financing the needed analytical work to identify and understand the implications of different options for the organization and financing o f the system, including the roles o f the public and private sectors. The Loan would finance consultancy services, specialized household surveys, andoperatingcosts (travel andper diems). 48. This Component, which includes Project administration, would be implemented directly by the Ministry o f Labor. The development o f the information system would be mainly the responsibility o f the technical staff in the Directorate for Information Systems inthe Ministry o f Labor in close collaboration with the Sub-secretariat for Employment and Training and its reporting units. Over the longer-term, the work contributing to the longer-term institutionalization o f employment and training services would also be ledby the Sub-secretariat for Employment and Training. 49. Support to the Lifelong Learning and Training Project on administrative and financial matters, would be provided by the Executing Unit for External Loans, the office inthe Ministry o f Labor which i s currently carrying out these functions for the ongoing Heads o f Household TransitionProject (AR-7369). The Director o f this Unit andhis staff would coordinate with the relevant staff in the Ministry of Labor to facilitate the use of the loan resources to support the eligible activities mentioned above. This Unit would be responsible for the appropriate utilization o f Loan resources, handle the day-today activities o f managing procurement, hiring consultants, and financial management, including the preparation o f Financial Management Reports, prepare the documentation needed for reimbursement requests and ensure compliance with audit requirements. It would analyze and control the administrative documentation related to Project implementation and would maintain all the documentation needed to support Project 68 activities. The Executing Unit for External Loans intends to make use o f the services o f UNDP to assist in Project management. The fees associated with this contract would be covered by nationalresources. 50. An agreement has been reached with the Government on a strategy for the transfer o f consultant functions to line staff and on the gradual reduction in the number o f individual consultants, and ensuring their performance and contribution to the expected results o f the Project. 51. The share o f total staff o f the Secretariat o f Employment working on activities related to the Project financed by the Loan would fall from 56 percent at the start o f implementation to about 38 percent by the end. The proposed strategy for the gradual reduction o f the number o f individual consultants hired by the Project includes the transfer o f functions to line staff, facilitated by capacity strengthening and training. The table below shows the share o f Ministry staff related to the Project and the corresponding Bank financing, as well as the evolution o f the shares o f external and national financing duringProject execution. Table A4.2. Staff financed by Loan proceeds 2007 2008 2009 2010 2011 2012 until closing date. BIRF 83 85 105 105 85 65 LOCAL 65 65 85 85 85 105 Total 148 150 190 190 170 170 69 Annex 5: Total Project Costs ARGENTINA: LifelongLearningandTrainingProject Project Cost By Component Local Foreign Total U S $million U S $million US $million ComponentA: Expand and Strengthen 106.2 4.7 110.9 Competency-BasedTraining and Certification ComponentB: Basic Education Services and 48.4 48.4 Certification for Adults Component C: Promotion ofYouth Employment 167.6 167.6 ComponentD: Strengthen Management 28.2 4.9 33.1 Information System, Project Administration and Studies Total Indicative Cost 350.4 9.6 360.0 Total Project Costs 360.0 Front-end Fee 0 Total FinancingRequired 350.4 9.6 360.0 70 Annex 6: Financial andDisbursementArrangements ARGENTINA: LifelongLearning and Training Project Summary of the FinancialManagementAssessment 1. As required by OP/BP 10.02 a Financial Management (FM) assessment o f the arrangements for the Lifelong Learning Project was performed in line with the "Financial Management Practices inWorld Bank-Financed Investment Operations", a document issuedby the FM Sector Board on November 3, 2005. The objective o f the evaluation i s to determine whether the financial management arrangements are satisfactory for the proposed Project. 2. The executing agency will be the Ministry o f Labor (Ministry) through the Secretariat o f Employment (SE). FM and Procurement functions are managed by the Executing Unit for Projects with External Financing (UEPE) within the Ministry. Part o f Project execution will be carried out by implementing entities (IEs) including Provincial Ministries of Education, municipalities, professional sector organizations, selected public/private sector organizations and employers, the latter two implementing, respectively, adult education and youth internship subprojects. 3. The FM assessment included a review o f the audit reports o f other Bank funded operations (Heads of Household - Ln. 7157-AR and Head o f Households Transition - Ln. 7369-AR) executed by the Ministry; a review o f the capacity andprocesses o f the implementing unit; and a review ofthe current Project design and its fiduciary impact. 4. The proposed FM arrangements are considered adequate and the Borrower has sufficient capacity and resources to implement the proposed Project. Assigned staff is experienced and has implemented several workfare-type employment programs; systems are adequate for Project requirements. For sub-components requiring funds to be passed to implementing entities (IEs), the use o f funds will be regulated by protocols signed between IEs and the Ministryo f Labor. The list o f output-based products appears in Annex 10. However, due to the complexity o f the Project and the variety o f implementing entities, the project FM risk i s rated substantial. Additional fiduciary measures suitable to this specific approach have been developed to mitigate risk and contribute to fluid Project implementation. Those measures include: an enhanced internal control framework, IE assessments prior to signing protocols, and management information system and concurrent audits. Country Issues 5. The Government o f Argentina (federal level) has a comprehensive Public Financial Management (PFM) legal framework and fully integrated budget, accounting, treasury, and public debt financial management systems. These systems control the funds received by the national Government from any source and provide sufficient information to determine if the funds have been utilized as planned. Inthe Country Assistance Strategy (CAS) approved by the 71 Board inJune 2006, the country PFM risk for the federal level i s rated modest. This diagnosis i s inlinewiththe 2007 CFAA currentlybeingcompleted. 6. The CAS includes a Fiduciary Action Plan (FAP) to help strengthen the operating environment for Bankprojects inArgentina. The FAP consists o fthree main components: raising public awareness; bolstering Bank fiduciary monitoring; and increasing transparency and competition practices inpublic procurement. With regards to FM, the FAP aims at: (i) improving the timeliness o f external audit compliance for Bank-financed operations; (ii)increasing the strategic focus and coverage o f supervision tools assessing fiduciary risk in operations; and (iii) implementing complementary actions such as supporting the streamlining and harmonization o f fiduciary processes and reliance on country systems when these meet adequate fiduciary standards. ImplementingEntities 7. The Ministry o f Labor will have overall responsibility for project implementationthrough the Secretariat o f Employment with the support o f the Executing Unit for Projects with External Financing (UEPE) for financial management and procurement. UEPE staff has experience and expertise in implementing Bank-financed projects, and are capable o f fulfilling the accounting and reporting needs o f the Lifelong Learning and Training Project. The UEPE will be incharge o f Project budgeting, disbursements, accounting and financial reporting as well as treasury operations, includingpayments for project expenditures and financial flows to IEs. 8. Project Implementation Entities (IEs). The implementation o f the Project will be undertaken partially by implementation entities (IEs), which include Provincial Ministries o f Education (currently the Provinces o f Buenos Aires, Cordoba, Mendoza, Santa Fey and Tucuman); selected municipalities up to a maximum o f 250 (currently 150 are pre-identified); sector organizations covering about thirty economic sectors; private/public sector organizations implementing adult education subprojects; and employers carrying out youth internship subprojects. The transfer o f responsibility from the Ministry to those IEs and the administrative requirements for use o f loan resources will be regulated by a protocol signed periodically (every 2 years, every year, or biannually, depending on the entity and as stipulated in the Operational Manual) between each IE and the SE after the execution o f a fiduciary assessment by the SE in close cooperation with the Bank, the requirements for which are included in the Operational Manual. The content o f the FM component o f these assessments will depend o f the type o f activity executed by the IE and the capacity o f the IE. Provincial Ministries o f Education are experienced in executing funds for national government ministries and the SE i s also experienced in monitoring and supervising execution by provincial ministries. Execution to be managed by selected municipalities is limited to the contracting and payment o f an average o f three consultants per municipality and will bear a limited risk. Adequate fiduciary rules will be established in the protocols to mitigate potential risks for the delimitated and limited financial execution by municipalities. For each sector, an organization with judicial personality, usually a union or a chamber o f commerce will be designated to use loan resources, as agreed in the protocol. Although the Ministry also has strong experience in working with those sector organizations, the Bank considers that due to the difference o f status and the lower level o f public information on the financial management o f those sector organizations, the risk is higher 72 thanwithprovincesor municipalities andthe assessment(requirements for which are includedin the Operational Manual) prior to signing a protocol will be more in-depth than for provinces or municipalities. Additional Fiduciary Control Framework 9. Given the characteristics o f this operation and Argentina portfolio performance, complementary measures to standardFM arrangements are part o f the Project fiduciary control framework. Incremental control measures are described below. 10.Fiduciary Action Plan (FAP). The fiduciary measures o f the Project are consistent with the pillars o f the Fiduciary Action Plan included in the CAS. A specific measure for the Lifelong Learning and Training Project i s the role o f the concurrent audit, which will contribute to: (i) maintaining an appropriate fiduciary control environment throughout implementation; (ii) helping to support program execution; and (iii) ensuring that annual financial audits are received bythe Bankon time. 11. Output based Activities and Determination of Standard Outputs. To reduce the impact on both fiduciary risk and Project implementation o f the complexity o f the Project (variety o f transactions, large number o f IEs and related flow o f funds, and the specificity o f services delivered), standard outputs and their respective unit costs have been determined for the Competency Normalization Activities (CNA), Curricular Alignment Activities (CAA), and Adult Education Activities (AEA). These activities will be financed through payments made by the Ministry o f Labor to IEs (sector organizations, IFPs, provinces, selected private/public entities implementing inter-institutional adult education subprojects) on the basis o f the quantity o f products delivered and a standard unit cost. A specific control framework has been designed for this purpose. This approach has been identified as the most suitable to manage the fiduciary risk associated with the variety o f IEs required to achieve the development objectives o f the Project; it is cost effective by preventing high transaction costs; it supports a smooth implementation adapted to the social and institutional requirements o f the Project; and it i s also consistent with a `results-based' focus for Project implementation. Traditional input oriented expenditure categories are not suitable for financing these activities in the institutional environment required by the Project; in addition they would generate high transaction costs without enabling the same level o f fiduciary risk mitigation. The adopted approach i s also to be viewed as part o f the fiduciary control framework as it contributes to alleviate FM risk in the Project processes. The mechanisms for payments related to this approach are developed in the `Use o f Funds' part o fthis annex. 12. Internal Supervision and Control. The Secretariat o f Employment (SE) will ensure overall coordination and technical and financial supervision o f the activities carried out under the Project. The internal control framework will consist mainly of: 0 The management information systems (MIS) recording relevant data and information on: (i) norms, evaluators, certifications and certified training institutions (REGICE system); (ii) training and education courses and traineedstudents; and (iii) youth participants in internships (PLATAFORIMA).Those systems provide relevant 73 information and a control environment for effective Project implementation and fiduciary risk mitigation. 