*                                                                ' C'  AL
12/10/90
SKTILLS FOR PRODUCIIVITY:
POUCIES FOR VOCATIONAL AND IECMNICAL
EDUCATION AND TRAINING
IN
DEVELOPING COUNTRIES
Education and Employment Division
Population and Human Resources Departnent
The World Bank



Preface
This paper has been written to improve World Bank support for vocational and technical
education in developing countries. It is the second in a series of policy papers on different
sub-sectors of education. The first addressed primary education, and future papers will
deal with higher and secondary education.
The findings and conclusions of the paper are based on the evidence presented in Skills
Training for Productivit Vocat.onal Education and Training in Developing Countries
a forthcoming book by John Middleton, Adrian Zid._rman and Arvil Van Adams. The
policy messages ir the paper have been discussed with ministers and senior civil servants
from labor, education, planning and finance ministries from 53 developing countries, and
with representatives of mulitlateral and bilateral assistance agencies, at four international
and regional meetings organized by the Economic Development Institute.
The paper focuses on the training of skilled workers and technicians by employers, by
private training providers, and by governments in public vocational schools, labor training
centers, and post-secondary technical institutions. Investment in these public sector
institutions has been a significant part of the World Bank's education sector portfolio.
Project-related training in other sectors is also an important source of World Bank
training assistance, but it is not addressed here. It has been treated in some depth
elsewhere, notably the 1987 Annual Operations Review: Education and Training.
The paper was prepared by John Middleton (Task Manager), Adrian Ziderman, and Arvil
Van Adams under the general direction of Ann 0. Hamilton, and the immediate
supervision of Adriaan M. Verspoor. Research support was provided by Omporn Regel,
Robin DePietro-Jurand, and Michel Welmond.



EKECUTIVE SUMMARY                                                      i-viii
INTRODUCTION                                                              1
L   THE CHALLENGE                                                       3
1. SKILLS AND DEVELOPMENT                                         3
Uncertainties in the demand for skills                     3
Barriers to efficient response                             4
IL    POLICY OPTIONS                                                     7
2. STRENGTHENING PRIMARY AND
SECONDARY EDUCATION                                           7
3. ENCOURAGING PRIVATE SECTOR TRAINING                            9
Creating a favorable policy environment                    9
Strengthening employer training                           12
Improving traditional apprenticeship                      14
Reducing regulation of private training                   15
4. IMPROVING EFFECTIVENESS AND EFFICIENCY
IN PUBLIC TRAINING                                           16
Improving market orientation in planning                  17
Improving market response in public training              18
Improving instructional efficiency                        23
Building capacity for policy implementation               23
Diversifying finance                                      24
5. TRAMINI G AS A COMPLEMENT IN EQIUTY STRATEGIES              27
Improving levels of education                             27
Training for rural and urban self-employment              28
Improving access to wage employment for women             30
IIL    IMPUCATIONS                                                       31
6. INTERNATIONAL SUPPORT FOR
VOCATIONAL EDUCATION AND TRAINING                            31
7. IMPLICATIONS FOR THE WORLD BANK                               32
Improving economic analysis for training                  33
Strengthening primary and secondary education             34
Strengthening employer and private training               34
Improving effectiveness and efficiency in public training  34
Providing long-term support                               35
SUMMARY OF OED FINDINGS                                                  36
RESEARCH BASE                                                            38
BIBLIOGRAPHY                                                             43



SKILLS FOR PRODUCTIVITY:
POLICIES FOR VOCATIONAL AND TECHNICAL EDUCATION AND TRAINING
IN DEVELOPING COUNTRIES
EXECUTIVE SUMMARY
Developing countries need to improve productivity throughout the economy if they
are to compete successfully in an era of rapid economic and technological change.
This requires not only capital investment, but also a work force that has the
flexibility to acquire new skills for new jobs as the structures of economies and
occupations change. The level of competence of a country's skilled workers and
technicians is centrally important to labor force flexibility and productivity.
Skilled workers and technicians enhance the quality and efficiency of product
development, production, and maintenance, and they supervise and train workers with
lesser skills. They are found in the modern wage sector, in agriculture and in
the small unregulated enterprises of the informal sector, both rural and urban.
The development of a skilled labor force makes an important contribution to
development.   The challenges are to use employer, private and public training
capacity effectively to train workers for jobs that use their skills, and to do
so efficiently, in developing economies increasingly influenced by technological
change and open to international competition.
In principle, training in the private sector -- by private employers and in private
training institutions -- is the most effective and efficient way to develop the
. -     skills of the work force.  It also has the most direct impact on the productivity
of the economy, if only because more people are at work than are enrolled in pre-
employment training programs. In the best cases, employers train workers as quickly
as possible for existing jobs.   Costs are low compared to training before
employment, and trained workers are placed automatically in jobs that use their
skills. Larger employers often have the technology, and their supervisors have
the expertise, to train in both traditional and newly emerging skills. Even the
very small unregulated enterprises of the rural and urban informal sectors can
provide the training needed for existing technologies and production practices.
Private training institutions must function !n the market place and be adept at
changing enrollments and curricula to fit with the employment opportunities
available for graduates. The costs and benefits of employer and private training
are equitably shared by workers and employers.  Workers contribute to costs by
accepting lower wages during training and benefit through higher wages after
training. Employers accept the lower output of trainees, pay the direct costs of
training, and benefit in the form of higher firm productivity.
In practice, the extent and quality of private sector training is limited in
varying degrees, depending on the nature of the economy and the level of
development in a given country. Economic and social policies often distort the
incentives to employers and workers to invest in skills development, leading to
inaccurate decisions on the kind and amount of training needed.   Moreover,
individuals often have difficulty obtaining credit to finance their training,
especially in longer programs where the costs and risks to returns are high. In
the small and medium-sized firms that employ 60 to 80 percent of private sector
workers in many developing countries, the capacity to train in the new skills



needed to raise productivity is often weak. In addition, training benefits society
in ways that employers and workers do not capture directly, reducing theiin
willingness to invest in skills.                                                    _
These limitations require a continuing role for governments to ensure an adequate
amount and quality of training. In low income countries especially, governments
will need to continue to finance and provide skills training in the immediate
future. But this should be an evolving role, one that seeks constantly to improve
the capacity for training by employers and private providers. This is a long-term
process, and it thus requires ,Aicies that compensate for the limits of the
private sector during the trans..tion period.
This paper proposes policies for using public resources to ensure that the skills
needed are developed, and that equity objectives for the poor and the socially
disadvantaged are effectively addressed. The keys to progress are strengthening
primary and secondary education, encouraging private sector training, and improving
public training.
Strengthening Primary and Secondary Education
Technological change is expanding the cognitive and theoretical knowledge required
for productivity in skilled occupations, increasing the need for workers to havc
the foundation of basic competencies needed to make re-training effective. The
most cost-effective use of public resources in improving the productivity and
flexibility of the work force is thus in general education at primary and secondary
levels. In addition to generating broad benefits to society, general education
directly increases worker productivity and increases the access of the poor and
socially disadvantaged groups to training and wage employment. In Peru, for_
example, workers with a complete secondary school education have a 50 percen
greater chance of receiving in-service training than those with primary education
alone. The recent policy paper on primary education argues that in many countries
additional investment in primary education is of the highest priority to address
the shortfalls in access and quality that jeopardize productivity and income-
earning opportunities, especially for the poor. Training in specific skills is
more effective when it builds on a strong foundation of general education. Primary
and lower secondary education provide this foundation for many traditional crafts
and trades.
In modern sector manufacturing and services, however, where the conceptual content
of jobs is increasingly high, and manual skills correspondingly less important,
the broad competencies gained through good quality academic secondary education
are significant, not only to immediate productivity, but also to the _ility to
learn new skills over the course of a career. Most important of these are the
abilities to communicate clearly in writing and to use mathematics and science
skills to diagnose and solve problems.   Secondary education also improves the
productivity of the self-employed.   In Ibadan,  Nigeria,  70 percent of the
proprietors of urban informal sector firms engaged in radio and TV repair have some
secondary education, as compared to 17 percent of those in soap making.
The extra resources used in many countries to replace part of the academic
curriculum with a few vocational courses would be better invested in improving
learning achievement in the academic curriculum, or in increasing access. These
"diversified" programs are no more effective than academic secondary education in
ii



enabling graduates to enter wage or self-emp]oyment.   The limited training
delivered in diversified programs produces equally limited skills, and does not
much change student aspirations for higher education and white-collar employment.
But it takes the place of more preparation in basic competencies.   And a few
hundred hours of craft training do little to help youth establish their own
enterprises, 4 task that is difficult enough for experienced adults.
Encouraging Private Sector Training
Private sector training can be expanded and improved by creating a favorable policy
environment.  Governments can achieve this by reducing distortions in incentives
and establishing compensatory policies where incentives cannot be improved.
Positive policies to stimulate and develop employer training, and to reduce
regulation of private training institutions, can accelerate private sector response
to a changing policy environment.
Creating a favorable policy environment.  Economic and social policies --
such as high minimum wages, guaranteed public employment, and narrow skill
differentials in publicly administered wage systems -- can distort the incentives
provided to employers and indiN.iduals to invest in skills development, and the
signals of skill needs to training providers. A careful assessment of the impact
of these distortions on training efficiency should be an on-going feature of policy
development  The process can be facilitated by strengthening the linkages between
economic and human resource planning.   Importantly, this assessment should be
incorporated in the efforts of governments and assistance agencies to design
economic adjustment policies, and in the country analysis that supports specific
assistance for skills training.
.flfif However, for sound social or political reasons, it may not always be possible to
change these policies.   in addition, the impact of changes in incentives for
private investment in training will take some time to take effect.   Thus,
compensatory measures may be needed as second-best and transitional options to
adjust for the effects of continuing distortions.   Compensatory measures may
include, for example, exemption of apprentices from minimum wages, or partial
public subsidies to compensate for artificially high training costs to employers
and workers. Selective and partial interventions may also be needed where there
are important social benefits of training.
Encouraglng employer traininp   Where employer training capacity is under-
developed, governments can assi nA by providing employers with information on
external train.ng opportunities, as well as technical assistance for the training
of trainers and the development of enterprise training policies and plans. When
designed to offset specific market imperfections, reimbursement of the costs of
training can have an important stimulus effect on firms' demand for training. In
Singapore, for example, such programs have succeeded in establishing or expanding
training in all firms with more than 5" employees, and more than half of those
employing 11-49 workers. However, reimbursement programs must be closely monitored
to prevent firms from re-packaging already established training for reimbursement,
resulting in windfall gains at public expense. Reimbursement programs should be
considered a transitional device for building training capacity. not a permanent
entitlement program.
iii