0 Technical supervision of the execution of training and adult education services, the enrollment and completion of educatiodtraining courses by participants. This supervision is carried out by the SE Technical Supervision and Control Coordination Unit (COSUSETEC) and the network o f supervisors located in each provisional office o f the Ministry o f Labor, Gerencia de Empleo y Capacitacibn Laboral-GECAL). COSUSETEC with its 15 staff members and network o f over 100 staff are experienced in supervisingprograms such as the present one or the Heads o f Household. Supervisionis carried out according to a specific methodology and work- program. Results would be entered in the MIS and could cause a suspension o f payments from Ministry o f Labor to IEs or training or education providers. For the supervision o f loan fundedtraining or education activities, COSUSETEC will prepare an annual plan to cover inter alia: (i) control on a sample basis o f the consistency between the training enrollments as registered inthe PLATAFORMA and the signed attendance lists in training and education providers; (ii) control on a sample basis o f service providers supporting documentation; and (iii) field visits to training and education providers. Field visits will be documented with standard periodic reports (including recommendations on findings), which will be made available to the concurrent auditors. Financial supervision of the execution of Project activities by IEs. This supervision complements the technical supervision and will include on a sample basis inter alia: reconciliationo f IEs separate project accounts where the loan resources will be deposited; assessment o f IEs separate project accounts to check debits and credits to service providers; and related verification o f related supporting documentation. The financial supervision includes also semi-annual field visits to IEs, except for municipalities2'. The financial supervision will be carried out by the administrative control unit o fthe National Directorate o fProfessional Training. 0 Supervision and validation of certifications and norms by the National Directorate o f Professional Training and the Argentina Organization o f Accreditation (OAA). This technical supervision ensures the compliance o f certifications and norms with the required standards. 0 The protocols or conveniosZ6signed between the SE and each IE to implement activities to be financed by the Project, will include inter alia FM and operational arrangements (opening o f separate bank account, flow o f funds arrangements, audit arrangements, internal control procedures, financial & physical reports for any activity implemented by the IE and measures in case o f non-compliance with the protocol). Inter alia, the protocols will define the agreed objectives, plano f activities, schedule of payments, supportive documentation to be archived by the IE, and sanction regime to be applied by the Ministryin case o f non-compliance by the IE. Protocols will be annual for the Provincial Ministries o f Education and up to six months for other IEs (sector organizations and municipalities). Model formats for 25 Fundsmanager bymunicipalities -Component C1- consist only ofpayments ofa standardnumber of consultants per municipality. Each step o f the execution o f these hnds (contracting, payment and recording and reporting) is systematically monitored by the Ministryo f Labor and do not require field visits. 26 Periodic agreementsbetween SE andIEs. 74 the protocols for each type o f IE (sector organizations, Provincial Ministries o f Education, municipalities, private/public organizations implementing adult education subprojects and employers implementing youth internship subprojects), incorporating minimumrequirements agreed with the Bank, are included inthe project Operational Manual. 0 Assessmentof IEs: As mentioned inthe implementing entity section, each IEwill be subject to a financial management assessment prior to a protocol signature between the Ministry and the IE. The scope o f the assessment will be agreed between the Bank and the Ministry and described in the Operational Manual. For Provincial Ministries o f Education, the assessmentwill consist of the review by the Ministry and the Bank of a questionnaire completed by the IE covering extensively financial management issues; for municipalities, the assessment will also consist o f a questionnaire, which will, however, be focused on the specific activities financed by the For sector organizations, the assessment, whose scope is defined in the Operational Manual, will be more comprehensive and include a field visit, interviews and reporting. The protocol will be signed upon conclusion of the assessment, satisfactory to the Bank. The Ministryreserves the right to carry out a field visit to complement the desk work assessment for any type o f IE. The conclusions o f these assessments and identified areas of improvements will be monitored duringthe life o f the protocol. 13. Expandedscope of audit. Due to the specificity and the complexity o f the Project, there will be an expanded scope o f audit. In addition to the annual financial audit (see paragraph 20), the . expanded scope of audit will include: 0 System audits. Due to the significant reliance on the Ministry of Labor MIS system, in particular the REGICE and PLATAFORMA, for the internal control of the Project, a system audit will be carried out within twelve months o f Project effectiveness. The objectives o f this audit will be to provide: (i) a professional opinion on the reliability o f the information processes, the level of control o f the system, and any risks posed by the IT processes of the Ministry and SE related to the internal control o f the monitoring o f project activities; and (ii) recommendations on any measures which would be required to ensure an acceptable level o f reliability o f the system. This audit will be conducted according to specific terms o f reference acceptable to the Bank and a specialized firm will be selected on a competitive basis for this purpose. If necessary, based upon the results o f this initial system audit, the Ministry of Labor, in consultation with the Bank, would contract an additional system audit in the course o f the Project to follow up on recommendations and to validate the changes which may need to be made. 0 Semester Concurrent Audit of Funds implemented by IEs. The objective o f the concurrent audit i s to carry out audit work and provide an opinion on a six-month basis about (i) requests for payments and the financial reporting sent by IEs, covering all activities to be executed by the IEs according to the protocols; (ii) the reliability of the quantity of outputs delivered; and (iii) reliability o f the internal control framework the and reporting information. The financial and physicalreports as specified inthe protocols *'Execution to be managedby selected municipalities is limitedto the contracting andpayment of an average of three consultants per municipality and will bear a limited risk. 75 signed between the IEs and the SE will be audited by the concurrent auditors and will provide the quantitative information to determine their opinion. Concurrent auditors will also provide recommendations to improve internal controls. It is recommended that the concurrent audit be conducted by the Argentine supreme audit institution, Auditoria General de la Nucidn (AGN) according to specific terms o f reference acceptable to the Bank. Special opinions. Inthe course o f the annual financial audit, AGN will be expected to provide a special opinion on the compliance with relevant regulations o f the validation of certifications by the National Directorateo f Professional Training (NDOPT). TableA6.1. FiduciaryControlFrameworkfor OutputBasedActivities ... RegisteredcompetencyNorms Concurrent Audit Evaluators trained, certified & of norms & registered certifications Special Opinion on Curricular design & didactic REGICE FM& Disbursement compliance with material arrangements regulations . determinedby Protocols Certification of Basic Education 0 Technical & financial Concurrent Audit Level by Adults management supervision by PLATAFORMA SUSEFI FM& Disbursement arrangements determined by protocols * System ** Financial Audit covering each I T component of the MIS of the 1 Dject Audit for the entire Project Strengthsand Weaknesses 14. Strengths. The Ministry o f Labor has implemented several workfare-type employment programs. Staff assigned to these programs i s experienced and administration systems are adequate for the Project requirements. 15. Weaknesses. The large number and relatively wide geographical distribution o fbeneficiaries and the required flow o f finds to numerous implementing entities increases project complexity. To mitigate these complexities and their fiduciary impact, additional fiduciary measures are incorporated and include, inter alia, an expanded scope o f audit and a reinforced internal control framework. RiskAssessmentandMitigation 16. The FM risk assessment aims at identifying FM risks so as to take appropriate measures mitigating those risks, including a level o f supervision intensity consistent with assessed risks. Two major factors are taken into consideration for the FM risk assessment: the inherent risk linked to the Project environment and the control risk related to the specific Project FM control 76 framework. The overall FM risk for the Project is assessed as substantial due to the complexity o f the Project (large number of beneficiaries and IEs; complexity o f flow o f funds) balanced by the output oriented approach and the adopted mitigation measures, in particular, the expanded scope of audit and the internal control framework. The Project risk rating will be reviewed regularly inthe course o f Project supervision. Table A6.2. RiskAssessment and Mitigation Measures Inherent Risk Country Level Modest EnhancedControl through the FAP Entity Level Modest Ministry of Labor has qualified accounting staff experiencedin Bank-financed operations. Project Level Substantial 0 Expanded Scopeof audit including Legal covenant Largenumberandwide concurrent audit geographical distribution of IEsand IncreasedFMsupervision beneficiaries. Introduction of output basedactivities Enhancedinternalcontrol framework ControlRisk Budgeting Modest SeparateProject budget line in Ministry of Labor budget system Accounting Modest UEPEX system will be used Internal Control Substantial ExpandedScopeofaudit including Legal covenant Variety of IEs and complexity of concurrent audit implementation mechanisms IncreasedF M supervision Introduction of output basedproducts Enhancedinternalcontrol framework Flow ofFunds Substantial 0 ExpandedScopeof audit Legal covenant Complexity of flow of funds and IncreasedF M supervision variety of IEs Introduction of output basedactivities Enhancedinternalcontrol framework Financial Reporting Modest Satisfactory audit report onprevious Bank funded operations executedby Ministry of Labor Auditing Modest Expandedscope of audit Legal covenant 77 Accounting Policies and Financial Reporting 17. The UEPE will be responsible for: (i) maintaining Project accounts with the chart o f accounts reflecting the categories, components and source o f fundingof the Project; and (ii) producing the requisite annual financial statements following the InternationalAccounting Standards. 18. The UEPE will follow the administrative processes and procedures covered in the Operational Manual, which will include internal control procedures, job descriptions, Project chart o f account, financial statements and reports formats, and the audit terms o f reference. An initiative o f the Government o f Argentina aims at using standard information and accounting software (UEPEX28 system) for financial management of multilateral-financed projects at the federal level. The UEPE in the Ministry o f Labor will use this standard software to maintain accounting records using cash basis accounting. In consultation with the Bank, the Project may use additional systems to complement this standardsoftware ifrequired by Project needs. 19.The Ministry o f Labor will make arrangements to set a separate line for the Project in the annual budget. 20. Project financial reports will consist o f annual financial statements and semiannual Interim Unaudited Financial Reports (IUFRs) to be delivered to the Bank 45 days after the reporting period as part o f progress reports. Annual financial statements will be on an accrual basis and subject to annual audit. IUFRswill be reviewedthrough Bank supervision. 21. The format o f financial statements and IUFRswere agreed with the Bank at negotiations and are incorporated inthe OperationalManual. IUFRsinclude: 9 Sources and uses o f funds: source and uses o f funds, for each semester and cumulative (uses by category), and uses o f funds by component Physical progress: Financial execution compared to physical progress and results achieved. 22. IE reports submitted to the Ministry will provide, at least on a semi-annual basis, financial information on the execution o f activities financed by Loan resources. IEs reports to the Ministry will have to disclose details on payments received and executed and their templates and design will be defined inthe OperationalManual. External Audit Arrangements 23. Annual Financial Audit. The Project annual financial statements will be audited according to a terms o f reference ensuring compliance with Bank Guidelines. The financial audit will be performed by an independent auditor following audit standards acceptable to the Bank. It i s expected that the audit would be conducted by the Argentine supreme audit institution, Auditoria General de la Nacidn (AGN). For audit purposes, the fiscal year will be the calendar year. 28UEPEX:Argentina budget executionsoftware for multi-lateral lending operations 78 24. Expandedscope of audit. As mentioned inthe discussion o f the additional fiduciary control framework inthis annex, additional audit activities will include: (i)System audits; (ii) Semester concurrent audit o f funds implementedby IEs; and (iii) special opinions on the compliance with relevant regulations on the validity o f certification by the National Directorate o f Professional Training. Table A6.3. Audit ReportsSchedule 25. Heads of HouseholdLoan(Ln. 7157-AR) Audit Results.The audit reports o f the previous Bank funded operations with the Ministry o f Labor were satisfactory. Audit opinions were unqualified except for the 2004 (see Table A6.4) opinion on financial statements and SOEs and the nature o f opinions did not indicate substantial FMissues. Table A6.4. HeadsofHouseholdLoan(Ln. 7157-AR) Audit Reports * Dueto UNDP reconciliation delay and availability at the date of the audit and further reconciled Flowof FundsandDisbursementArrangements 26. The following Disbursement Methods may be used under the Loan: 0 Reimbursement 0 Advance 0 Direct Payment 27. Loan proceeds to be withdrawn by the Ministry o f Labor using the advance method will be deposited into a segregated designated account (DA) in U S dollars. The designated account will be held at Banco de la Nacibn Argentina (BNA) and will be under control o f the Ministry o f Labor. The ceiling for advances to be made into the DA would be USD$ 20 million, an amount estimated as sufficient for peak disbursement periodsof Project execution. As expenditures arise, funds will be converted to local currency and deposited ina Project account under the control o f the Secretariat o f Employment through the UEPE and expenditures will be executed either as 79 direct payments to suppliers, reimbursement o f authorized costs incurred, or payments to IEs for delivery o f output-based activities. 