Workers in rural areas and in the urban informal sector are increasingly well-
educated, and thus better able to benefit from programs that seek to strengthen
traditional apprenticeship.   Options for governments include support for the
provision of technical information, correspondence courses, textbooks and theory
classes.
Governments can also contribute to the improvement of private training. In Korea,
for example, the government has provided private technical junior colleges with
loans on favorable terms for equipment purchase and staff development.
Reducing regulation of private training. Governments can encourage private
provision of training by reducing barriers to entry into the training market, such
as requirements for use of an official curriculum, and by allowing institutions
to set tuition charges freely.  Hovever, continuing programs of accreditation and
consumer information are needed to protect against exploitive practices.
Improving Effectiveness and Efficicncy in Public Training
With strong support from international donor agencies, including the World Bank,
developing country governments have buiit public training systems. Most public
training is delivered before employment in vocational schools and labor training
centers for skilled workers, and in post-secondary institutions for technicians.
A major policy objective in many countries is to use this capacity more
efficiently; this is especially true in low income countries where employer and
private training is not yet well developed.
In many cases, the record of public training is not satisfactory, often because
it has been expanded to address objectives other than compensating for weak private
training.    These  include  using  pre-employment  training  to  reduce  youth
unemployment, to create a reserve of skilled workers to attract new capitalW
investment, or to divert youth from aspirations for higher education.   In the
absence of sustained growth in wage employment, such policies have led to too much
public training and low levels of placement of trained workers in jobs that use
their skills. Scarce public resources are wasted. Moreover, many countries find
it difficult to provide adequate financing for these public institutions, resulting
in low levels of training quality, and further reducing the impact of training on
productivity.  In Egypt, for example, in an effort to divert youth from higher
education, the government enrolls more than half of upper secondary students in
vocational schools.  Open unemployment among graduates exceeds 35 percent.  In
Bangladesh, Togo and Cameroon less than half of public trainees find wage
employment in their trade; social rates of return to vocational schooling in
Bangladesh are negative.
Governments must be efficient in providing training. The record shows that public
training can be cost-effective when it is capable of responding to market forces
with good quality training that results in high placement rates, and costs are well
managed. Ownership turns out to be less important than management practice. These
factors explain social rates of return to public pre-employment training ranging
from 12 to 25 percent in Botswana, Korea, Brazil and Colombia.   Even where
appropriate objectives are established, effectiveness can be improved by making
training more responsive to market forces.   Efficiency in the use of training
resources can be improved by consolidation and better utilization of training
capacity.  Within the government, strong capacity for policy implementation is
iv



needed not only to make these measures work, but also to manage the complex tasks
of creating a more favorable policy environment for private training. Training
finance needs to be ciiversified to increase the contributions of employers and
workers to ensure the adequate and stable finance needed.
Choosing appropriate objectives. A first step toward more effective and
efficient training is to focus publicly provided or subsidized training more
clearly on areas where the presence of significant external social benefits, market
imperfections, or weak employer and private training capacity reduce role of
private sector training. For example, higher technical skills can be important
to growth in economically strategic sectors or industries where technological
change is rapid. The long duration of such courses, and the risk of losing workers
with transferable skills, makes employers reluctant to Drovide this kind of
training. The costs can also make it difficult for individuals to finance their
own training, especially where they are unable to borrow for their education. The
risk to individuals of a substantial investment in training for newly emerging or
rapidly changing occupations is also high, further reducing incentives to invest.
Government support for private technical education, for example in the form of
scholarships, may thus be needed. Public provision is a reasonable transitional
alternative where private training is not available.
Public pre-employment training of skilled workers in secondary vocational schools
and labor training centers may also be justified when employer and private training
capacity is weak. But such programs must be both effect:ve and efficient, and in
many cases this will require significant changes in institutional practices to
improve responsiveness to market forces.
Training for workers displaced by economic restructuring is another case where
external social benefits justify public intervention. Experience in OECD countries
shows that training can help dislocated workers find new employment if other
complementary elements are in place, including job creation programs, support for
self-employment and small business development, effective labor market information
systems and labor placement institutions, subsidization of the costs of worker
relocation, and income support programs during re-training and job search.
Effectiveness requires that training be linked to demonstrated job availability,
or integrated with efforts to expand self-employment or to establish small
businesses.   Experience in developing countries,  including Chile and Mexico,
suggests that effectiveness is improved by decentralizing publicly subsidized
training to local labor markets through competitive contracting for services from
employers, private training providers, and public training institutions.
Accountability can be improved by linking funding to placement outcomes. The high
cost of these programs calls for special attention to the need for highly flexible
training arrangements in order to minimize training duration.
Improving responsiveness of pre-employment training to market forces. Much
public pre-employment training is isolated from market forces and rigidly
administered.   These factors conxtribute to low levels of job placement for
graduates.   Improving responsiveness requires action at both the national and
institutional levels. At the national level (or state level in larger countries)
the isolation of public training from the economy can be reduced through planning
approaches that rely on labor market analysis, on monitoring of training costs and
outcomes, and on information from employers in determining training supply. The
responsiveness of public training institutions can be strengthened by exposing them



to market forces through policies that link financing to performance in placing
graduates in employment. In addition, modern sector public training institutions
can be encouraged to be entrepreneurial by selling training services to employers,W
generating revenue to improve training quality. This approach is well developed
in a number of Latin American countries, where more than half of the business of
public vocational training institutes is now in-service training and sale of
technology and management consulting services to employers.
Experience in a number of countries, among them Jordan, Brazil, and China, shows
that to respond effectively to market forces, institutions need to develop linkages
with employers that improve the flow of information on training needs and on the
impact of training on worker productivity.   Institutional managers need the
authority to adjust curricula and enrollments to respond to locally identified
training needs and opportunities.
Using training resources efficiently. The quality of training is centrally
important to improving productivity, and thus to the willingness of employers to
hire trained persons. Good training costs more than general education. Adequate
financing for qualified instructors and managers, instructional materials and
maintenance is critically important to the quality of services. Experience shows,
for example, that materials and maintenance costs run to 25-30 percent of the
recurrent budgets of effective institutions. Costs can be contained, however, by
curricula and instructional practices that permit efficient use of training
facilities.  These include "dual" systems that combine training off-the-job in
basic skills and theory with supervised apprenticeship in employment, and
competency-basei modular curricula that enable trainees to enter and exit training
based on acquired skills, facilitating intermittent study along with employment.
Training centers not tied to rigid curriculum requirements of educatior ministries
have been more successful in using these instructional apprcaches than ministry
of education vocational schools.                                                     W
Building capacity for policy implementation.   Implementing responsive,
market-oriented  public  training  policy  requires  strong  and  sustainable
institutional  capacity.    Training  authorities  governed  by  a  Board  with
representatives of employers, worker organizations and government have been
effective in this task.   Given a degree of autonomy and adequate resources,
training authorities can help create a favorable policy environment for private
training, be effective in market-oriented planning, and achieve scale economies
in professional curriculum development, testing, monitoring, and research and
development services.   An important function is the use of training funds to
provide incentives to enable private and public training institutions to adjust
to changing patterns of training needs, to provide training for the unemployed,
and to provide training support for rural and urban informal sector employment
generation programs. Well-paid and well-trained managers and professional staff
are essential to success.
Diversifying Finance.  Finance policy for training should ensure both the
stability of funding needed to develop sustainable institutional capacity for
policy implementation and the level of financing needed to improve training
results. The recent World Bank primary education policy paper argued the need in
many countries to increase public investments in that sub-sector, given the
dominant importance of equity considerations and the presence of significant
externalities. The claim on public resources for vocational education and training
vi



.s    is much less strong in most countries.   A first ob.iactive, therefore, is to
increase the contributions of employers and trainees. Direct cost-recovery from
employers is the most efficient source of financing, either through employer
sponsorship of trainees or through contracts for training services. Cost-recovery
from trainees is an option whera fees are charged for academic secondary or post-
secondary education; otherwise, cost-recovery for vocational programs raises
significant questions of parity.   Income from sale of products and training
services has provided an important source of revenue in a number of countries.
Care must be taken, however, to strike a balance between training and production
of goods to avoid exploitation of students, subsidized competition with private
firms and negative impact on training quality.
Levies on employer payrolls have been a stable and effective source of training
finance, especially for national training authorities and to support technical
assistance and financing programs for the development of employer training. Tney
have also increased employer interest in training.  The risk of levy financing
leading to inefficiency and top-heavy training bureaucracies can be minimized by
channeling financing through national training authorities, periodically reviewing
levy rates, varying levy rates across sectors and industries to reflect training
costs, ensuring that funds are not used for other purposes, and using the resources
to develop enterprise training.   In general, payro'l  levies should be seen as
another transitional mechanism, to be dismantled as training institutions get
stronger and direct finance by trainees and employers is expanded.
Training as a Complement in Equity Strategies
Most of the poor in developing countries are found in rural areas and in the urban
informal sector.   Their principal asset is their labor, and improving their
productivity and earnings is their main road out of poverty. Reform of policies
to encourage economic and employment growth is the first step along this road for
the poor, as well as for women and minorities.   Improving levels of general
education also helps by improving both productivity and access to training.
In the urban and rural informal sectors, traditional apprenticeship, appropriately
strengthened, can be a major source of skills for the economically disadvantaged.
Formal training programs can contribute if they are used as a complementary input
in broaaer income-generation strategies. These strategies include reduction of
regulatory barriers to self-employment and use of information on local markets,
products, and the characteristics of clients in the design of broader programs.
Training alone, especially when oriented to modern sector wage employment and
trades tests, does not address these factors nor does it develop the range of
skills needed for productive self employment in informal markets.
In the modern sector, public vocational education has not been an effective measure
to reach the poor, who can ill-afford to be out of employment for several years.
Moreover, in most developing countries secondary schools enroll a small proportion
of the age group: in such circumstances, vocational schools become second-best
options for academically well-qualified students who are not necessarily poor.
In Thailand in 1979, for example, farmers and laborers comprised 88 percent of the
labor force, but their children held less than 20 percent of the places in
secondary vocationc  schools,  the balance being occupied by the children of
businessmen and government officials.
vii