28. Supporting documentation for Project expenditures under the advance and reimbursement disbursement methods will be: (a) records evidencing eligible expenditures (e.g., copies o f receipts, suppliers/contractors' invoices) for payments for goods against contracts valued at more than $350,000; and payments for consultant services against contracts valued at $100,000 or more for consulting firms, and $50,000 or more for individuals; (b) a customized Statement of Expenditures (SOEs) for all eligible expenditures reported under Competency Normalization Activities (CNA), Curricular Alignment Activities (CAA), and Adult Education Activities (AEAs); and (c) Statement o f Expenditures (SOEs) for all other expenditures, including operating costs, training, fees, and stipends. All consolidated SOEs documentation and supporting records evidencing such SOEs will be maintained by the Ministry o f Labor for post- review by the Bank and audit purposes for up to one year after the final withdrawal from the Loan account is made. 29. Direct payments supporting documentation will consist of records (e.g.: copies o f receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursements will be $4,000,000. 30. The flow o f funds is detailed inthe following graph. Figure A6.1. ProposedFlow ofFunds Direct payments inUSD or other Foreign Consultants Currency or Service Providers j Note: The counterpart funds' share for DirectPayments i s not presented inthis graph and follows national rules. I 80 Uses of Funds 31. Uses o f funds comprise: (i)flows o f loan resources to IEs that would use to implement Project activities following a plan o f activities and procedures as specified by protocols signed with the Secretary o f Employment; (ii) payment to suppliers (including training and education providers) and consultants for activities contracted directly by the Ministry o f Labor; and (iii) payments by the Ministry o f Labor to IEs (sector organizations, Provincial Ministries o f Education, and public/private sector agencies implementing adult education subprojects) related to output based activities against the delivery o f standardized and priced products; and (iv) direct payment through debit cards for stipends for youth participating in internship subprojects. All uses processed by UEPE will be supported by external third party documentary evidence, payments for evaluatiodcertification and competency-based training courses will be made on a fixed cost basis according to a schedule o f fees included inthe operational manual. Other goods and services will be procured in line with Bank guidelines in the case of supplier payment. Payments for output based activities to IEs and the fixed cost services listed above will be supported by (i)listings o f beneficiaries and services delivered generated by the MIS (PLATAFORMA and REGICE); (ii) IEs periodic physical and financial reports to the Secretary o f Employment, which will detail beneficiaries, quantity and unit cost for each type o f eligible service, as required by the protocols; and (iii) supporting documentation for payments to service providers. Appropriate use o f the loan proceeds paid for output based activities will be assured through the enhanced internal control framework and the expanded scope o f audit. 32. Output based activities finance the registration o f occupational norms, the certification o f evaluators (CNAs), curricula development and publication (CAA), and adult education activities (AEA). The Ministry o f Labor would pay standard fees for evaluatiodcertification and competency-based training, according to a schedule o f fees included in the Operational Manual. The Secretary o f Employment has established a list o f 5 standard outputs, which would be eligible for financing under two expenditure categories (one comprising the CNAs, CAAs and AEAs; and the other comprising the AEAs under the adult education subprojects). These activities do not logically fit into any standard category o f expenditures (such as works, goods, equipment or consultants). The Bank will therefore include the output based activities as two separate disbursement categories. 33. Payments to IEs and IEs use o f funds to pay service providers will follow the specific requirements o f the protocols s covering all technical, financial, administrative and fiduciary IEs responsibilities. As mentioned above, periodical physical objectives and payment schedules are defined in the protocols (annual with Provinces, up to six months for other IEs). Minimum fiduciary requirements to make payments to a participating IE will include: opening a separate Project account where funds from the Ministry o f Labor will be deposited; and appointment o f qualified staff responsible for FMduties that will be required to make a statement that shehe is aware of all the fiduciary requirements for the operation. 34. The unit cost o f the output based activities (CNA, CAA, and AEA) has been determined through analysis of the actual costs o f its components, based on the experience to date and accounting for actual prices that prevail in the market. These costs are considered to be reliable proxies, on average, for actual costs o f delivering the activities listed. These unit costs havebeen 81 reviewed and found acceptable by the Bank andwould be reviewed at the second year o f Project implementation or an any time by request from the Ministry o f Labor, and adjusted as necessary to reflect actual costs. 35. The UEPEwill access the Bank's Client Connection website to download the 1903 Form and to perform the reconciliation process periodically between their bank account and the resources receivedfrom different sources. Table A6.5. Disbursements per Expenditure Category Expenditure Category Amount of the Percentage of Loan Allocated Expenditure to be ($ M) financed (1) Consultants' services,non-consultants' services, 69.1 100% works and goods (other thanfor CNAs, CAAs, AEAs, Adult EducationSubprojectsandYouth Internship Subprojects) (2) CNAs, CAAs and AEAs 14.8 100% (3) OperatingCosts 4.5 100% (4) Training 4.2 100% (5) Adult EducationSubprojects: 100% (4AEAs, 2.4 (b) didactic andconsumablematerials andconsultants' services 4.0 (6) Fees 58.0 100% (7) Stipendsunder Youth Internship Subprojects 43.0 100% (8) Front-endFee 0 --_-_- (9) Premia for Interest Rate Caps andInterest Rate 0 ______ Collars Total Project Loan 200 Supervision Plan Table A6.6. FinancialManagement Supervision Plan Type Timing Mechanism Objective On-siteVisit & General Integratingsupervision t ReviewFMperformance. Desk work Supervision: missionsor inagreement t Followup onExternalAuditors Twice a year. withprojectTT'L recommendations/raisedissues. + Reviewstaffing. ReviewofIUFRs t Updateassignedrisk t Follow-upon the IEsassessment conductedby the Ministry. Financial Once a Year Over the Audit Report t ReviewAudit Report. Audit Review submittedto the Bank t RaiseissuesdisclosedinAudit Concurrent Twice a year Overthe Concurrentaudit t Reviewissues disclosedby the Audit Review reuort concurrentauditor. SystemAudit DuringProject Overthe SystemAudit t Reviewissuesdisclosedbythe review first vear Reuort svstemaudit ~ u o r t . 82 Annex 7: Procurement Arrangements ARGENTINA: LifelongLearningandTraining Project A. General 1. Procurement for the proposed Project would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004, and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual Project implementation needs and improvements ininstitutional capacity. 2. Procurement implementation: the Procurement actions will be carried out mainly by the line units o f the Ministry o f Labor. For Subcomponents A.l (Establish Competency-based Certification) and A.3 (Train, Assess and Certifi Workers), sector organizations o f the private sector will hire consultants, procure small items and pay for courses, as well as evaluation and certification services. For Subcomponent B.1 (Support to Provincial Ministries of Education) and Subcomponent C.l (Employment and Career Orientation) provinces and municipalities will be responsible for procurement, mainly o f consultancy services, following Bank procedures as specified in the protocols (annual agreements) signed between the province or municipality and the Ministry o f Labor, models for which are included in the Operational Manual. The implementing capacity o f M O L was evaluated and the results are discussed below. 3. Procurement of Works: Works procured under this Project could include minor construction for small refurbishing needed to accommodate equipment and improve training facilities. These will be procured through administrative procedures based on a comparison o f three written quotations fiom qualified contractors in amounts not to exceed $50,000 equivalent per contract. 4. Procurement of Goods: The goods to be procured under this Project would include publications and dissemination materials, computer and networking equipment and software, and sundry office supplies. These goods will be procured using national competitive bidding (NCB) procedures- with standard bidding documents (SBD) acceptable to the Bank-for contracts estimated to cost less than $350,000 equivalent, international competitive bidding (ICB) procedures for contracts above this threshold, andthrough shoppingwhen the individual cost o fthe items is less than$100,000. 5. Procurement of Services (other than consultant services): All contracts for services not relatedto consultant services (logistics, organizationo f seminars, workshops, travel, printing services) may be procured under the same methodologies and thresholds specified for goods. Payments for evaluation and certification services will be made 83 based on a schedule o f fees included in the Operational Manual and do not involve procurement processes. 6. Procurement of Training Activities: This category does not involve procurement processes. Competency-based training activities under Component A.3 (Train, Assess and Certifv Workers) will be arranged by the sector organizations and financed on the basis o f a schedule o f standard course fees corresponding to each registered sectoral occupational standard, which include the costs o f instruction, teaching materials, inputs, and insurance. These fees have been reviewed and found acceptable by the Bank and are included in the Operational Manual. The schedule o f fees would be updated at least annually to incorporate courses for additional registered norms and to take into account other modifications. For training which i s not competency-based, the Project would finance the cost o f travel, room, board and per diem incurred by trainees and other participants in connection with the training and the course fees charged by academic or other institutions. 7. Selection of Consultants: The consultant services required by the MOL will be contracted in the following areas: technical assistance for the installation o f the competency-based certification and training system and Strengthening o f municipal employment services, studies, data collection and analysis, workshops, and the development o f a monitoring and evaluation system. Such contracts will be procured using Bank'sGuidelines for the hiringo f consultants. Inthe technical assistance tasks for the strengthening o f the capacity o f about 250 municipalities, 2 or 3 additional staff on average for each municipality will be hired as consultants in individual contracts estimated to cost less than $5,00O/year usinglocal procedures. 8. For firms, all contracts would be procured using QCBS procedures except for small contracts for assignments o f a standard or routine nature and estimated to cost less than $100,000 equivalent which may beprocuredusing LCS, and for very specialized services that will be hired through QBS procedures. Single-source selection (SSS) procedures may be used, with prior agreement o f the Bank, for hiringservices that meet the requirements o f paragraph 3.10 o f the Consultants' Guidelines, for assignments when only one firm i s qualified or has experience o f exceptional worth. 9. The short list o f consultants in contracts estimated to cost less than $500,000 equivalent, per contract, may be comprised entirely o f national consultants, in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. Specialized advisory services, including those to be hired by the sector organizations, would be provided by individual consultants selected by comparison o f qualifications o f at least three candidates and hired in accordance with the provisions o f paragraph 5.1 to 5.3 o f the Consultant Guidelines. Individual consultants may be selected sole-source with prior approval o f the Bank in accordance with provisions o f paragraph 5.4 o f the Consultants Guidelines. Private sector agencies (Le. sector organizations) may follow private sector or commercial practices if these are described and included in the Operational Manual and are acceptable to the Bank. Even inthose cases, for large assignments consideration shall be given to the use o f competitive procedures as described above. 84 10. Stipends: This category does not involve procurement processes. A stipend o f no more than 200 Arg. pesos/month (about $67/month) unless otherwise agreed by the Bank would be paid directly by the Ministry o f Labor, using a debit card, to an estimated 145,000 youth while they are participating in internships lasting for three to six months. The procedures governing eligibility determination for receipt o f the stipend are specified inthe Operational Manual. 11. Operating Costs: project operation costs will include specialized consultants, including in procurement and accounting, travel and per-diem, and procurement o f sundry items; some o f these expenses will be procured through the UNDP in collaborative arrangements with the MOL. These items and services will be procured using administrative procedures applying to MOL which were reviewed and found acceptable to the Bank. 12. Output-Based Competency Normalization, Curricular Alignment, and Adult EducationActivities: Payments to sector organizations to cover the cost o f competency normalization activities (CNA), to sector organizations or IFPs to cover the cost o f curricular alignment activities (CAA), and to provinces or private/public sector entities implementing the adult education subprojects for adult education activities (AEA) (See Annex 10) would not follow procurement rules. The Project would include payments to sector organizations on the basis o f outputs delivered, as agreed in the protocols (annual agreements) with the sector organizations. The payments would be for the following activities: (a) registration o f about 300 labor norms; (b) certification o f about 800 evaluators; (c) development o f about 300 curricula; and (d) certification in primary or secondary education o f about 100,000 adults. The outputs will be verified byregistration inthe REGICE or MIS (inthe caseofAEA) andreviewedbyMOL staff andindependent auditors. 13. Operational Manual: given the multi-layers o f management and implementation units, a section on procurement in Operational Manual is needed to define the roles, responsibilities, rules and reporting on procurement as well as defining the schedule o f fees for training activities and evaluation and certification services. 14. Thresholds for procurement methods and reviews: the following thresholds will be taken into account in the design o f the procurement planfor selection o f methods and for the review by the Bank as set forth inthe Operational Manual: 85 Table A7.1: Thresholds, Methods and Prior Review to be used inthe Procurement Plan ($) 5 350,000 NCB Firstone 5 100,000 Shopping Firstone eachyear Consultants' services ( f m s ) > 100,000 QCBS or any sole All source 100,000 LCS, CQ Firstone Consultants' services (individuals) >50,000 or any sole See section V o f All (TOR, CVs source Guidelines compared and contract) Targets listed inthe Large items or Any itemor service Advances to provinces and Plan services to be listed >$100,000 municipalities separately inthe procurement plan Inaggregateamount Direct contracting" None Sundry items of $5,000 per municipality B. Procurement Plan 15. The procurement plano f the Project for the first 18 months o f Project implementation i s prepared and approved by the Bank. The plan identifies about 50 procurement activities; most o f them are hiring o f consultant firms and individual consultants. The plan includes the targets o f advances to provinces and municipalities. The implementationo fthe advances will be recorded inthe plan and posted inthe SEPA. 16. The procurement plan will be available in the Project's database and in the Bank's external website. The procurement plan will be updated in agreement with the Project Team annually or as early as required to reflect the actual Project implementation needs and improvements ininstitutional capacity. The procurement plan for the Project relates to the centrally-implemented activities. It is expected that for provinces and municipalities, the request for advances will submit a list o f the goods and services with the application. Provinces and municipalities will keep records with the actual items and services procuredpursuant to the Operational Manual. 17. The program o f advances to provinces and municipalities and payments effected through sector organizations will not be subject to a procurement plan; however, the procurement plan.shal1 list the number o f target interventions or advances on a geographical basis or other classification as agreed and the actual implementation o f the advance will be recorded inthe procurement plan. The request of approval o f an advance 29 Municipalities will generally follow municipal regulations but the Bankwill recognize such expenses as direct contracting. 86 to provincial governments, municipalities or sector organizations will include a list o f goods and services expected under each application. Such a list is not bindingbut it will allow identifying large ticket items requiring special consideration for the procurement method. Ifthe M O L identifies insuch a list large items or services, i.e., generally costing above US$lOO,OOO, these items will be includedinthe procurement planseparately. C. ImplementingCapacityandFrequencyof ProcurementSupervision 18. MOL is committed to handle procurement using the facilities and resources o f the Executing Unit for Projects with External Financing (UEPE) retaining the same structure and work allocation used in other projects financed by the Bank. The Project implementation experience includes the implementation o f the Heads o f Household Projects (Ln. 7157-AR and Ln.7369-AR). The information systems at M O L are adequate for Project implementation and will include the use o f the UEPEX. The proposed Project expects using UNDP for the payment o f consultants, procurement o f equipment and travel expenses. Given the nature o f the Project involvingprovinces, municipalities and sector organizations in30 sectors that are not familiar with Bank-financed operations, the overall risk assessment o f procurement implementation is high, and would require post- review missions twice a year. The Bank's review shall cover no less than 1in5 contracts signed. 19. Inrespect o f the implementing capacity at the provincial and municipal level, it was agreed that the M O L will carry out an assessment o f the implementing capacity on procurement, with a toolkit acceptable to the Bank, o f any municipality receiving more than $500,000 inadvances and of any provincial government receiving advances o f more than $1,000,000 for expenses other than per capita education (AEA) or certification payments, duringthe duration o f the project. 20. Inrespect o f the implementing capacity o f the sector organizations, before signingthe relevant agreements, MOL will assess the procurement capacity o f most o f the participant entities usinga toolkit acceptable to the Bank in all cases wheathe aggregated amount in payments for goods and consultant services, other than expenses incurred inCNA, CAA, and fees for competency-based training course, evaluations, or certification, are estimated to exceed US$200,000 equivalent. The Bank may join the MOL for such assessments when the aggregated amount exceeds $1.O million equivalent. D. SpecialProvisions 21. The following "Special Procurement Provisions" are included inthe Loan Agreement and shall apply to procurementunder the Project: (a) procurement of goods, works and non-consultant services shall be carried out usingstandard biddingdocuments acceptable to the Bank; (b) a two-envelope biddingprocedure shall not be allowed inthe procurement o f goods, works and non-consultant services; 87 (c) after the public opening o f bids, information relating to the examination, clarification and evaluation o f bids and proposals and recommendations concerning awards shall not be disclosed to bidders or consultants or other persons not officially concerned with this process untilthe publication o f contract award (except as provided in paragraphs 2.20 and 2.27 o f the Consultant Guidelines); (d) bidders or consultants shall not, as a condition for submitting bids or proposals and/or for contract award: (i) be required to be registered in Argentina; (ii) have a representative in Argentina; and (iii) associated or subcontract with Argentine be suppliers, contractors or consultants; requests(e)for expressions o f interest and the evaluation reports o fbids andproposals o f all the invitations to bid, bidding documents, minutes o f bid openings, goods, works, non-consultant services and consultants' services, as the case may be, shall be published inthe web page o f the Borrower's Office o f National Procurement (OJicina Nacional de Contrataciones); ( f ) the provisions set forth in paragraphs 2.49 through 2.54 and 2.59 o f the Procurement Guidelines shall also be applicable to contracts for goods and non consultant services to be procured under National Competitive Biddingprocedures; be used(g) the publication o f bidders in one or more specialized magazines shall not by the Borrower in determining if the bidder whose bid has been determined to be the lowest evaluated bid has the capability and resources to effectively carry out the contract as offered inthe bid, as referred to inthe provision set forth inparagraph 2.58 o f the Procurement Guidelines. The provision set forth inparagraph 2.58 o fthe Procurement Guidelines (including the limitation set forth herein) shall also be applicable to contracts for goods and non-consultant services to be procured under National Competitive Biddingprocedures; and (h) the types o f contracts described in Section IV o f the Consultant Guidelines (including the important provisions to be included insaid contracts) shall be the only type o f contracts to be used by the Borrower (as the case may be) in connection with the contracting o f consultants' services provided by a firm and to be financed with the proceeds o f the Loan; (i) The Borrower: (i)shall register in the Bank's publicly accessible Procurement Plans Execution System (SEPA) within 30 days o f negotiations the information contained in the initial procurement plan and (ii)shall update the procurement plan at least biannually or as required to reflect the actual project implementation needs and progress and shall record in SEPA the information contained inthe updatedprocurement planimmediatelythereafter; and Q ) the Borrower shall prepare and hrnish to the Bank as part o f the Project Report not later than one month after the end o f each semester, interim un-audited financial reports for the Project covering the semester, inform and substance satisfactory to the Bank (which reports shall include, inter alia, the list o f signed contracts for works, 88 goods, non-consultant services and consultants' services under the Project as reflected in the Borrower's financial management system (UEPEX) during the period covered by each of said reports). 89 Annex 8: Economic and FinancialAnalysis ARGENTINA: LifelongLearningandTrainingProject 1. The economic justification for the Project is based on the following sets o f empirical evidence. Firstly are school attainment in the general population and on the distribution o f education among the provinces. The data shows that although school attainment in Argentina has been rising steadily and educational inequality has been steadily declining, the country still shows an unequal educational distribution among the provinces. These differences are negatively correlated with the GDP o f the provinces. Secondly, documentation is provided regarding the skill gap o f the Argentinean labor force relative to the status o f other countries. The data suggests that improvements inthe quality o f the adult labor force through the addition o f entrants with higher levels o f education would be insufficient for Argentina to be a significant player in the global economy, and that Argentina needs to address the skill gap facing adult workers. A review is presented o f the evidence regarding the potential benefits to Argentina from reducing the skill gap to its labor force. These benefits would include higher productivity and higher employability o f workers with upgraded skills as well as higher economic growth and lower income inequality for the society as a whole. The first and second parts o f the economic analysis serve to demonstrate the need for a project which seeks to upgrade the skill and competencies o fthe labor force, as well as the need for such a project to address social deficits arising from inequitable attainment in education and skills. Thirdly, evidence is provided regarding the specific components o f the Project. The specific data pertain to unit costs that would be incurred on behalf o fthe Project beneficiaries. 2. The traditional tools o f economic analysis o f education projects, such as computation o f benefits from efficiency gains and increased labor market earnings due to additional years o f schooling and improved skills o f project beneficiaries cannot be applied to this Project. Empirical evidence o f the magnitudes o f the benefits would not be possible without making unsubstantiated conjectures, as the Project considers innovative, modular and flexible options for access to lifelong learning opportunities to adults and youth and certification o fbasic education services opportunities for adults. While an analysis o f the unit cost ofProject components is presentedinorder to determine the order ofmagnitude for the Project to have a positive net present value and an assessment o f these magnitudes is provided, the thrust o f the economic analysis is o f a more general nature. School Attainment and the Distribution of Education3' 3. Mean schooling attainment in Argentina has been rising steadily for at least half a century -- from 8.9 years for the cohort born around 1940 to 11.7 years for the one born 30The annex presents a summary o f the paper, Argentina Lifelong Learning and TrainingProject: EconomicEvaluation by Cristian Aedo (April 2006) which contains additional details, including statistical information. The full paper is inthe Project File. 31See an extended version o f this Economic andFinancial Analysis inProject files. 90 around 1982. The population's average educational attainment in 2005 stood below upper secondary completion level, at 10.8 years. Population growth, together with the increase in school attainment, has meant a rise in the country's overall average attainment. Furthermore, the growth in schooling appears to have been concentrated at the secondary and tertiary levels. The educational profile o f Argentina has changed over the course o f the last half-century. Among the oldest cohorts, around 55 percent o f the population completed only primaryor less education. Among the three youngest cohorts, less than one-fourth have completed primary or less education, two-fifths have some secondary schooling, with more than half o f these having completed all twelve years. Another two-fifths has some tertiary education. These results hold by gender and for the economically active population. Figures A8.1 and A8.2 show how educational attainment inArgentina compares with that inother countries. 4. Notwithstanding the steady decline in overall educational inequality, Argentina still shows an unequal educational distribution among the provinces (Figure A8.3 below). The Rezago Educutivo (RE or educational lag) in primary education, that is the percentage o f the population aged 20 to 65 who have not completedprimary education, i s estimated to be 15 percent for the country. However, there are important differences across provinces related to their per capita income. Provinces with high GDP per capita generally have lower rates o f RE. For instance, the lowest REi s inthe province o f Tierra del Fuego with 8 percent and the highest RE is in the province o f Misiones with 33 per cent. At the secondary level, the RE 32 is estimated to be 60 per cent for the whole country with differences across provinces. Thus, an intervention which offers the population the opportunity to complete primary and/or secondary education, particularly to the vulnerable and disadvantaged groups, will be tackling both inequity and poverty issues at the same time. 32This is defined as the population between 20 and 65 years of age that have not completed secondary education. 