Additional progress for women can be achieved by reducing distortions caused by
discrimination in employment, including not only laws and regulations, but alsci
entrenched social attitudes among employers. Carefully targeted training in non- 
traditional skills can be effective in en.abling women to enter higher paying
occupations if prospective employers are involved in training design and in the
selection of traineas.
International Assistance
Support for vocational education and training averaged forty percent annually of
multilateral international assistance for education in the 1980s.   With some
notable exceptions, bilateral assistance agencies provide less support for
vocational education and training than multilateral organizations. While this
assistance has contributed to the establishment of (mainly) public pre-emp'.oyment
training capacity, it has reached a very small share of those seeking any form of
education. Future assistance efforts will be more effective if they are better
coordinated anti more closely linked to government reform programs that are based
on a thorough analysis of policies needed to improve the balance between private
and public training.
Implications for the World Bank
The World Bank has been the largest single source of international financial
support for skilis training.   Since the early 1980s, findings from World Bank
evaluations have led to increasing investment in national institutional capacity
and center-based training, and to significant reduction in support for diversified
and vocational schooling. However, as discussed, vocational investments have not
been part of a broader strategy to address policy issues, especially with respect
to the rationales for public training and the encouragement of private training.
Substantial improvement in the analytical and policy content of investment _
operations is needed.
Five actions will improve the quality of World Bank support for skills training.
First, the economic analysis of training should be improved by addressing labor
market issues and establishing clear economic rationales for public investments
in pre-erp'loyment training based on market distortions, weak private training
capacitv  or external social benefits to training.  Second, investments in the
quality of and access to academic secondary education should replace investments
in pre-vocational courses. Third, training investments should address the policy
changes needed to create a favorable economic climate for private training as well
as direct measures to stimulate and improve training in the private sector.
Fourth, investments should include measures to improve the effectiveness and
efficiency of public training. Fifth, World Bank sector work and lending should
support national plans for policy development, and encourage broadly-based
coordination of donor support.
viii



. NTRODUCTION
1.    A competent and flexible work force, one that can acquire new skills as
economies change, is a necessary pre-requisite for economic and social development.
Society benefits in the form of higher productivity and the capacity to adapt to
changing economic circumstances and opportunities. Individuals beno'fit through
higher earnings and enhanced mobility in seeking better employment opportunities.
In the modern wage sector, skilled workers and technicians enhance the efficiency
and quality of production and maintenance, facilitate the adaptation and use of
new technologies, and supervise and train workers with lesser skills. In the rural
and urban informal sectors, the acquisition of skills can increase worker
productivity in self-employment and in small enterprises.
2.    Workers use a wide range of general and specific skills. As the complexity
and responsibilities of jobs increase, specific manual skills becorme less important
than higher-order conceptual skills and theoretical knowledge.  The content of
vocational and technical curricula reflect this continuum. Initial training at
the semi-skilled level gives heavy emphasis to specific manual skills. In post-
secondary technical education, general theoretical and conceptual content receives
more emphasis and can occupy more than half of the curriculum.   The level of
general education required for successful trpining also increases with tn., level
of skills being taught.  More broadly educated and trained workers are better
prepared to learn new skills as production technologies change, and thus to move
up the occupational ladder and increase their earnings over the course of a career.
3.    Most middle-level skills are developed through work experience and training
during employment, financed by enterprises and workers.   Employer training can
be highly efficient.  But, much employer training, especially that in small firms,
is restricted to informal on-the-job training in the skills needed for existing
production technologies.  This is the case for traditional apprenticeship that
provides most of the skills used in the very small, unregulated firms of the rural
and urban informal sectr-s in many countries. On the other hand, larger firms,
and some smaller firms as well, train formally, and have the expertise and
technology needed to develop new skills. Training costs are typically lower than
those of pre-employment training in vocational schools and training centers, and
the economic impact of employer training can be high.   Research in an Indian
factory found that employer training increased productivity by 7 percent.   In
Malaysia employers realize an average return of 20 percent on training investments.
4.    Basic vocatinnal and technical skills are developed before employment in
secondary vocational schools, labor training centers, and post-secondary technical
education institutions. Private vocational schools and training centers provide
a substantial share of this initial training, often at high levels of quality, with
the costs paid by trainees.  There are private technica' schools in Bangladesh,
Honduras, and Thailand, for example, that are much in favor with employers and
whose graduates easily find jobs. At the same time, publicly financed and provided
pre-employment training, while not the major source of middle-level skills in most
countries, is an important part of the national training system.  In addition,
governments train their own employees in ministerial or sectoral training
organizations, and support or deliver a variety of specialized training programs
to help the unemployed find jobs and to improve productivity and earnings in rural
and urban self-employment.
*                                               -1-_



5.    Central issues in formulating training policy objectives and strategies are
when and why governments should finance or provide training in vocational and
technical skills, given the potential scale and efficiency of training by employers  _
and private training institutions.   There is no blanket rationale for public
financing and provision of training. Rather, public resources will be used most
efficiently when training policies are designed to overcome or to compensate for
factors that constrain training in the private sector.   These factors include
distorted incentives for investment in training by individuals and firms, weak
private sector training capacity, and the presence of external social benefits
from training not captured by workers or employers. In addition, governments may
subsidize selected training programs for equity reasons.
6.    These factors require a continuing role for governments to ensure the
provision of an adequate amount and quality of training. But this should be an
evolving role, one that seeks to reduce limitations on private sector training.
This is a long term process that requires polices that compensate for the
constraints on the private sector.
7.    Thus, in most countries, governments will continue to provide training, even
though much expansion can come in the private sector. But public training must
be both effective and efficient, and this will require improved responsiveness to
market forces. Experience shows that public training can be effective and efficient
where economic growth has been sustained, and where training is responsive to
employment opportunities. For example, social rates of return to pre-employment
training or vocational schooling in Brazil, Botswana, Korea and Thailand have been
high  - - from 12 to 25 percent.   Decentralized job training programs have
facilitated economic adjustment in Mexico and Chile. In India and Malawi programs
that combine technical and business training with access to credit havc enabled
carefully selected adults to start small businesses.                                 V
8.    But slow growth in wage employment and unresponsive training systems have
often combined to produce unsatisfactory results for much public pre-employment
vocational schooling and training. For example, in Bangladesh, Togo and Cameroon
less than half of vocational secondary school graduates find wage employment in
their trade, and social retirns to such schooling are very low.  In Bangladesh,
social returns have been negative, due an oversupply of graduates, inadequate
financing, and low student motivation for training and for skilled occupations.
9.    This paper proposes policies that can help governments make the transition
to a more dynamic and efficient use of public resources to ensure that the skills
needed to meet the challenges of economic change are d.veloped, and that equity
objectives for the poor and the socially disadvantaged are effectively addressed.
Progress can be made by strengthening basic and secondary education, encouraging
private sector training, improving the effectiveness and efficiency of public
training before employment and to facilitate economic change, and using training
as a complementary input in programs designed to improve the incomes of the poor
and socially disadvantaged.   These policies have important implications for
international assistance generally.   Effective support from the World Bank will
require substantial improvement in the analytical basis of investment operations,
and heightened attention to broad policy issues.
- 2 -                                        0



I. THE CHALLENGE
1.  SKILLS AND DEVELOPMENT
10.   In an era of economic adjustment and change, development is increasingly a
matter of managing the economy under conditions of uncertainty. Market signals
and mechanisms, and economic management through incentives, are centrally important
in allocating economic resources. In most countries, this market-based approach
to development must be managed in conjunction with severe constraints on public
resources. As a result, training institutions face pressures to increase their
flexibility in responding to economic change. These pressures fall heavily on the
private and public institutions that develop the skills needed to facilitate change
and growth: as economies change, so too must vocational and technical education
and training. Positive public policies are needed to encourage these changes.
Uncertainties in the Demand for Skills
11.   Three macroeconomic factors are increasing the uncertainty regarding patterns
of employment and skill needs in society among employers and training planners:
demographic trends, policy changes that open economies to international trade and
competition, and technological change. Successful population and economic policies
are raising the prospect in some countries of labor shortages and rising wages,
increasing the pressure on employers to acquire new production technologies to
offset rising labor costs. More often, population growth has out-paced economic
expansion, resulting in high levels of open unemployment and low productivity
under-employment that pose significant social and economic problems.
12.   Where opportunities for wage jobs are scarce, self-employment in the rural
and urbar. informal sectors is an important source of earnings. In Asia and Latin
America a quarter of all workers are found in non-agricultural self-employment;
in many countries of Sub-Saharan Africa, the urban informal sector of very small
unregulated enterprises accounts for as much as 60 percent of urban employment.
Typically, more than half of this employment is unpaid work in family enterprises
and in easy entry, low-skilled self-employment. Small, unregulated enterprises
in the urban informal sector, however, often provide more productive, skill-
intensive production, repair and construction services.
13.   Movement away  from policies  that protect domestic  industries  towards
outwardly-oriented trade policies is now well established in many developing
countries.   These policies shift the structure of production from goods and
services primarily sold domestically to those that can find international markets.
The need to compete increases pressures for efficiency and quality in production,
and rapid changes in international trade relationships can lead to rapid decline
and growth in different industries. When countries are heavily in debt, these
economic adjustment policies are often accompanied by reductions in public
employment, especially where inefficiency is high in public and para-statal
organizations.   The net result of these changes in the short term can be
considerable dislocation of workers across industries and sectors of the economy,
and significant changes in the patterns of skills required. Successful adjustment
can lead to resumed economic expansion and improved employment chances, but the
process is often slow and imperfect, and employment problems can persist.
-3-