91 8.1. EducationalAttainment of Adult Population by per capita GDP L'dred %ut6 NCWZcalvd C d 4 1 c d C . I I I 5 6 5 aI I 9 toI I 11 Log dFer CaplrGDk,2000 ource: De Ferranti et al. (2003).33 Figure A8.2. Secondary Enrollment by per capita GDP -I I I I I I I 5 6 7 8 9 10 I 1 la$dPer CapiraGDP,1y9s ource: De Ferranti et al. (2003). 33De Ferranti, D., G. Perry, I. J.L. Guasch, W. Maloney, C. Shnchez-Pkamo and N. Schady, (2003), Gill, "Closing the gap ineducationand technology." World Bank. 92 FigureA8.3. GDPper capita andREinPrimaryEducationamongArgentinean Provinces =c 0.35 b. 0.25 v $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 GDP per capita (in thousands of pesos) Source: Staff elaboration basedon EPH2005. Benefitsof Reducingthe Skill Gap 5. It would be useful to document the possible benefits that can be obtained, particularly in the Argentinean context, from improving skills and competences in the population. Skills and competencies can be linked to: (1) higher productivity, (2) more rapid economic growth, (3) lower inequality, and(4) higher employability. Productivity 6. The simplest evidence regarding the link between skills and productivity can be obtained from the work o f Hall and Jones (1997).34 Using 1991 data for 155 countries and applying the Cobb-Douglas production function, they analyzed the output patterns per worker, setting the United States as a standard. They asked four questions: (i) What i s the output per worker in each country as compared to a worker in the U.S.? (ii) What i s the position of physical capital of that country as compared to the US.? (iii) i s What the position of human capital of that country as compared to the U.S.? and (iv) What is the residual that can be attributedto productivity differences? Table A8.1 reproduces the mainresults o fthe paper. 34 Hall, R. and C. Jones, (1997), "Fundamental determinants o f output per worker across countries." NBER. 93 TableA8.1: FundamentalDeterminantsof Outputper Worker across Countries cc Country Output per Physical Capital Human Capital Worker Intensity Der Worker 'roductivity UnitedStates 1.ooo 1.ooo 1.ooo 1.000 Canada 0.941 1.002 0.908 1.034 Italy 0.834 1.063 0.650 1.207 Germany 0.818 1.118 0.802 0.912 France 0.818 1.091 0.666 1.126 United Kingdom 0.727 0.891 0.808 1.011 Singapore 0.606 1.031 0.545 1.078 Japan 0.587 1.119 0.797 0.658 Mexico 0.433 0.868 0.538 0.926 Argentina 0.418 0.953 0.676 0.648 India 0.086 0.709 0.454 0.267 China 0.060 0.891 0.579 0.116 Kenya 0.056 0.747 0.457 0.165 Zaire 0.033 0.501 0.408 0.159 Average 133 Countries 0.289 0.854 0.564 0.502 Standard Deviation 0.265 0.241 0.163 0.320 Source: FundamentalDeterminants of Output per Worker across Countries, by R. Halland C. Jones, NBER, 1997. Basedon Table4, pp. 28. Resultsfor U.S.S.R. and Hong Kongare excluded from the above table. 7. This Table shows that the output per worker in Argentina was 42 percent o f that in the U.S. The Table also shows that differences inthe amount o fphysical capital intensity does not explain much o f the difference between the outputs per worker - in fact, the example o f West Germany and Japan shows that the amount o f physical capital intensity was greater in those countries as compared to the U.S. and yet their output per worker was lower. 8. In the case o f Argentina, differences in productivity i s the most important factor in explaining differences inoutput per worker, followed by differences inhuman capital per worker. With the same human capital per worker, the Argentinean output would be 62 percent o f the U.S. counterpart; with the same physical capital intensity the output would be 44 percent o fthe U.S. counterpart. 9. Therefore the proposed Project aims to increase Argentinean workers' humancapital as well as their productivity, so as to reduce the gap in output per worker relative to the U.S. 94 10. In a recent update o f the model, Di Gregorio (2006)35 produced a newer decomposition o f GDP per capita for 2000, relative to the U.S., following the same methodology but inco orating the newer series on educational attainment produced by Barro andLee (2001). 2Table A8.2 presents an excerpt based on DiGregorio`s results. Table A8.2. FundamentalDeterminants of Output per Worker across Countries revisited 1 tribution From Country I Output per Physical Capital Human Capital Intensity per Worker Productivity Argentina 0.921 0.943 0.458 Chile 0.389 0.863 0.694 0.649 Colombia 0.178 0.701 0.629 0.403 Mexico 0.381 0.922 0.684 0.604 Peru 0.156 1.006 0.695 0.224 Venezuela 0.275 0.936 0.666 0.441 Korea 0.571 1.I85 0.977 0.493 Greece 0.546 1.127 0.940 0.515 Israel 0.675 1.114 0.955 0.634 Latin America 0.816 0.648 0.464 BasedonTable 4, pp. 28. Resultsfor U.S.S.R. and Hong Kong are excludl rom the above table. 11. Based on these newer results, the Argentinean productivity is less than half o f U.S. worker. If both workers had the same productivity level, the output per worker in Argentina would be 87 percent o f an U.S. worker. This difference inproductivity might be due to several factors, but most o f it i s due to skill levels that are not adequately measuredby years o f educational attainment.37 Economic Growth 12. A study o fthe causes o f economic growth constitutes a huge theoretical and empirical literature. Recent advances in the growth literature have been directed at better understandingthe role o f human capital in economic growth. The theoretical literature shows a clear link between skill gaps in the labor force and differences in growth rates; however, it suffers from a lack o f measurement o f skills. The growth literature uses the educational attainment o f the labor force as a measure o f the stock o f human capital and current enrollment rates as a prediction o f the future stock o f human capital. This literature shows a clear link between the initial level of educational attainment and the growth rate and a less precise link between changes in educational attainment and changes inthe growth rate. 35 De Gregorio, J. (2006), "Economic growth in Latin America: from the disappointment o f the twentieth century to the challenges o f the twenty-first." Central Bankof Chile Working Papers, no. 377, November. 36 Barro, R. andJ.W. Lee, (2001), "International data on educational attainment: updates and implications." Oxford EconomicPapers, 53(3). 37 In these newer results, differences inhuman capital per worker and physical capital intensity are not as important for Argentina as inthe previous results ofHall and Jones. 95 13. New empirical evidence shows the robustness o f the relationship between skills and growth. Hanushek and Wopmann (2007)38found evidence that the cognitive skills of the population, reflecting educational quality, are strongly related to economic growth. Taking a sample o f 50 countries and the average measure o fthe mathematics and science scores in all the international tests, they find that the association between years o f schooling and growth turns insignificant and it i s reduced to almost zero once the average educational performance o f the whole labor force is included in the In other words, it is not the years o f schooling but the quality o f the education received and the skills acquired that have a positive partial correlation to growth. 14. Economic growth and international competitiveness are increasingly dependent on the generation and transfer o f knowledge and technology, which inturn are changing the skills needed from workers. Research underpins economic growth and competitiveness by advancing knowledge and skills that sustain innovation and help solve problems for industry and business. This again highlights the importance o f the quality o f labor training systems and skills transfer processes for a country such as Argentina. I ncorne Inequality 15. De Gregorio and Lee (2002)40 find that educational factors (higher educational attainment and more equal distribution o f education) play a significant role in making income distribution more equal. Nickel1 (2004)41 and Hanushek and Wopmann (2007) present evidence that cognitive skills in the economy, along with other factors such as labor market institutions, unionization and minimumwages, will have a direct effect on the distribution o f income. The authors do not attempt to describe the causal structure, as they consider it inappropriate to attribute the variance inearnings simply to differences in the quantity or quality o f schooling. However, they conclude that improvements in educational outcomes and skills will have direct impacts on income distribution. 16. Information on wage inequality for Argentina based on Gasparini (2006)42 can be found inthe extended version o fthe Economic and Financial Analysis inthe Project files. It canbe seenthat the Gini coefficient for the distribution o fhourly wages for all workers and male workers aged 25 to 55 has increased in the time period 1992-2005. It is interesting to note that when the sample is dividedby education level, the Gini increases 38Hanushek E. and L.Wopmann, (2007), "The role of education quality ineconomic growth." World Bank Policy ResearchWorking Paper 4122, February2007. 39The positive association of the educational performance of the whole labor force on economic growth remains robust to the inclusion o f other control variables, such as regional dummies, institutional framework of the economy, fertility and geography. The results are qualitatively similar under division of the sample of countries into groups, such as OECD countries and non-OECD countries and countries above andbelow the sample median of initial GDP per capita. 40De Gregorio, J. and J.W. Lee, (2002), "Education and income inequality: new evidence from cross- country data." Review ofIncome and Wealth, Series 48, No. 3, September. 41Nickell, S., (2004), "Poverty and worklessness inBritain." Economic Journal 114, no. (March): Cl-C25. 42 Gasparini, L., (2006), "Monitoring the Socio Economic Conditions in Argentina", Working Paper No.1/05, June. 96 only for the unskilled. Giovagnoli et a1 (2005)43 show that returns to schooling increased duringthe period 1992-2002 and their analysis do not rule out that increased demand for skills maybe drivingthe increasing returns over that decade. Employability 17. The relationship between skills and competencies and employability o f individuals i s straightforward. In Argentina, as in many other countries, labor market groups with higher skill levels generally present lower unemployment rates. Based on data reported by Gasparini (2006), the extended version o f the Economic and Financial Analysis in Project files shows the relation between unemployment and educational attainment in Argentina. Several facts are clear: First, skilled and unskilled unemployment fluctuates in a relatively synchronized fashion. Changes in the unemployment rates for different skill groups are mainly determined in the short run by the business cycle. Second, the unskilled unemployment rate is muchhigher than the skilled rate. Third, after reaching a peak in the year 2002, the aggregate unemployment rate has decreased substantially throughout all skill categories. 3. Project Assessment 18. The proposed Project has four components: (A) Expand and Strengthen Competency- Based Training and Certification; (B) Basic Education Services and Certification for Adults; (C) Promotion o f Youth Employment; and (D) Strengthen Management Information Systems, Project Administration and Studies. The benefits o f the Project would be obtained in terms o f increasingthe stock o f workers with improved skills and competencies, which would translate into improved productivity, higher growth, increased employability and reduced inequality. Empirical evidence i s not yet available regarding the magnitude o f the possible gains due to the improved access to lifelong learning ~pportunities.~~ The private portion o f these gains would be obtained interms o f less frequent and shorter durations o f employment and higher earnings for workers. Empirical evidence regarding the magnitudes o f these benefits would not be possible without makingunsubstantiated conjectures, as the Project considers innovative, modular and flexible options for service delivery to adults and youth. 19. The planning for the Project incorporates an estimation o f the potential number o f beneficiaries and the costs of the various components. This allows the computation o f unit costs per potential beneficiary -which provides an idea of the value of the benefits per beneficiary that would be required to make the Project economically viable45. An 43Giovagnoli, P.I., A. Fiszbein and H.Patrinos, (2005), "Estimating the returns to education in Argentina: 1992-2002,". World BankPolicy ResearchWorking Paper 3715, September 2005. 44 The Chilean Lifelong Learning and Training Project (P068271) and the pipeline Mexican Lifelong Learning Project ,(P086058) do not provide yet impact evaluations of their components. 45These calculations are lower bound estimates because unit costs are calculated using only those participants projected to complete the full cycle o f activities, i.e., reaching certification for Components A and B, and participating in youth internships for Component C. However, it is likely that many other participants in Project activities would realize benefits as well, for example, from taking a competency- based training course, completing an extra year of schooling, or employment services. 97 assessment o f the viability o f these magnitudes i s provided based on Argentina labor market conditions. For the Promotion o f Youth Employment component the assessment i s based on a review o f available impact evaluations o f youth training programs Latin America. A. Expand and Strengthen Competency-based Training and Certification: Table A8.3 presents information for this component o f the Project. It includes the estimated number o f beneficiaries who would be supervised, the estimated cost o f the component, the cost per beneficiary and the annual increment in social benefits to break even assuming that the worker i s 30 years old (i.e., he/she can potentially work for 35 years46), 40, 50 and 60 years o f age. "Production" costs of the component are included, but the analysis excludes any opportunity costs for the worker, as the certification does not require a significant commitment o f time by the worker. Positive spillovers on firm productivity, on economic growth and other external effects; and substitution effects as the workers who are certified might crowd out other workers are not included in the analysis . 