14.   The introduction of new production technologies has mixed effe-ts on
employment and skill needs. Information-based technologies, such as numer:; ly
controlled machine tools, robots and computers can reduce the demand for workers
skilled in traditional trades, while creating demand for relatively fewer workers
with higher levels of skill. When economies are growing, the jobs lost can be
balanced by opportunities created in other sector  and industries. But the workers
dislocated by technological change must be re-trained for these new jobs. Many
of these jobs require a higher level of cognitive and theoretical knowledge, and
re-training can be difficult if workers lack the foundation of education needed
for training to be effective.
Barriers to Efficient Response
15.   The capacity of employers,  private  training organizations  and public
education and training systems to respond to changing needs in uncertain economic
environments is often limited.
16.   Employer training.   The impact of employer training on productivity and
equity can be limited by four factors. First, government interventions in labor
markets can reduce the incentives to workers and employers to invest in skills
development.  The amount and quality of privately financed training is reduced,
increasing the need for public financing to meet skill needs.   Second, where
management capacity is weak, training capacity is usually even weaker. This is
a major constraint on training by small firms. in developing countries, more than
a third of employment is in firms of less than 100 employees; in smaller countries,
this proportion rises to 60 to 80 percent. In addition, small firms rely heavily
on external training provision for new skills, and thus are hostages to the often-
low quality of public and private training institutions.   Third, even large
employers are reluctant to invest in higher technical education, partly because
of the cost of long programs, and partly because the more general and transferable
nature of higher technical skills increases the risk of losing both the employee
and the training investment.  Fourth, the benefits of employer training to the
disadvantaged are reduced by the tendency to hire and provide the most training
for the best educated employees.   These are less likely to be poor, or to be
members of socially disadvantaged groups, who have less access to basic and
secondary education.
17.   Traditional apprenticeship in the unregulated enterprises of the rural and
urban informal sectors is a highly efficient means of reproducing the skills of
masters.   However, it is weak in developing new skills, and access is often
restricted by the availability of apprenticeship places and by social barriers that
prevent women or minorities from entering certain trades.
18.   Private training.  If allowed to compete freely, profit-making schools and
centers and non-governmental voluntary agencies can meet an important share of
skill needs without public financing.   However, private training is often too
tightly regulated. Ceilings on tuition constrain income, preventing entry into
occupational areas with high equipment and instructor costs. Regulations requiring
private vocational schools to follow the public curriculum reduce flexibility.
The net effect of tight regulation is to reduce the amount of training provided,
especially in more technical occupations with high training costs.
- 4 -



19.   Public training.  Most publicly financed or provided training is delivered
before employment.   Responsiveness and efficiency have been hampered by rigid
planning and management, weak linkages to employers, over-expansion of training
systems, and inadequate financing. These constraints are especially binding when
institutions are called upon to provide rapid re-training for dislocated workers.
20.   (i)   Rigid Rlannin  and management.   Planning for skills supply is often
driven by manpower requirements forecasts that do not take market forces into
account, yielding inaccurate predictions of skill needs (See Box 1). At the same
time, public institutions are shielded from private competition and accountability
for employment outcomes is weak.   And when public institutions try to enter
training markets, they are often discouraged by regulations that restrict their
ability to retain earned income, reducing incentives for entrepreneurial
activities.   Centrally determined and rigidly administered curricula prevent
institutions from responding to locally identified training needs, and from
reducing the duration of training to lower costs.
Box 1: Weaknesses of Manpoiw Requirements Forecasts
In occupations where demand is mainly determined by demographic factors and public employment
policy, it is possible to estimate the volume of training needs in the medium term. Health technicians
and agricultural extension workers are examples. But skil projections that are based on estinates of
future growth in most sub-sectors of the economy have proved inaccurate, for four reasons. First, in
open economies, skill needs are based on output projections, a difficult task in uncertain conditions. In
command economies, they are based on growth targets that are often inaccurate. Second, the model
assumes that only a given combination of skill levels will generate the target output, and thus that
.  employers wil replicate this combination. In fact, employers are sensitive to the price of labor with
different skills, and will re-organizer production to reduce skill content if it lowers production costs.
Third, models assume that a specified type and level of education is needed for a particular job. In
reality, individuals with different levels and types of education and training perform the same jobs at
varying levels of productivity. Fmally, there has often been an uncritical assumption that public training
should meet projected skill gaps, regardless of costs and the existence of alternative, often private,
options for skill acquisition.
21.    (ii)   Weak links to employment.  In the modern sector, public training
institutions have few incentives to establish working relationships with employers.
Employers find little reason to cooperate with vocational schools and training
centers that are unable to respond to their needs with good quality services.
While the skills imparted by modern sector institutions can be broadly useful in
rural and informal sector self-employment, the curricula are weak in preparing
individuals for the market and product opportunities of non-wage employment.
Successful entry into self-employment, and the establishment of small businesses,
require much more than vocational skills -- access to capital and markets, and
business management competence.  But training can be useful if it is based on
knowledge of local market conditions and skill requirements.   Managers and
instructors in institutions focused on training for wage employment, howevcr, often
lack this information, and the training provided is poorly linked to the realities
of self-employment.
-5-



22.    (iii)  Over-expansion.  Post-primary technical education and training has
often simply been expanded beyond the capacity of the economy to provide jobs
(See Box 2). Much of this expansion has been directed at problems of large scale _
youth unemployment. Under conditions of excess labor supply, however, vocational
skills confer little advantage on new labor market entrants. Most entry-level jobs
require few specific skills, and when they do, employers very often prefer to hire
and train broadly and generally educated workers, who often have lower wage
expectations.
Box 2: Labor Mar  Imbalances
Finding wage employment is difficult in countries where the modern sector of the economy is small and
growing slowly, creating few new jobs relative to the numbers of young people entering the labor market
with post-primary education or training. As shown in Box Table 1, the number of educated labor market
entrants can exceed the number of jobs created by a wide margin. In larger or expanding economies, a
better balance between education and employment has been achieved.
BoK Table L Edneated and Trained Labor Force Entrants
and Jobs Created,
Selected Countries - I8
Ratio of Educated
Entrants to Jobs
Country               Created
Niger                    *
Sri Lanka                *
Hungary                  *
Colombia 
Togo                     12:1
Mexico                   12:1
Zimbabwe                 12:1
Benin                    11:1
Chile                    5:1
Turke,                   3:1
Thailand                 2:1
* Net reduction in wage employmenL
Source: Middleton, Ziderman and Adams (forthcoming)
23.   Expansion of vocational training in order to create a reserve of skilled
workers to attract new investment is an unnecess; -ily risky investment for
governments. Most of the vocational skills needed to operate a new enterprise can
be developed quickly and more efficiently after ir.vestment plans are complete and
skill requirements known. The exceptions are higher technical skills because of
the longer training period required.  The creation of com.lex sets of training
agencies and institutions that often provide the same services has been an
unfortunate legacy of successive expansion phases in a number of countries.
-6-



Coordination is difficult given lack of institutional accountability; consolidation
to improve efficiency is even more challenging.
24.   Expansion of public support for vocational schooling has also been justified
on social grounds. One objective has been to change the aspirations of youth for
higher education and white collar employment. Where skilled jobs can be found,
this policy can be effective: Thailand is currently a case in point.  But the
policy is costly and unproductive when youth cannot find jobs that use their
skills. Agricultural secondary education intended to keep youth in rural areas
has been unsuccessful in the face of limited possibilities to enter into profitable
farming and the pull of higher wage prospects in the modern and urban informal
sectors. A second social objective of investments in vocational schooling has been
to provide an "appropriate" form of education for academically less able students.
But where secondary schools enroll only a fractic; of the age cohort, all students
admitted to any form of secondary education are academically capable. This is the
case in most developing countries. In 1986, secondary enrollments in Africa, Asia,
the Middle East/North Africa, and Latin America were 23, 40, 48 and 52 percent
respectively of the relevant age cohort. Academically able students tracked to
vocational schools see occupational training as a second-best choice.   Their
motivation to learn is often low, and their willingness to take up the trade for
which they have been trained lower still.
25.   (iv)   Inadequate financing.  Governments have had difficulty meeting the
costs of vocational education and training, which can be two to three times higher
than those of academic education because of small classes, high facility, equipment
and instructional material costs, and the need to pay higher salaries for competent
instructors. When these costs -- especially the non-salary costs -- are not met,
training outcomes are inadequate and the employability of graduates reduced.  In
Peruvian cities, secondary vocational education contributes less to worker earnings
than general secondary education. The resources needed to improve flexibility in
responding to economic change cannot be found, particularly in colAntries where
economic conditions lead to restrained public budgets.   A vicious cycle is
established, especially where systems have been overly expanded. Graduates have
difficulty finding skilled employment, and falling training quality makes the
search even more tenuous as employers lose confidence in the training system.
26.   To overcome these constraints, governments need to have an explicit strategy
for skills development which will usually include several elements: (i)
strengthening basic and secondary education; (ii) encouraging private sector
training; and (iii) improving the effectiveness and efficiency of public training.
II. POLICY OPTIONS
2. STRENGTHENING PRIMARY AND SECONDARY EDUCATION
27.   Strengthening general education at primary and secondary levels is the first
priority for public policies to improve the productivity and flexibility of the
work force. In addition to generating broad benefits to society, general education
directly increases worker mobility and productivity, and increases the access of
the poor and socially disadvantaged groups to training and wage employment. In
Peru, for example, workers with a complete secondary school education have a 50
-7-



percent greater chance of receiving in-service training than those with primary
education alone. The 1990 World Bank policy paper, "Primary Education" summarizes
the evidence on the contribution of education to development and emphasizes the
importance of primary education as the foundation upon which further education and
training can build. Training in specific skills is more effective when trainees
have strong literacy, numeracy, and problem-solving skills.  Primary and lower
secondary education provide this foundation for many traditional crafts and trades.
Primary education helps improve the productivity and incomes of the poor in rural
areas.
28.   Especially in modern sector manufacturing and services, where the conceptual
content of jobs is already high and increasing further, the skills gained through
good quality academic secondary education are important, not only to immediate
productivity, but also to the ability to learn new skills over the course of a
career. Secondary education also improves the productivity of the self-employed.
In Ibadan, Nigeria, 70 percent of the proprietors of urban informal sector firms
engaged in radio and TV repair have some secondary education, but only 17 percent
of those in soap making. Possession of a secondary certificate has also been shown
to improve the chances of obtaining wage employment for women.
29.   In many nations,  educators have sought to improve the contribution of
secondary education to the employability of graduates by replacing some of the
academic program with vocational courses to create "diversified" curricula.
These courses typically occupy 20 percent or less of student course-work; often
as little as six hours of vocational instruction is offered in a school week.
Heavily supported by the World Bank and other assistance agencies in the 1970s,
this weak form of vocational schooling has had generally disappointing outcomes.
While diversified schools have a higher cost per student, they are not more
effective than academic secondary education in enabling graduates to find wage jobs
or work in the informal sector.  There are three reasons.  First, only low levels
of vocational skills are developed, and they are acquired at the expense of the
more general communication, science and mathematics skills that employers value.
Second, they do not materially affect the post-school choices of students.
Students can continue on to higher education, and their aspirations remain in that
direction.   Finally, most countries have been unable to afford the competent
teachers, equipment and instructional materials needed to deliver the courses at
an acceptable level of quality. Poor quality, in turn, confirms the suspicions
of parents and students regarding the second-class status of vocational courses
and skilled employment.
30.   The additional resources used for diversified curricula are better invested
in improving learning achievement in or access to academic secondary education.
If the quality is good, academic secondary education can contribute substantially
to individual productivity and the ability to benefit from further training by
developing students' capacity to learn, to solve conceptual problems, and to
communicate. Improving the quality of secondary education is an enormous challenge
to most developing countries, and meeting this challenge would make a significant
contribution to economic and social development.  Improving student achievement
in mathematics and science is especially important to understanding modern
technologies and production processes.
- 8-



31.   There is increasing interest in "technology" education, which seeks to
develop a more general understanding of applied science and mathematics in the
context of technology and production, instead of developing occupationally-
specific skills. These courses do not require investment in the costly workshops
and equipment that training programs need to replicate the work environment. While
technology education programs are too recent to have been evaluated,
experimentetion may be warranted. A major constraint on large-scale implementation
would be the need for extensive teacher training.
3. ENCOURAGING PRIVATE SECTOR TRAINING
32.   Private sector training can be expanded and improved by creating a favorable
policy environment.   To achieve this, governments can reduce distortions in
incentives, and establish compensatory public policies for subsidizing or providing
training to ease the transition and as second-best policies where, in the short-
term, incentives cannot be improved. Positive policies to stimulate and develop
employer training, and to reduce regulation of private training institutions, can
accelerate private sector response to a changing policy environment.
Creating a favorable policy environment
33.   Good labor market information is a prerequisite for the efficient functioning
of labor markets and socially efficient investment in training.   For example,
scarce skills will command higher wages, creating incentives to individuals to
invest in acquiring these skills. However, governments pursue social and economic
goals through policy interventions that affect employment and relative wages, and
thus distort the signals to individuals, employers and trainers as to the amount
and type of training that society needs.
34.   Distortions take a variety of forms.   Policies that guarantee public
employment artificially increase the demand for the formal education and training
qualifications that are required for entry to public sector jobs. Excessive social
security charges on wages raise the costs of labor generally, reducing both
employment and training. Government interventions in setting wages can result in
artificial prices for different skills that do not necessarily reflect their value
in production.   Policies that compress wage differentials  for workers with
different levels of skill will reduce incentives to acquire skills. High minimum
wages make employers less willing to offer entry-level training that would be
otherwise provided if appropriately lower "training wages" could be paid, enabling
employers to shift the cost of training in transferable skills onto trainees.
These policies shift individual demand for general skills training from employer-
provided training to pre-employment training, usually at public expense. In many
countries weak mechanisms for labor placement and inadequate labor market
information systems compound the negative effects of policy distortions on the
demand for training.
35.   Distortions are greater in inward-focused economies than in export-oriented
economies, because governments often intervene in labor and capital markets to
protect domestic producers from external competition. These policies usually favor
capital-intensive development, which has slowed overall employment growth in the
modern sector and often reduced the demand for certain middle-level skills. In
such cases, the major source of employment growth is provided by the informal
-9-



sector. Pre-employment skills training oriented to needs of the modern sector is
often not approrriate for informal sector jobs, with the result that training
efficiency, as reflected in training-related employment, is low.
36.   Reducing distortions  in incentives. An appropriate modification of the
policies that create these distortions would improve the accuracy of signals of
skill needs, increase private investment in training, and thus increase the
efficiency of a nation's overall training effort. However, the impact of economic
and social policies on signals and incentives to train is complex, and not always
well understood.   Better integration of economic and human resources policy
analysis is needed if planners are to understand the wider costs and benefits of
macroeconomic and social policies, as they impinge on training markets.   The
correction of policy-induced market imperfections may prove, on balance, to be
socially undesirable, or politically unacceptable.  In such cases, integration
enables planners to design training policies to offset distorted signals and
incentives.
37.   Designing public training policies.  Market imperfections represent one of
four reasons for public intervention in training.   The other reasons include
capturing external benefits, offsetting weak private training capacity and
improving equity. (See Figure 1).
Fure L Efficncy rabonaks for pubc trainig poicy
Reason for State                      Training   Training    Complementary
Intervention:                         Finance    Provision    Policies*
Market imperfections                    A         N         P     Deal with source of
market imperfections
External benefits of training           P         N
Weak private training capacity           N        A/P       P     Build private
training capacity
Equity                                  A         N         P     Reduce subsidies to
trainee peer groups.
Introduce selective
scholarships
Key. P = Preferred policy approach.                 N = Not justified.
A = Acceptable (next best) approach.            * = Policies may not be feasible.
38.   (i)   Compensating for market distortions.   Training subsidies may be
required to compensate for distortions in market signals and incentives. For
example, if governments wish to avoid the disincentive effects of minimum wage
legislation, and repeal of this legislation is not feasible, some legislative
compromise, such as exempting trainee wages from the minimum, may be possible.
In the absence of such arrangements, subsidizing apprenticeship wages is a second-
best measure. Social policy favoring narrow wage differentials between skilled
- 10 -