20. It i s clear from Table A8.3 that, depending upon the age o f the worker, modest social gains per beneficiary would make this component o f the proposed Project economically viable. These break even gains are well within any conservative estimate o f potential benefit streams. For example, for a worker 40 years old only $130 o f social gains per year are required for the Project component to break even, on amount which is below the minimummonthly wage receivedbya full time worker. B. Basic Education Services and Certification for Adults: Table A8.4 presents the information for this component o f the Project. The costs included are just the "supply" cost o f implementing the component. As in the previous case, opportunity cost o f attending education is not included as this component is based on innovative adult outreach programs offering the possibility o f completing secondary education through modalities that are flexible, modular and responsive to the needs and circumstances o f interested adults.47 Table A8.4 presents information on unit cost per beneficiary and displays the social gains per beneficiary that would be required to make this component o f the Project economically viable. As in the previous component, the amounts required to break even are modest and within any conservative estimate of potential benefit streams. 46This assumes 65 years of age as the retirement age for the worker regardless ofgender. 47Not included are positive spillovers on fmproductivity, on economic growth and other external effects; andpossible substitution effects. 98 a c m M a yi M d r? 4 v: r? pr: M (A - r? r? a b P C a C h a r? tf: b M h c 5c t. In m Y) - w Y) N a H 1 IC 8 yi H -- - 2 1 a E yi n b? r? Y) N 0 0 C C U aLc: U H IC C 0 C n 8 C 0 r C. Promotion of Youth Employment: The cost structure for the evaluation of this component considered: (i) government cost o f the internship (stipend, transportation the and internship related expenses), (ii)the employer cost o f training (stipend and transportation expenses) and (iii) trainee cost (opportunity cost) for the duration o fthe the internship (six months). Table A8.5 presents the information: TableA8.5. CostStructureYouthInternships costs Value per Month Number of Months Total 1. Government Cost $83 6 $498 Stipendduringtraining $48 6 $288 Transportationexpenses $16 6 $96 Training relatedexpenses $19 6 $114 2. Employer Cost $160 6 $960 Stipendduringtraining $144 6 $864 Transportationexpenses $16 6 $96 3. Trainee Cost $249 6 $1,495 Out-of-pocketcost of training $0 6 $0 opportunity cost of training $249 6 $1,495 Total $492 6 $2,953 21. Table A8.6 presents the information for this component. The social gains per beneficiary that would make this component economically viable depend on the number o f years that the beneficiary works. With 45 years o f work and a 12 percent discount rate, US$357 per year o f extra benefits per beneficiary i s needed for the Project to break even (this represents an increase o f 9 percent o f labor income). With only 15 years o f work, US$434 is needed for the Project to break even (this represents an increase o f 11 percent o f labor income).48 Of course, these amounts are reduced if a lower discount rate i s used. 22. Are these estimates o f potential benefits streams reasonable for the training component? As i s presented in the extended Economic and Financial Analysis available inProject files, training programs producepositivebenefitson wages (a partofthe social benefits) in the cases o f Latin America. The estimated effects range from 10 percent to 20 percent on base wage. Based on this information, it can be concluded that this component is marginally economically viable. However, the duration o f the effects on the trainees' earnings remains an open question in the empirical literature. Shorter duration o fthe earnings effects may affect the economic viability o fthis component. 48 As the model is lineal and the opportunity cost roughly represents 50% of total costs, the gains needed for the component to break even are halved ifthe opportunity cost is excluded fiom the analysis. 101 (1 3 H Annex 9: Social Assessment and Safeguard Policy Issues ARGENTINA: LifelongLearningandTrainingProject This Annex contains summaries o f a social assessment covering the views o f key Project stakeholders and o fthe Indigenous Peoples PlanningFramework. Social Assessment 1. Inthe areas o f competency-based training and certification and adult education services, the Ministry of Labor (Ministry) has prior experience working with various stakeholders. During project preparation, the Ministry also carried out specific assessments and organized meetings with stakeholders. On the basis o f these studies and consultations, this section o f the Annex summarizes the views, particularly on implementation issues, of the principal groups o f stakeholders. These include national and provincial authorities, beneficiaries o f social programs, training institutions, private companies andunions. Competency-based Certification and Training System 2. Stakeholder views were collected from three sources: (a) the participatory assessment o f the pilot Program for Training and Certification o f Competencies, financed by IDB through the Multilateral Investment Fund (FOMIN), which began implementation in 2001; (b) discussions with the business advisory council to the Ministry; and (c) discussions with a company which hadparticipated inthe pilot Programmentioned above. 3. The participatory assessment o f the competency-based training and certification pilot highlightedseveral contributions o f the approach. The establishment o f specific descriptions o f the supply and demand for skills made labor intermediation more transparent. The focus on competencies made the content o f training more transparent and pertinent, and the innovations in teaching and supporting materials had improved quality. The management o f training agencies had been strengthened through capacity-building o f the teachers and to improve the quality o f internal procedures. The pilot had generated a new institutional focus for sector assessment and certification procedures and brought about a social and institutional recognition o f the labor competencies o fworkers. 4. Comments o f individuals certified inthe pilot Programincluded: "It willpermit me to advance and is a good opportunity to demonstrate the quality of my work. (assistant mechanic) "...it is something important, if it is extended to all of the workshops it could improve service quality. (electronic systems mechanic) " "Iwastrained in theworkshop andIdidnot haveany writtenrecognition thatshowed my experience." (assistant mechanic) "It is important to be assessed, on thejob I can show my capacity and it gives me the opportunity to identijj which theoretical knowledge Iam missing.'' (machineprinter) 103 "With the certijkate Ifeel more secure,for now it is a matter of personal attitude, but I think that in a short time it will also be important for the labor market. '' (baker's assistant) 5. When one company recruited new staff using the competency-based approach, the pool o f candidates included, for the first time, women, who got production jobs. After this initial experience, the company has adopted the approach, not only for recruitment, but also for updating the qualifications o f permanent employees. The company now collaborates with the Ministryto promotethe methodologyandextend itto its sub-contractors. 6. The Ministry presented the objectives and components o f the proposed Project to the business advisory council on professional training. The members commented on the Project and on their experiences with competency-based training. The general themes included the following: What motivates companies to incorporate competency-based norms and training? What are the results so far? How do they characterize the experience? What problems does it help resolve? What are the gains for companies? What i s the role o f the national government? 7. The Ministry authorities explained that the government was prepared (in fact, was already engaged) to mobilize the technical, financial, and organizational resources necessary to install the system. This implied the development and installation o f infrastructure for competency assessment (in order to align training supply and to identify training needs) and certification (for agencies chosen bythe sector, but inneed o f strengthening). 8. Representatives o f the Industrial Union o f Argentina became involved with the competency- based approach because they needed to know the qualifications o f their workers. In their experience, the methodology was well-suited for employees, but for the unemployed,needed to be accompanied by other actions. For vulnerable groups, assessments and orientation had to precede technical training. Some groups (women, youth) also required counseling and opportunities for practical experience in the workplace. Training institutes needed to be well- connected with companies, the municipality and others inthe community. 9. For the representatives o f the restaurant industry, the role of the state in the first instance was to finance the system, but it was also to promote the approach, above all to those who should participate intraining. Individual sectors did this for their own activities, but the state needed to make the approach accessible to as many sectors as possible. Most businessmen on the council said that the state needed to finance the installation and initial operation o f the system. Thereafter, for the system to be sustainable, financing would need to be shared between the private and public sectors. Some representatives said that private financing should be compulsory since companies benefit from a more qualified workforce. For the private sector, certification was important, as well as the support from national institutions, in this case, the Ministry. "This approach is very useful for human resource management - above all for companies which operate with quality standards and need to demonstrate that. But it needs to be promoted and not separatedfrom salary discussions." Several participants mentioned the critical role o f the state to promote and disseminate the methodology. The group agreed that it was important to speak about a competency-based system, life-long learning, and norms and certification. Given its role inpromoting and mediating social dialogue, the Ministry should be charged with findingthe institutional solutions for the system. 104 10. Several businessmen mentioned that shortening the time needed to receive a certification based on experience would help to promote the approach among small businesses since sustaining training activities is more difficult for them. There was concern that many workers had not completed their secondary education, although this was a basic requirement for subsequent professional development. They favored promoting adult education services and coordinating them with training. 11. Additional opinions expressedby the businessmen and unions included the following: "Ourfirst interest in the subject was to incorporate technological changes and international references based on this methodology, including the use of norms for training and the certijkation of standards. Another factor was the need to improve communication and human resources in the area of management and production. The industry needed professionals with technical competencies. The result, for us, is that training based on competenciesis very effective. ,949 "At the beginning we had our doubts, particularly related to union issues, given the possibility for demandsfor restructuringjob categories and salary increases, which could be associated with the certiJication of workers. But we understand that it is very importantfor the worker. It motivatespeople. Our reasonfor incorporating this approach is to make the industry more professional. There are manuals with procedures. I t is possible to visualize the requirements and the necessary knowledge. 'J' "Theprocess is clear, concrete and useful. Productivity increased because the gains in the quality of human resources improved working relationships and organizational structures. The State needs to have a role as regulator, advocate and rector, in order to include the issues discussed by the private sector in the public debate. We are convinced that this strategy centered on people is our best and largest asset to sustain the development of our industry. 'J' "The norms are a way to organize qualijkations andprofiles. They organize the diversity of training supply in theface of the needfor different actors (businessmenand unions) to agree on profiles. In this sense, it is also an input for collective bargaining. For workers it is an important recognition of their knowledge and experience. 12. Stakeholders views were also available in the participatory evaluation o f the pilot Formujer Program (Program), which combined a focus on competencies, including a diagnosis and reform o f training content, with that o f gender. Working with training institutions, the Program promoted the approach with participants in social programs as well as businesses. The program worked with participants on their employability/citizenship and the construction o f a personal "employment project". The views o f two groups o f stakeholders - female participants and training institutes - were gathered. 49Metalworking Indsutry 50AssociationofFootwearCompanies GraphicsIndustry 52ConstructionWorkers Union 105 13. The participants reported that the counseling provided to help them develop a personal employment strategy had facilitated their access to training. The Program had helped remove obstacles to employment: lack of work experience, o f specific training, and o f contacts with employers, and ignorance about how to look for a job. The help received in job search was important. The training received had focused not only on the transfer o f knowledge, but also competencies. Most participants had signed up for training because they needed a job, and the compensatory strategies had facilitated their participation. They recognized that the knowledge attained through experience was important, including professionally. More than half o f those surveyed thought that they had improved their employability and status as women and citizens. The evaluation showed that the training activities had been effective in"activating" participants, particularly when they included training injob search skills. 