and unskilled workers reduces individual incentives to acquire skills.  Then,
building new schools and training capacity will result in wasted resources, unless
subsidies reduce the private cost of training and increase the net benefits of
skills development to individuals and enterprises. To the extent that employment
in the modern sector is not growing because of distortions in factor prices
encouraging capital- intensive development, the placement of grad.aates will suffer:
potential trainees will have less incentive to enroll, and the capacity of the
training system will be under-used. Adjusting training capacity downward would
be warranted under these conditions, along with emphasis on training for the
informal sector.
39.   Individuals have difficulty borrowing in commercial financial markets
to finance training:   human capital is rarely accepted as collateral.   The
comparatively high levels of uncertainty associated with the returns to investment
in training further reduce the bankability of skills development. The longer the
training, the greater the costs and the higher the risk. These factors can lead
to under-investment in training by individuals. Individual training loans address
the problem of imperfect capital markets, but do little to reduce the risk factor,
and can be difficult to administer.   Other compensatory policies, such as
subsidization of training costs, may thus be needed.
40.   (ii)  Capturing external benefits.  individuals and employers invest in
training because they expect higher earnings, productivity or profits; they will
not capture, and therefore do not take into account, any external benefits that
may accrue from a better trained work force -- such as improved flexibility and
competitiveness of the economy in responding to new economic opportunities. Thus,
from society's point of view, they may not invest in enough training.   The
externality case is particularly persuasive for retraining dislocated workers.
Society captures the largest share of the benefits of a more efficient economy,
and subsidization of programs to offset the costs of labor mobility to workers is
fully justified.
41.   However, the relative importance of external benefits is typically lower for
pre-employment training than for general education. Thus, in most cases, external
benefits alone can justify only a very partial public subsidy of training to
ensure an adequate supply of skills. On externality grounds, public subsidy of
pre-employment training is most appropriate for broader skills that increase
worker flexibility, and for skills that support specific public investment
strategies, such as expansion of a particular industry. These conditions are most
applicable for higher technical education, which incorporates a relatively greater
amount of conceptual and theoretical content that improves worker flexibility.
42.   (iii)    Offsetting  weak  private  training  capacitv.    While  market
imperfections and external benefits can justify public financial support of
training, they do not establish a rationale for government to provide the
training. Government provision may be economically justified, however, where the
training capacity of private enterprise is weak and where private training
institutions are underdeveloped. This argument weakens as private and enterprise
training capacity develops. When the public sector provides training it should
be accompanied by attempts to strengthen and build employer and private training
capacity.
*                                 ~~~~~~~~~~~- 11-



43.   (iv)   Improving equity.   Public subsidization of training, on equity
grounds, for the poor, women and minorities may be justified when carefully
targeted  to  ensure  that  only  those  in need benefit.    However,  blanket    W
subsidization or public provision of pre-employment vocational schooling or
training on the rationale that these programs generally serve the poor or
underprivileged is likely to be both wasteful and inefficient. Where access to
secondary education is low generally, a large proportion of the students in
vocational programs are not poor. The issue in vocational education is then
really one of parity with studencs receiving subsidized academic secondary
education.   The preferred policy is to reduce subsidies to both relatively
privileged groups, but if this is not possible, subsidies equivalent to those
provided to academic secondary education may be required for vocational programs.
44.   Responding to varying economic contexts.  The economic environments of
training policy development vary widely, and this will require different patterns
of transitional compensatory policies in different countries. The skill needs and
incentives  for  private  investment  in  training  in  outwardly-oriented
industrializing countries, for example, will be different than those of largely
agricultural societies, those with small modern sectors, and those with high
levels of domestic protection. In the former case, technological change and the
need to respond to international competition increase needs for higher technical
skills, and market incentives for private and employer investment in training are
more efficient.   Private sector training can be more rapidly and effectively
expanded. In the latter cases, modern sector employment is limited, a diverse set
of training activities is needed for rural and informal sector emDloyment, and
employer and private training capacity is likely to be weak. Governments must
take an active role through compensatory financing and provisi3n of training,
but the range of training needs, and the small scale of operation, will require
high levels of flexibility in policy implementation, and great efficiency, given
resource constraints and pressing needs to irvest in basic education.
45.   As development proceeds, governments can expect to face the need to modify
training policies. With changes in economic policies patterns of incentives for
private training will change as well. Economic growth will shift the patterns of
skills needed in the economy. Private sector training capability will improve.
This dynamic context for public training policy reinforces the need for a high
level of integration between economic and training policy and planning processes
to enable training to adjust to changing economic environments.
Strengthening Employer Training
46.   There is a strong Prima facie case for the cost-effectiveness of employer
training in the modern sector, whether public or private.  The match between
skills demand and training supply is readily made. Firms play a central role in
in-service training.  Because most technological innovation enters developing
countries through enterprises, the equipment and technical information needed to
develop new skills is often found in firms.  Informal learning on-the-job is
central to employer training. A continuous process, it can be stimulated and
intensified where enterprise personnel systems recognize and reward improved
productivity.   But learning on the job is often insufficient, and employers
supplement it by training workers on entry through formal on-the-job training,
- 12 -                                       O



organized instructional programs provided by the firm or purchased from external
training providers, and regulated apprenticeship.
47.   Information about training opportunities and training programs in human
resource management can help expand and improve the quality of training by private
employers. Public subsidies for private employer training are likely to be most
efficient when they are based on a clear economic justification.   Market
distortions may justify subsidization of trainee wages, or grants to offset
training costs. Partial subsidies may also be justified where the general skills
component of training is high, raising the risk of lost employer investment; such
subsidies may in fact be most needed in highly competitive labor markets. When
employer training expertise is weak, subsidies combined with information on
training opportunities and technical assistance can stimulate training
(See Box 3).
48.   However, some larger firms may merely "re-package" their existing training
to qualify for subsidies with no net increase in provision or training quality.
Protection against re-packaging requires administrative control and monitoring,
which may be costly where training is spread across many firms.   If the
procedures are too cumbersome, many firms will not participate. Tax exemptions
primarily benefit large enterprises in the more dynamic parts of the economy and
may represent a windfall gain to the firm and a needless expense for the
government.
49.   Reimbursement for training at external training institutes can be more
easily monitored, and permits smaller firms to take advantage of scale economies
in training costs. In general, the effectiveness of training subsidies can be
improved by targeting them on new and improved training in designated occupations,
and by flexible eligibility criteria that make it easy for firms to qualify
programs of varying duration. This is especially important where subsidies are
financed from payroll levies to enable firms of different sizes to obtain benefits
in return for their levy contribution.
50.   Subsidization of private employer training should be a transitional policy.
As employer training capacity develops and market distortions ease, firms should
be expected to finance their own training. Enterprise associations have been
successful in establishing training operations in many couptries and have been
especially helpful in enabling small firms to achieve scale economies through
cooperative training.   Governments can assist in the establishment of these
associations and training operations by offering technical assistance and start-
up grants.
-13-



Box 3: Training Subdcs in Singapore
With a low rate of population growth and rapid industrial expansion, Singapore developed a strategy to
improve productivity by raising the level of technology in production, reducing low-paid unskilled jobs
and upgrading the skills of the work force. A government program for reimbursement of company
training expenses, administered by the Economic Development Board, is a major component of the
strategy.
The Skils Development Fund was established with a levy on the wages of unskillcd workers to upgrade
the work force through training grants to enterprises. The Training Grant scheme has been successful
by most measures. By 1985 the Fund had awarded grants to 23,000 applicants. Training reached
240,000 work,rs, or 21% of the labor force. Most early impact was found in larger firms, but
aggressive ehorts to make small firms aware of external training courses and to provide support for
industry associations has increased impact on smaller firms (Box Table 2).
Box Table 2: Profile of Successful Applicants, Singapore Skils
Development Fund
FY 1986                        FY 1988
Employment                  Percent                      Percent
Size of     Number of    Recevtng        Number of      Receiving
Fium       Companies      Grants        Companies      Grants
10           50,405         2.2           60,536        8.0
11-49          9,862        22.8           10,287        53.0
50-99           1,183        66.4           1,319        100.0
100-199          603         87.0             616        100.0
200-499          367         99.7             358        100.0
500+             217       100.0             224        100.0
The steady growth in the use of the Fund can in part be attributed to an incremental strategy of
implementation. In the first two years, efforts were focused on creating awareness of the Fund among
employers, with aid ho reimbursement of approved courses. In the second stage, priority was given to
in-plant training, and reimbursement increased to 90% of costs as an additioxal incentive. The third
stage encouraged the development of corporate traiing plans by paying grants in advance of expenses,
reducing interest costs to firms. In the current stage, the focus is on smaller enterprises and training
quality.
Sources: Pang and Salome (1987); Skills Development Fund (1989).
Improving traditional apprenticeship
51.   Historically, in many parts of the world, small enterprises sold training
as well as products. Apprentices paid masters a fee, in cash or in labor, in
return for instruction in a trade. When demand for their product was low, masters
made training a major actis:lty. The tradition continues in North and West Africa,
and to a lesser extent in Latfn America. Through apprenticeship, individuals can
acquire the broad range of practical and business skills necessary for self-
employment.   Rising  leve'ls  of education among  informal  sector workers are
- 1.4-



.      contributing to improved productivity. Untouched by minimum wage legislation and
labor codes, apprentices finance their own training, a fact that is gaining
significance in an era of limited public resources.
52.   Traditional apprenticeship can have a posltf.ve impact on employment and
earnings, and poor and rural individuals can benefit. However, masters mostly
pass on their skills and knowledge to -pprentices; they rarely create new
knowledge. The absence of any formal instruction favors acquisition of practical
skills vital to production,  sales,  and management, but limits theoretical
understanding.  Apprentices learn enough Zor commercial survival, but not enough
for significant improvement in productivity. The impact of apprenticeships on the
economy is limited by the number of masters willing to take on apprentices, and
by the number of apprentices that masters are able to absorb effectively. Social
customs can restrict access of women and minorities co certain, often more
profitable, trades.
53.   Great caution should be exercised in considering interventions into the
traditional apprenticeship system. Left aione, the system meets the overwhelming
share of training needs in the informal sector of many countries, at no cost to
the government. Rising levels of education suggest that governments can improve
the theoretical knowledge of masters and apprentices through correspondence
courses, or perhaps by evening or weekend classes in public training institutes.
Technical information. services and vocational textbooks are further options. But
these interventions must not upset the traditional master-apprentice relationship
that is central to effectiveness.
R.educing Regulation of Private Training
O       54.   Governments often overlook private training when they assess training
capacity.   In many countries, however, private schools and training centers,
operated either as non-profit organizations or as for-profit firms ("proprietary"
training), provide a large share of skill formation, often in dynamic skill
markets (See Box 4). Most private vocational schools, colleges and training
centers in developing countries offer courses in commercial and business
occupations, for which capital costs are comparatively low, and instructors are
in relatively abundant supply.
55.   Private training has much to recommend it.  The use of private training
capacity can often be improved simply by taking private provision into account in
planning for skills supply. Freedom from civil service salary regulations and
ministry of education curriculum control gives private institutions more
flexibility in responding to changing demands for skills. Where information about
costs and training outcomes is available to consumers, private institutions are
held accountable for price and quality in the market place.   In practice,
consumers often find it difficult to assess the quality of private training
relative to its price, with the result that the quality of private training
varies considerably. Some of it is undoubtedly low, with problems of deceptive.
advertising and exploitation. But many private technical schools, both
proprietary and church or NGO-operated, produce superior students who are sought
after by employers.
*                                              - 15 -



Box 4: Private Tramiing Markets in Zimbabwvc
With more than a million workers in wage employment, Zimbabwe has one of the largest markets for
modern sector skills training in Sub-Saharan Africa. Growth in the sector has been constrained by
macroeconomic factors, and employment growth has been slow, reducing the efficiency of public
training. Only 1,000 apprentices could be placed in 1986 out of the 110,000 that applied. It has been
difficult to pay the salaries needed to retain qualified instructors in technical colleges and the
polytechnic. A rebate scheme operated by the Zimbabwe Manpower Development Fund (ZIMDEF)
to encourage training by employers has yet to function smoothly. In 1987, only 77 firms received
rebates, covering the training of 640 employees.
At the same time, a vibrant private training market has developed, driven by increasingly high levels of
general education and traditions of self-improvement through education and training. Correspondence
colleges enroll approximately 200,000 persons, of whom several thousand are enrolled in technical
fields such as electronic engineering, and even more in commercial and banking fields, stimulated by
reimbursement of fees to individuals by ZIMDEF and by employers. In addition, more than 40
private colleges offer general; commercial and some technical courses during the day and in the
evening, enrolling several thousand working students willing to pay for their instructkon. The colleges
have also ventured into the in-service upgrading market, successfully offering intensive courses in
specific business skills to more than 1000 persons employed in 350 firms. A range of private firms
have entered the management training market, including training conz-rilting and management frms,
international accounting companies, and enterprises with excess training capacity.
The government polytechnic has also entered the private market, provi Hing technical and engineering
courses in the evenings for a fee. Enroling 600-700 students at a "., these courses generate
revenues sufficient to pay high salaries for well qualified part-tine aI'u-.tors and to earn a profit of
20 percent.
Source: K King (1990)
56.   Private schools tlourish i.ien labor markets rew(rd private spending on
training and when schools are free to operate with miL  mal regulation.  Good
private schools increase the exposure of public instit.ntions to competitive
forces, providing a stimulus for improved efficiency antd quality. But private
institutions are often subject to strict government regulations, the most onerous
of which is control of prices. Ceilings on tuition fees restrict competition with
subsidized public institutions, and prevent private schools from developing the
resources needed to respond to newly emerging training needs. Regulation should
be limited to protecting consumers through public information on the quality and
stability of the proprietary training institutions, as well as the relevance of
courses offered to labor market needs.   A formal and continuing process of
accreditation is a good way to establish minimal standards of quality.
Associations of private schools can be encouraged to establish accreditation
standards and requirements for public information as conditions of membership.
4. IMPROVING EFFECTIVENESS AND EFFICIENCY IN PUBLIC TRAINING
57.   Governments must be effective and efficient in compensating for weaknesses
in employer and private training. Much can be gained by choosing appropriate
objectives. Planning needs to be better oriented to labor markets. Effectiveness
- 16 -                                          a



.c can be further improved by increasing the responsiveness of public training
institutions to market forces, including job training for the unemployed.
Efficiency in the use of training resources can be improved by better
institutional and instructional practice.   Strong institutional capacity for
policy implementation is needed not only to make these measures effective, but
also to manage the complex tasks of creating a more favorable policy environment
for private training. Training finance needs to be diversified to increase the
contributions of employers and workers to ensure the adequate and stable finance
needed.
Improving market orientation in planning
58.   Meeting the demand for skills training efficiently requires that planning
systems identify and respond quickly to changing employment opportunities and
skills demand.  It is essential to develop accurate sources of information on
skill  needs  and  training  capacity  in  enterprises  and  private  training
institutions, as well as in public agencies.  Historically, fixed-coefficient
manpower requirements forecasting has been the main planning method for skills
training, but it is highly inaccurate and inflexible (Box 1). New approaches are
needed. Patterns of economic change and growth must be interpreted to identify
skills that require relatively extended periods of study and that will be
strategically important to the economy in the medium term. Better monitoring of
labor markets to identify inicentives for training and shorter-term changes in
skill demands, combined with evaluation of training costs and outcomes, is needed
to improve management of the training to respond to short term training needs.
59.   Higher technical skills are more likely to be strategically important to
.     growth where economies are changing rapidly. A current example is the need for
accounting technicians in Eastern European countries moving from command to market
economies.   The kinds and levels of skills likely to be needed depend on a
nation's comparative advantage, recent record of growth in different industries,
and strategies for economic expansion and technology development. Nations giving
emphasis to growth in food processing will have different skill needs than those
giving primary attention to expansion of heavy manufacturing, electronic assembly,
or clothing manufacture.
60.   Using information on placement and unemployment rates by skill levels,
economic returns to different levels of training, current vacancy rates, and
employer projections of employment needs, planners can identify skilled
occupations where employment opportunities are likely to expand in the medium
term. Expansion of training supply in these areas is warranted, often balanced
by cutbacks in skill levels where demand has slowed -- and where there is no
reason to anticipate dramatic upswings. This is essentially a process of informed
judgement. Planning procedures of this nature have been established in Colombia
and Brazil, and in Malaysia. To meet anticipated demand, first recourse should
be to expanded employer and private training.   Expansion of public training may
be needed, but should generally be held well below anticipated demand for skills
in recognition of the ability of employers and priv..te trainers to meet any excess
skill needs.
61.   For skills that take less time to develop, planning should be focused on
improving irnformation for efficient management of training supply.   Data on
-17 -



vacancy rates, unemployment by skill level, and trends in wages and employment
provide evidence of market flexibility and efficiency in adjusting to economic
change. Analysis should identify labor market rigidities that impede flexibility
and distort the signals to individuals and enterprises affecting skills
development. Structural shifts in wages and employment suggest the demand for and
supply of skills. Monitoring the costs and results of training complements labor-
market analysis.   Studies of graduate employment and wages by skill level,
institutional capacity ut. .,_ation rates, and application-admission ratios can
produce useful information about the market demand for skills training. Cost and
tracer studies can yield estimates of the social and private returns to
alternative modes of training, strengthening the use of efficiency criteria in
determining training supply. Small-scale surveys of enterprises in local labor
markets can provide information on wage and earnings profiles for different types
of skills and offer qualitative assessments of different kinds of skills training.
Enterprises can also provide information on the effects of policy-induced barriers
on employment and on other factors that influence the demand for specific skills.
62.   Because the success of labor-market analysis depends on the availability of
timely and accurate labor-market information, developing a labor-market
information system is a high priority. It not only guides planning for training
but also alerts policy makers to labor market inefficiencies, informs career
counselling, and facilitates job placement.
63.   More directly, simply building good linkages between training institutions
and enterprises can improve the flow of information on skills demand and the
success of training in meeting the skill standards of employers.  Creating a
permanent pipeline of market information on the demand for skills and their supply
is crucial as a guide to improving training quality and efficiency. Among the
more effective mechanisms are joint employer/school advisory and curriculum
development committees, vocational guidance and placement activities, surveys of
local employers, and training strategies that include periodic, supervised
placement of trainees in work experience.   Forging linkages with rural and
informal sector employment requires the development of a base of information on
clients, markets and product opportunities.
Improving market response in public training
64.   The flexibility of public training systems needs to be substantially
improved if they are to be respond efficiently to economic change. Flexibility
is improved when training is separated from education, institutions specialize to
meet the skill needs of different markets, training institutions have the
authority needed to adjust training to local labor markets and are accountable for
employment outcomes,  and training quality is satisfactory.   These are all
characteristics of the most successful vocational training institutes in Latin
America (See Box 5). The Latin American and other similar experiences demonstrate
that management processes and structures rather than ownership are the key
determinants of success.
65.   Separating education and training.  Education and training place different
demands on systems,  institutions, instructors and administrators.   Both are
essential to productivity, yet they are difficult to administer effectively within
the same institutional framework. Training is more effective when delivered by
- 18 -



Box 5: The Latin Ameican Model of Voatonal Training
In 1987, vocational training institutes (VTls) in twelve Latin Amerikan countries enrolled more than 3
million persons, equivalent to 37 percent of total secondary school enrolments in the same countries.
VTIs are notable for dynamic relationships with employers, high-quality training, and responsiveness
to rapidly changing and competitive environments.
VTIs are independent of formal education; they are financed by levies on enterprise payrolls; and they
are governed by representatives of workers, employers and the state. Autonomy has facilitated
flexibility in responding to the needs of employers; the stability of payroll tax financing has nurtured
autonomy and training quality, and tripartite governance has strengthened accountability. VTIs
specialize to serve specific sub-sectors and industries, such as textiles and petro-chemicals, often with
financial support from industry associations.
VTls have diversified services to meet changing needs. In-service upgrading training now accounts for
two-thirds of enrolments. Training is delivered on the premises of employers; assistance is provided
to develop the training capacity of large and smaller employers. Management consulting and support
for the introduction and adaptation of new technologies is provided under contract.
The payroll tax flnancing scheme is changing. In Brazil employers can hold back portions of the levy
to use in direct contracting for services, improving accountability. In Chile, the levy-based subsidy of
the VTIs has been replaced by a system of competitive contracting for services from the public and
private sectors. In Colombia, policy makers are considering the elimination of the payroll levy, and
requiring the VTI to compete for public funding after 20 years of successful institutional development.
Source: CINTERFOR (1990).
institutions with a degree of autonomy and flexibility that is difficult to
achieve in formal education systems. Clear separation of education and training
provides advantages to both, enabling educators to concentrate on their essential
mission, and trainers to develop the specialized technical and managerial capacity
needed to link training more closely to the economy.
66.   One way to separate training and education is to concentrate skills training
in institutions run outside of the education ministry. This approach is most
clearly needed in training skilled workers for wage or self-employment.
Specialized technical schools oriented to wage employment can be run within the
ministry of education, if bureaucratic procedures can be modified to give programs
the flexibility needed. Another strategy for education ministries is to deliver
vocational training intensively at the end of the secondary cycle. This will
enable students to choose among occupations a year or less before they seek
employment, when they are more mature and when they can choose an occupation
knowing the current state of the labor market. In general, enabling students to
choose a vocational course after completing the highest level of general education
possible improves educational equity and student motivation alike.
67.   Building linkages with employment.  Responsiveness improves when training
institutions develop specialized expertise for, and institutional linkages with,
different skill markets.   Of central importance is establishing effective
*                                              - 19 -



information linkages with employers as the basis for curriculum adjustment, staff