14.Participants, particularly women, wanted help from the training institutions in formulating their "personal employment project" and referring them to education services, in addition to course content. The evaluation also showed that training institutions needed to take into account the level o f schooling o f the participants as well as the time they had available. Inpractice, sometimes the training agencies found that employers didnot always have enough information to formulate occupational profiles. Another finding was that it was important to pay attention to promotional activities, to how participants entered different training institutions, and mechanisms o f support and counseling inorder to ensure retention. 15. According to the training institutions, the Program made several positive contributions. One was the new design o f training courses based on competencies. Others were the activities to improve the link between the institutions and their economic context and the subsequent adaptation o f training courses to labor market needs. There were innovations intraining content including the incorporation o f transversal topics. The Program also developed new ways to connect the participants in social programs to training courses, for example, they expanded their services to include orientation, intermediation services, and opportunities for work experience. At the end, training institutions were better positioned relative to vulnerable groups. Several methodological innovations had been incorporated - a gender dimension, employability focus, the evaluation o f learning, the implementation o f compensatory strategies, supervision and the evaluation o f activities. Staff o f the training institutes was unanimous that the focus on competencies had improved the design o f occupational profiles. Because they no longer considered just participant needs, but also labor market requirements, employability had improved. Teachers reported that their experience had removed some preconceptions about the behavior o f women and men and caused them to appreciate more the capacities o f women in jobs, to correct discriminatory practices and to identify biases inthe labor market. IndigenousCommunities 16. During a consultation organized by the Ministrywith Indigenous communities in Tucuman, the representatives suggested that basic education and competency-based training courses be organized in schools and to promote these courses through the radio. They requested technical assistance to help them identify training needs, including inthe marketing o f surplus agricultural products and use o f machinery. A local development plan existed as a reference point for the economic context. There was interest in certification o f previous training and experience, for example, inthe administration and maintenance o f small water systems. 106 Adult Education Services 17. Beginning in mid-2003, in the context o f the Heads o f Household emergency workfare program, the Ministry has promoted adult education services among beneficiaries, and correspondingly, an increase in supply. The Ministry has organized several meetings o f stakeholders including municipal, provincial and national authorities, technical experts in education and local economic development, staff o f other social programs and national Ministries, including the Ministries o f Education and Social Development, and nongovernmental organizations. The objectives were to exchange experiences, discuss achievements and obstacles, and to agree on future actions. 18. In general, the participants in these meetings recognized some achievements. More flexible mechanisms and a broader menu o f options had been incorporated on the supply side. The value and attention given to the area o f adult education in the provinces had been restored. Services had beenbrought closer to the community, including by opening new centers. More information was being gathered on labor market demands. Compensatory measures to facilitate participation o f the vulnerable population, including women (babysitting, materials, snacks, bus tickets, glasses) hadbeen incorporated. 19. Nevertheless, some difficulties remained. Training needed to be linked to the economic context inorder to improve the pertinence and the quality o f supply - the weakest aspect so far. They needed better information to understand the results o f activities. Administration could be more agile, since quality depended on timely arrival o f inputs. Businessmen thought that in addition to technical content, courses should incorporate training on values and attitudes, for example, the need to be proactive and responsible. All agreed that training, together with solid formal basic education, was indispensable. Specific proposals included: (a) incorporation o f other actors - municipalities, nongovernmental organizations and unions; (b) orientation activities for trainees; (c) different materials for adults depending their education level; (d) incorporation o f tutors or facilitators to improve retention; (d) more publicity and facilitation o f access for vulnerable groups; and (e) coordination with municipal employment offices. 20. Ina meeting with provincial and national educational authorities organizedby the Ministry in August 2006, a consensus on the vision for adult education services at the national level (Ministries o f Education and Labor), as well as in several provinces, provided a base for cooperation. The participants acknowledged the gap between the potential demand for adult education and the ability o f the system to respond effectively. Provinces accepted the role o f the national government to set the basic approach for adult education services. At the same time, the national authorities recognized that flexibility and support (not just financial) was needed so that provinces could develop actions. The main problem was the inertia o f the current system on pedagogical, as well as institutional and financial aspects. 21. Provincial authorities identified obstacles to expanded coverage, for adults ingeneral, and for those in social programs. Adults did not take advantage o f opportunities and many who did left too early. The traditional pedagogical model was inadequate from the institutional and curricular standpoint. The central objectives were not clear. For example, the development o f basic competencies - reading comprehension, logical mathematical analysis - was secondary. Services lacking pertinence were unattractive. Often teachers treated adults like children, not 107 appreciating their efforts. Sometimes there was a lack o f recognition by higher levels o f education. They were pressured to attend to adolescents, thereby displacing adults. There was not sufficient or well-designed promotion to attract and retain students. Some municipalities discouraged participation among those enrolled in social programs. Location was often inconvenient. Funds were sometimes scarce because o f delays at the national level or because o f provincial procedures. Because o f bureaucratic rigidities, services and teachers were not transferred to where needed. Some teachers feared a dismantlingo f the current structure that the flexibility o f some alternative models could prevent institutional strengthening. Supervision and assessmentwere not sufficient to detect problems intime. 22. The provinces did not require much from the national level, but were not ready to propose ambitious targets (because o f funding delays and the shortage in teaching positions). Their requirements related more to symbolic aspects, such as increasing the visibility o f adult education services, improving coordination among national agencies, and providing more funds to the provinces. Regarding possible ways forward, they highlighted the tension between the difficulty o f changing the current system and the low effectiveness o f isolated innovative experiences. A critical point seemed to be whether the provinces would promote more demand when the ability to deliver depended on the availability of additional resources. Provincial authorities were open to mechanisms o f financing by result, based on increases in adult enrollments. Summaryof IndigenousPeoplesPlanningFramework53 23. The Constitutional Reform o f 1994 establishes inArticle 75, among other things: respect for the cultural identity o f indigenous peoples and their right to a bilingual and inter-cultural education; recognition o f the legal status o ftheir communities; and the communal possession and ownership o f traditionally-held lands. It also establishes the need to ensure their participation in the management o f natural resources. Argentina has ratified International Labor Organization Convention 169. 24. Estimates o f the number o f Indigenous inhabitants in Argentina vary from 400,000 to 1.5 million. Inthe 2001 Population Census, 2.8 percent o f households contained at least one person who recognized themselves as indigenous. Provinces with the highest proportion o f Indigenous households are Jujuy (10.5 percent), Chubut (9.7 percent), Neuquen (8.6 percent), Rio Negro (7.9 percent), and Salta (6.4 percent). Almost a quarter o f indigenous households have unsatisfiedbasic needs, compared to 14percent for all households inArgentina. Only 10percent of the Argentine population lives inrural areas, but the share is 16.5 percent for the indigenous population. 25. Among the indigenous population 10 years old or above, the share of illiterates is 9 percent, three times greater than the national average. Slightly less than 80 percent o f the indigenous population 15 years old or above have reached a maximum educational level o f incomplete secondary, while a third have not completed primary. This compares with shares for the population as a whole o f 68 percent and 18 percent, respectively. 53This annex presents a summary ofthe IPPFpresentedbythe Borrower inSpanish. 108 26. At the present time and with the available information, inthe case o f ComponentB (Expand Coverage and Certification of Basic Education for Adults), the Provinces that are currently identified as participants in the Project and would trigger OP 4.10 are Mendoza and Tucuman. The estimated indigenous population inthe target group i s 4,000 inTucuman (60 percent o f the Indigenous population triggering Op 4.10) and 1,665 in Mendoza (64 percent o f the Indigenous population triggering OP 4.10). Inthe case o f Component C (Promote Youth Employment) in respect o f the relevant subcomponents (C.l Employment and Career Orientation) and C.2 (Education and Training), 112 municipalities in 14 provinces fulfill the criteria established in OP 4.10, with an estimated indigenous population inthe target group o f 37,000. 27. The Ministry o f Labor presented the Project before the members o f the Indigenous Participation Council o f INAI, and before the communities o f Amaicha del Valle and Quilmes in the province o f Tucuman in order to provide information on its activities, promote the participation o f indigenous communities inits implementation, and to receive suggestions on the IPPF and the Project. During Project implementation, the consultations and collaboration between the Ministry o f Labor and INAI and the Indigenous Participation Council would continue with the aim o f improving the efficiency and cultural appropriateness o f the specific activities o f the Project in order to increase the levels o f schooling and skills within indigenous communities. 28. As established in the Operational Manual for the Project, for those participating provinces, participating municipalities, or participating Private/Public Sector Entities implementing the adult education sub projects under SubcomponentB.2 or other agreements which have been, or in the future are, identified as triggering OP 4.10, the framework agreements that would be signed with the Ministry of Labor in regard to the Project, would include a requirement to undertake a social evaluation o f the communities o f indigenous populations, and where required, prepare an Indigenous Peoples Plan (IPP), in accordance with the requirements set out in the Indigenous Peoples Planning Framework (IPPF). The IPP would be an integral part o f the Protocols (annual agreements) or other agreements signed between the province, municipality or private/public sector entity and the Ministry o f Labor for implementation o f the Project. Both the framework agreement and the protocol need to be signed before loan funds are made available to the participating province, participating municipality or participating private/public sector entities and would require the prior no objection o f the Bank. The IPPs would be financed through the Project. These mechanisms would ensure the implementation o f an appropriate intercultural approach for indigenous populations. Inaddition, the technical project coordination unit in the Ministry of Labor, as well as Bank staff, would monitor implementation of the requirements o f the IPPF duringProject implementation. 29. Given the nature o f the Project, no negative impacts are expected. Nevertheless, the possibility exists for complaints on the part o f the population. In order to prevent conflict, as well as to resolve problems in an appropriate manner, the normal complaint resolution channels o f the Ministry o f Labor would be used, which operate through the provincial offices o f the Secretariat o f Employment (Offices o f Employment and Professional Training). 109 General guidelines for the social evaluation 30. The Social Evaluation on indigenous populations which each identified province, municipality or private/public sector entity would carry out according to Annex A o f the OP 4.10, will containthe following: Demographic characteristics: age, sex, urbdrural, gender, migration Educational and occupational characteristics, including estimates o fthe Indigenous workers that could certify education levels and receive labor or professionalorientation Estimate o fthe indigenous youth that couldparticipate employment and career orientation or education and/or training through the municipal employment offices Estimate o f staffltutors needed for adult and youth education andtraining services, and youth employment and career orientation whose work would include a framework o f respect and integration o f cultural differences, and the training required for them Estimate o f the materials needed for adult education services needed for the implementation o f the activities with the indigenous communities General guidelines for the preparation of Indigenous Peoples Plans (IPPs) 31. The preparation o f the provincial or municipal plans would incorporate specific strategies o f promotion and communication adequate for indigenous communities in order to guarantee their full understanding o fthe Project. Inparticular, the following is envisaged: (a) the use o fexisting material in the original language; (ii) training o f local agents to register participants in these communities; (iii)promotion and communication campaigns; (iv) mechanisms to provide information and respond to complaints, at the national as well as the provincial level; (v) training for tutors to work with the participants from these communities; and (vi) a description o f the specific modality that would be used to offer these services ineach indigenous community. The provincial, municipal, or private/public sector entity plan could include as well the activities that the province or municipality is developing, in cooperation with its indigenous communities, to improve the quality and access to basic education services and work experience and training opportunities for youth. 32. The provinces, municipalities, or private/public sector entities where the specific activities take place will have the primary responsibility for the preparation and implementation o f the IPPs. They have experience in responding to the needs and demands o f the indigenous population. The Ministry o f Labor plans to hire specialists to advise on the preparation o f the social assessments andthe IPPs. 110 Annex 10: Output BasedActivities ARGENTINA: LifelongLearningand TrainingProject INFORMATION TOTAL OR REIMBURSED COMPONENT ACTIVITY UNIT OF MEASUREMENT VERIFICATION COST SYSTEM (AVERAGE) $ Competency Normalization AJEstablish Ministryo f Labor Competency- Registered competency norms developed by sector RegisteredNorm Registry o f 1 3,62554 Based Norms Certification normalization committees REGICENIS System Supervision and Trained, certified and Ministryo fLabor registered evaluators RegisteredEvaluators Registry 1,979" I REGICEMIS A.2Align Publications and Training with Ministry o f Labor Competency- Materials published and Registry BasedApproach registered REGICENIS 6,800j6 and Improve didactic materials Quality o f IFPs B.l Ministryo f Labor support to Adult Education MIS; school Provincial Adult Certified records; and 126,75" Ministries o f Certification o f Basic supervision Education Education Levelby Adult B.2 Inter- Adult Education institutional Ministryof Labor Subprojects to Certification o fBasic Adult Certified MIS, school 1205* Provide Adult EducationLevelby Adults records, and Education supervision Services Exchange rate: 3.1 Argentine pesos =$I 54 Cost breakdown: Specialized consultancy services and transport cost and per diem for workshop participants 55 Cost breakdown: Specialized consultancy services, sundry materials, and transport cost and per diem for workshop participants Cost breakdown: Specialized consultancy services, copying services j7 Cost breakdown: Teachedtutors salaries, instructional supplies. Reimbursed cost represents 40% o ftotal cost o f activity ($3 17) '*Cost breakdown: Teachedtutors salaries, instructional supplies. Reimbursed cost represents 40% o f total cost of activity ($300) 111 Annex 11: Documents inthe Project File Argentina: LifelongLearningand Training Project 1. Evolucidn Recientey Situacidn Actual de la Educationde Adultos en Argentina by Irene Kit(April 2007) 2. Diagndstico del Desempleo Juvenil(2006) Subsecretariade Programacidn Tecnica y Estudios Laborales, Ministerio de Trabajo, Empleo y Seguridad Social 3, Argentina LifelongLearningandTrainingProject: Economic Evaluationby Cristian Aedo (April2006) 4. Argentina Lifelong Learning andTrainingProject: Social Assessment byMarcela Salvador (October 2006) 5. Marco de Planipcacidn para Pueblos Indigenas: Proyecto de Inversidn en Formacidn Profesional Continuay Empleo, Ministry of Labor (April 2007, revised May 2007). 6. Proyecto: Sistema Nacional de Formacidn Profesional Permanente, Sintesis Ejecutiva, MinistryofLabor. 7. Costos del Proyecto del SistemaNacional de Formacidn Profesional Continua, Ministry of Labor. 8. Programa de Calidad del Empleo y la Formacidn Profesional: Presentacidn Institucional, Nacional Directorate of Professional Training, Ministry of Labor. 9. CertiJcacidn de Competencias Laborales: Lineamientos de Registro, National Directorate of Professioinal Training, Ministryof Labor. 10. Certijkacidn de Competencias Laborales: Dialogo social sobre calijkaciones, empleo y competitividad, Abril 2006, Multilateral Investment Fund (FOMIN), Program of Competency- basedTraining and Certification, and Ministryo f Labor. 11. Marco Conceptual para el fortalecimiento de la Calidad de la Formacidn Profesional, Nacional Directorateof ProfessionalTraining, Ministryof Labor. 12. Dimensiones de Calidadpara la Formacion Profesional (various), Ministryof Labor. 13. Instituciones de Formacidn Profesional: Requisitos de Gestion de Calidad, Ministry of Labor, IRAM. 112 Annex 12: ProjectPreparationand Supervision ARGENTINA: LifelongLearningandTrainingProject Planned Actual ~ ~~~~~~ PCNreview 6/22/2006 6/22/2006 Initial PID to PIC 8/21/2006 8/21/2006 Initial ISDS to PIC 811812006 811812006 Appraisal 1211112006 4/9/2007 Negotiations 2/22/2007 4/30/2007 BoardRVP approval 4/26/2007 6/28/2007 Planned date o f effectiveness 11/30/2007 Planned date o f mid-term review Planned closing date 12/31/2013 Key institutions responsible for preparation o f the project: Ministryo f Labor Bank staff and consultants who worked on the project included: Name Title Unit Polly Jones Lead Operations Officer LCSHD Marcela Salvador Social Protection Consultant LCSHS Cristian Aedo Senior Education Economist LCSHE Juan Prawda Consultant Education Sergio Espana Consultant Education Alexandre Arrobbio FinancialManagement LCC7F Specialist Alejandro Solanot Consultant Financial LCOAA Management Isabel Tomadin Consultant Indigenous Issues EfraimJimenez LeadProcurement Specialist LCSPT Marta Molares-Halberg Lead Counsel LEGLA Xiomara Morel Senior Finance Officer L O A G l Bank funds expended to date on project preparation: 1. Bankresources: $277,662.82 2. Trust funds: Not applicable 3. Total: $277,662.82 Estimated Approval and Supervision costs: 1. Remainingcosts to approval: $10,000 2. Estimated annual supervision cost: $80,00 113 ARGENTINA HeldandDisbursedPortfolio - InMillionsofU S Dollars STATEMENT OF IFC's Held Disbursed 2000 ASF 3.76 0 0 3.85 3.76 0 0 3.85 1998 AUTCL 4.28 0 0 0 4.28 0 0 0 2004 AceiteraGeneral 50 0 20 30 50 0 20 30 2006 Arcor 70 0 0 210 70 0 0 210 2000 BACS 0 6.25 0 0 0 6.25 0 0 2006 BACS 50 0 0 0 13.25 0 0 0 1999 BancoGalicia 57.79 0 0 40.91 57.79 0 0 40.91 2005 BancoGalicia 4 0 0 0 0 5 0 0 0 1997 Bunge-Ceval 0 0 5 0 0 0 5 0 2006 CAPSA 50 0 0 20 50 0 0 20 1995 CEPA 3 0 0 1.2 3 0 0 1.2 1998 F.V. S.A. 1.5 0 4 0 1.5 0 4 0 Grupo Galicia 0 3.06 0 0 0 3.06 0 0 1998 HospitalPrivado 8.4 0 0 0 8.4 0 0 0 1992 Huantraico 0 2 7 0 0 0 0 0 0 2004 Jumbo Argentina 0 39.12 0 0 0 39.12 0 0 LDManufacturing 0 0 5 0 0 0 5 0 Milkaut 0 1.23 0 0 0 0 0 0 1997 Milkaut 5.33 0 9.44 1.44 5.33 0 9.44 1.44 1993 Molinos 0 2 0 0 0 2 0 0 1994 Molinos 0 0.57 0 0 0 0.57 0 0 1996 NeuquenBasin 0 26.4 0 0 0 0 0 0 1999 NeuquenBasin 0 5 0 0 0 0 0 0 2006 Noble Argentina 18 0 0 18 15 0 0 15 2005 PAE - Argentine 105.5 0 15 135 103.53 0 15 135 1998 Patagonia 1.76 0 1 0 1.76 0 1 0 1998 PatagoniaFund 0 8.54 0 0 0 1.65 0 0 1999 S.A. San Miguel 2.76 0 0 0 2.76 0 0 0 2005 S.A. San Miguel 20.62 0 0 10 17.29 0 0 8.33 1995 SanCor 8.7 0 19.89 0 8.7 0 19.89 0 Socma 7 0 0 0 7 0 0 0 1995 Socma 0.94 0 0 15 0.94 0 0 15 1997 T61 3.33 0 5 3.75 3.33 0 5 3.75 1997 Terminal 6 3.33 0 0 1.63 3.33 0 0 1.63 1995 TerminalesPort. 0.5 0 0 0 0.5 0 0 0 2000 Tower Fund 0 0.85 0 0 0 0 0 0 1995 Tower FundMgr 0 0.05 0 0 0 0.05 0 0 1996 Transconor 4.2 0 0 157.58 4.2 0 0 157.58 2001 USAL 9.27 0 0 0 7.27 0 0 0 2005 Vicentin 20 0 15 0 0 0 15 0 1993 Yacylec 0 2.52 0 0 0 2.52 0 0 Total Portfolio: 549.97 122.59 99.33 648.36 447.92 55.22 99.33 643.69 Approvals PendingCommitment Loan Equity Quasi Partic 2001 ITBA 7 0 0 0 2001 Gasnor 21 0 0 20 2006 Arcor Swap 1.1 0 0 0 2004 Banco Rio TFF 20 0 0 50 2005 Vicentin Exp. 0 0 0 5 0 Totalpending Commitment: 49.1 0 0 120 115 Annex 14: Country at a Glance Argentina at a glance 2/7/07 2005 Developmentdlarnond' Population, mid-year (millionsJ 387 551.4 598.7 : + Illiteracy(% ofpopulationaqe 15+J 97 90 93 Gross pnmaryenrollment (% of school-agepopulation) 112 119 107 -Argentina Male 113 121 108 Female 112 117 106 -Upper-middle-incomegroup 1986 1996 2005 2006(e) Economic GDP (US$ billions) 110.9 272.1 1832 210.5 Gross domesticinvestmenVGDP 17.4 18.1 21.5 23.0 worts of goods end senices/GDP 8.2 10.4 24.6 24.6 Trade Gross domesticsavings/GDP 19.3 17.4 27.0 28.4 Gross nationalsawngs/GDP .. 158 24.0 25.7 CurrentaccountbalancdGDP -2.6 -2.5 3 2 Interestpaments/GDP ., 2.7 3.8 i:: Domestic Investment Total debVGDP 47.2 42.0 75 60 Sawngs Total debtservicdexports 828 45.6 120 30.8 Presentvalue of debVGDP Presentvalue ofdebffemrts 1985.95 199505 2005 2006 (e) 2006-09 (e) indebtedness (avgannualgrowth) GDP 2.2 -1 5 9.2 8.5 5.7 -Argentina GDPper Capita 0 8 0 9 8.2 7.3 4 5 worts of goods ands&ces -Upper-middle-incomegroup 7.5 8.8 16.7 15.2 8.4 STRUCTUREof the ECONOMY 1986 1996 2005 2006(e) I Growth of Investment and GDP (n) (% of GDPJ I Agriculture 7.8 6.0 9.4 8.8 40 Industry 37.4 28.4 35.6 35.6 Manufacturing 27.4 18.7 23.2 23.2 20 Serdces 54.8 65.6 55.0 55.6 0 Privateconsumption 70.1 61.1 63.1 -20 Generalgovernment consumption 12.5 11.9 8.5 -40 Importsof goods and serdces 6.3 11.1 19.0 19.2 1 -GDI -O-GDP I I 198595 199505 2005 2006(e) (avwageannualgrowth) Growth Rate of Exportsand Agriculture 2.5 2.7 11.1 8.5 Imports(%) Industry 1.5 2.1 9.2 8.5 Manufacturing 0.9 1.4 7.5 8.5 40 Serdces 2.3 1.9 8.4 7.0 Privateconsumption .. 1.4 7.0 7.2 -10 General government consumption .. 1.4 6.1 8.8 Gross domesticinvestment 4.1 3.9 22.7 19.2 Importsof goods and serdces 14.5 5.9 20.1 12.7 1-W -Exports -O-imports I *The diamonds show four keyindicatorsin the country(in bold) comparedwith its income-groupaverage. If data are missing,the diamondwill be incomplete. 116 Argentina PRICES and GOVERNMENTFINANCE 1986 1996 2005 2006(e) Domesticprices Inflation(x) (% change) 50 Consumerprices 90.1 0.2 12.3 9.8 40 lrnpiimtGDPdefiator 74.5 -0.1 8.8 12.1 30 Govemmenf finance 20 (% of GDP, includescurrentqranfs) 10 Currentrevenue 21.2 16.9 23.7 24.4 0 r- Currentbudgetbalance(cashbasis) -1.0 -0.9 3.6 4.0 10 Overallsurplusideficit (cash basis) -4.1 -2.1 1.7 1.8 -GDP deflator *CPI TRADE 1986 1996 2005 20061e) (US$rnrllrons) ExpoW and Imports Total exports (fob) 6,852 24,043 40,352 46,569 (million USS) Food 1,245 2,560 2,803 Meat 465 1,074 1,642 55,000 7 Manufactures 4,778 14,959 25,122 30,052 Total imports (cif) 4,724 23,855 28,689 34,159 45,000 Food 35,000 Fueland energy 419 922 1,545 1,729 25,000 Capitalgoods 663 5,607 7,011 8,484 15.000 Exportpriceindex(1993=100) .. 116 111 119 5,000 Importpriceindex(1993=100) 106 98 100 99 00 01 02 03 04 05 06b) Terms of trade (1993=100) .... 110 114 120 BALANCEof PAYMENTS 1986 1996 2005 2006 (e) (US$ millions) Current Account BalanceiGDP(56) Exports of goods andserwces 8.449 28,448 46,343 53,373 Importsof goods andserwces 6,906 30,236 34.916 41,838 Resourcebalance 1,543 -1,707 11,426 11,534 10 7 Netincome -4.404 -5,464 -6,207 -5,596 Netcurrenttransfers 2 482 570 618 Currentaccountbalance -2,859 -6,769 5,789 6,557 Financingitems (net) 1,968 2,887 -14,227 -10,200 Changesin net reserves 891 3.802 8,438 3,643 Memo: Reservesincludinggoid (US$rnl//Jons) 2,905 18,324 27,179 30,000 Conversionrate (DEC, /oca//US$j 9.00E-5 1.0 2.9 3.1 EXTERNALDEBTand RESOURCEFLOWS 1986 1996 2005 2006 (e) (US$ millions) Total debt outstandinganddisbursed 52,450 114,423 135,204 129,209 Composition of 2005 Debt IBRD 1,140 5,317 6.881 6,206 (US$ m.) IDA 0 0 0 0 Total debt service 6,281 12,963 7,420 10,326 IBRD 210 608 1,216 IDA 0 0 0 0 Compositionof net resourceflows Officialgrants 0 0 Ofiicialcreditors -420 -5,459 -6,720 Privatecreditors .... 8,117 2,567 2,595 Foreigndirect investment 919 4,768 2,983 2,866 Portfolioequity 0 496 -91 -94 World Bankprogram Commitments 499 1,195 495 1,165 F' 88,714 Disbursements 408 1,077 362 459 Principal repayments 134 282 928 1,134 A IBRD - E - Bilateral Netflows 274 795 -566 -675 8 . IDA D-Othermultilateriri F-Private Interestpayments 75 326 282 340 C IMF - G Short-term - Nettransfers 199 469 -849 -1,015 DevelopmentEconomics 117 MAP SECTION IBRD 33362 70°W BOLIVIA To Tarija 60°W 50°W JUJUY Pilcomayo To PARAGUAY Calama San Salvador De Jujuy To S A L TA Salta FORMOSA San Pedro s CHILE eTUCUMÁN Salado To Cascavel CHACO Formosa á To TUCUMÁNSan Miguel De Tucumán ucumán Paraguay Paraná Paran Copiapó d B R A Z I L CATAMARCA SANTIAGO Resistencia Posadas Santiago Del Estero Corrientes n MISIONES DEL ESTERO Uruguay Catamarca CORRIENTES To A La Rioja Santa Rosa To La Serena LA S A N TA Laguna To F E Santa Maria 30°S Mar Chiquita RIOJA SAN á Cordoba To JUAN San Juan Santa Fe Paran Paraná Paraná Paraná Artigas 30°S Cerro CORDOBA PACIFIC Aconcagua E N T R E Tacuarembó (6960 m) Mendoza R Í O S OCEAN To San Luis Rosario Valparaíso Desaguader To URUGUAY s To Montevideo MENDOZA SAN LUIS a BUENOS AIRES p To Talca m Salad a B U E N O S 0 100 200 300 400 500 Kilometers Santa Rosa Colorado o A I R E S L A P 0 100 200 300 Miles PA M PA Mar del Plata To Los Ángeles NEUQUEN Bahía Blanca Bahía Neuquén Neuquén A Negro RIO NEGRO 40°S n To Viedma Puerto Montt d 40°S e Chubut C H U B U T s Rawson ATLANTIC ARGENTINA a OCEAN i Chico To n Coihaique Comodoro Rivadavia o CHILE Deseado g S A N TA aC R U Z t Chica a ARGENTINA FALKLAND ISLANDS (ISLAS MALVINAS) P A DISPUTE CONCERNING SOVEREIGNTY OVER THE ISLANDS EXISTS BETWEEN ARGENTINA WHICH CLAIMS 50°S 50°S THIS SOVEREIGNTY AND THE U.K. WHICH ADMINISTERS SELECTED CITIES AND TOWNS THE ISLANDS. Río Gallegos Río PROVINCE CAPITALS Stanley NATIONAL CAPITAL RIVERS TIERRA MAIN ROADS DEL FUEGO This map was produced by the Map Design Unit of The World Bank. RAILROADS The boundaries, colors, denominations and any other information Ushuaia shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any PROVINCE BOUNDARIES endorsement or acceptance of such boundaries. INTERNATIONAL BOUNDARIES 80°W 70°W 60°W 50°W SEPTEMBER 2004