development, enrollment planning, vocational guidance, and student placement. W
68.   Institutions located in particular industrial areas have a natural advantage
in serving  the area's  industries.    Specializing  in clusters  ^f related
occupations, however, or in sectors of the economy, is also possible, depending
largely on the size of markets and the capacity of individual institutions.
Specialization is an option only when modern sector employment is large enough to
create sufficient specialized demand. In smaller economies, institutions must
serve several markets to generate the training business needed to achieve
reasonable scale economies in their operations.
69.   Specialization in higher technical skills that are needed in strategically
important growth areas of the economy is an important role for selected post-
secondary technical institutions. By definition, both the technology and training
e:pertise for these skills are found primarily in industry. Dual training systems
that take advantage of the capacity of schools and colleges to provide basic
technical education courses, complemented by more specific training in
enterprises, are an efficient means of using the expertise of firms.
70.   Training skilled workers in core occupations that are in demand throughout
the economy can be a viable role for vocational schools that have skill training
as their principal objective. Examples include the occupations of secretary,
book-keeper, motor mechanic, and maintenance electrician.   To be effective,
however, non-bureaucratic management processes must be established and schools
must be able to hire qualified instructors, to monitor training outcomes, and
adjust enrollments and courses as demand changes.
71.   Close linkages with empl yment opportunities, including programs to support
self-employment and small business development, are especially important in re-
training dislocated workers. In addition, experience in developed countries shows
that training is effective when integrated with other positive measures
(See Box 6).    The keys to responsiveness in re-training the unemployed are
identification of local employment opportunities, cooperation with employers, and
use of existing training capacity through competitive contracting. Accountability
can be improved by linking funding to placement outcomes. An example of this
approach is found in Chile, where the National Training and Employment Service
(SENCE) uses a network of 400 authorized public and private training organizations
to provide training services for unemployed adults and youth through a program of
training grants and fellowships. Both trainees and opportunities for wage and
self-employment are identified at the municipal level.  In 1987, the program
trained more than 9000 unemployed workers.
72.   Whether or not developing countries can or should adopt these approaches
depends on several factors, including the availability of skilled jobs and the
capacity to finance expensive programs.   In many cases, the costs of income
maintenance programs and of developing the comprehensive labor market information
and placement systems needed to link training with employment will be prohibitive.
The institutional development required can be time consuming. However, large
national programs are not the only approach to training to facilitate economic
change. In Sierra Leone and Uruguay, for example, carefully focused NGO training
programs have been successful in cooperating with employers to train and place th.-
- 20 -                                       0



.      unemployed and to train workers for new occupations and positions whose jobs are
threatened by restructuring within firms.  Where labor supply greatly exceeds
demand, these programs are likely to have only a marginal impact on total
unemployment in the short run.
Box 6. E3emnts of EmpImagiinet Pror.ms
The benefits of successful employment traiing programs are gained only wher re-trained workers are
placed in employmenL Experience in OECD countries shows that this requires job creation
programs, labor market information, subsidization of the costs of worker relocation, and effective
counseling and placement services. Income maintenance programs are essential during the transition
period. Integrated programs are more effective where levels of education are high, and where there
are few cultural or fmancial barriers to worker mobility. These active measures, together with
retraining, can be expensive: in Sweden expenditures on positive labor market policies represent
approximately two percent of GDP.
73.   Increasing institutional authority and accountability. Effective response
to employment opportunities will require a higher level of authority at the
institutional (training center or technical school) level to respond to local
employment opportunities and training needs. Specialized professional staff are
needed to establish relations with employers, to develop curricula and in-service
training for instructors, and to provide vocational counseling services.
Accountability for results and use of resources can be improved by monitoring and
inspection systems, and by building incentives for job placement and other
indicators of outcomes into budget allocations.   Local employer councils can be
an important source of feedback on institutional performance.  Consistently poor
performance caused by imbalance in skill supply and demand is a signal for a
review and modification of curricula and enrollment patterns.
74.   Experience in a wide range of countries (for example Brazil, Colombia, and
Jordan) shows that public training centers outside the education system have had
more success than schools in becoming flexible and efficient. Not tied to rigid
degree requirements, they have more freedom to develop courses of varying length,
to minimize training duration, to offer evening courses, to provide training
services to enterprises, and to use part-time instructors.  Because of these
advantages, centers should generally be chosen to expand public training of
skilled workers. Their advantages also can enable them to provide productivity
support to small and medit'm sized enterprises, to respond quickly to needs for
work force re-training, and to provide training as a complement to new investment.
75.   Improving training outcomes.   Developing vocational and technical skills
costs much more than general education, and inadequate budgets lead to inadequate
outcomes. If skills are not developed, however, productivity will not increase,
and the benefits to society and individuals will not materialize. Meeting the
recurrent costs of paying well-qualified managers and instructors and providing
up-to-date teaching materials and maintenance are the sine qua non of quality.
76.   (i)    Paying adequate salaries.   Professional instructors with good
technical and pedagogical skills are central to quality. Most countries have had
difficulty paying sa.laries high enough to attract and retain such staff,
-21-



especially in occupations where demand from the private sector is high -- and
where the need for training is the greatest. In Egypt, salaries are so low that
vocational teachers must hold two or more jobs, often at schools that are distant
from each other.   Inadequate pay reduces the quality of teaching, and shows
students how little society values the trade they are learning.
77.   Rigid civil service salary regulations and constrained budgets erect
significant barriers against better teaching. If the government cannot afford to
pay market rates generally, it should at least let wages rise for instructors in
those occupations that are in greatest demand, allowing for market scarcity in
differentiated salary systems.   Some success has been achieved by offering
improved benefit packages, such as providing housing or, as in Korea, exemption
from military service for vocational instructors. A further option is to use
part-time instructors drawn from enterprises, a strategy that has been successful
in several countries, including Mexico.
78.   (ii)   Ensuring availability of materials and maintenance.  Textbooks,
practice materials for workshops, and other instructional materials are essential
to good training. Materials development for vocational training can be expensive
because of the need for frequent revision and expansion in rapidly changing
occupations.   Materials for modern-sector occupations can be adapted from
developed country models.   In new and rapidly changing occupations, close
cooperation with employers is needed to adapt existing materials.   Training
materials for self-employment generally must be developed to incorporate skills
that are specific to local products and technologies, and that include business
management skills that fit the local regulatory and market environment.
79.   There is considerable interest in the potential of various educational
technologies to overcome the lack of skilled instructors and to reduce per-
student unit costs.   Although experimentation to test cost-effectiveness is
warranted, there are reasons to be cautious.  Video-tape technology is being
increasingly used as hardware costs fall and local software production becomes
more feasible to demonstrate complex manipulation skills. However, more advanced
technologies -- such as computer-aided instruction -- require high rates of use
to become cost effective. In developed countries, this has been achieved only in
large modern enterprises and in training institutions that deliver individualized
instruction in highly flexible environments. However, in industrialized middle
income countries, where these conditions exist, advanced technologies may provide
a means of partially overcoming shortages of highly skilled instructors in
technologically changing occupations.
80.   Adequate maintenance of facilities and equipment is essential for good
training. Inadequate budgets and lack of foreign exchange have combined with low
levels of incentives to managers and instructors to reduce the quality of
maintenance in many countries. Dual training systems that rely most heavily on
the equipment of employers offer a practical way to minimize maintenance costs to
training institutions.  But where this is not possible, adequate funding and
improved staff accountability can lead to improvement.
- 22 -



Improving instructional efficiency
81.   Improving the flexibility of training in currently under-financed public
institutions will be costly. Ways must be found to deliver instruction at lower
cost.   A first option in countries where public capacity is under-used is
consolidation into fewer, better-quality institutions. Lower costs per training
graduate can be achieved by reducing the duration of instruction and by improving
the utilization of facilities and equipment.
82.   Consolidation.   Consolidation can be achieved by converting vocational
schools to lower-cost general curricula or by turning schools over to
organizations with the information and financial resources needed for effective
operation -- such as enterprises, enterprise associations or NGOs. Consolidation
is particularly attractive where the supply of skilled workers from poorly
financed institutions greatly exceeds effective employment demand or where
training institutions are too small to achieve scale economies.
83.   Improving utilization of training capacity.   Shorter, more intensive
training periods are worthy of consideration because they reduce the opportunity
costs to trainees of being in training instead of at work, and enable training
institutions to achieve a higher rate of use of equipment, facilities, and
expensive instructors. The same number of course hours provided on a part-time
basis over three years in a vocational schcol can be delivered intensively in one
year or less after school is completed. Training duration can be reduced as well
through occupational analysis to distinguish the skills needed for entry into a
given occupation from those best learned on-the-job.
84.   Competency-based, modular curricula also increase efficiency by enabling
trainees to exit and enter training based on acquired skills, and to maintain a
record of achievement that facilitates intermittent study along with employment,
including evening courses.   Modularization is fundamental to individualized
instruction, which permits enrollment and labor market entry at any time during
the school year (See Box 7).
Building capacity for policy implementation
85.   Implementing public training policy is a complex task that requires
considerable professional and managerial capacity. To respond to the needs of the
economy demands a degree of freedom from short-term bureaucratic control that is
difficult to achieve in line ministries. National training authorities (NTAs)
have been found to be effective in this respect in several countries.   The
structure of successful organizations varies considerably, but the key elements
in effectiveness are governance that involves employers, worker organizations and
government, adequate and stable financing, the ability to use resources
flexibly,and a high level of professional capability. In addition to managing
training institutions, NTAs can play key roles in monitoring labor markets and
training costs and outcomes, in planning, in providing professional services, in
establishing outcome standards, in organizing temporary training systems in
response to worker dislocation, and in developing private training capacity.
-23 -



Box 7: lndividld Instruction in the Euaado LAdi School
The Euvaldo Lodi School in Rio de Janiero is one of the network of training centers operated by
SENAI. Trainiig is based on periodic analysis of market demand for skills and occupational analysis
of different occupations in surrounding industries. Learning materials are organized into modules of
work sheets and activities that combine theory and practice for a defined series of tasks. Student sklls
are evaluated after each module. The fial stage of learning compises a period of supervised training
within enterprises.
Beginning in 1965, the Euvaldo Lodi School sought to address three problems by individualizing this
methodology. First, the school wanted to be able to provide training to students entering with
different skill levels and aptitudes. Second, it wanted a curriculum structure that would be highly
flexible in the face of rapidly changing labor markets. Third, it wanted to reduce drop-out rates and
the consequent cost of unused capacity.
This was accomplished by reducing the inter-dependence between modules. Students can enroll at any
time during the year, and are tested for placement in the series of modules. They then complete
modules at their own pace, and are tested for competency on completion. No lectures are provided;
the role of the instructor is to provide guidance and testing. Because enrollments are determined by
the number of places in workshops, students are admitted continuously as others complete their study
or drop out.
These changes have reduced the time required to complete traDiing by 45 - 75 percent, significantly
increasing utilization rates. Faster completers increase utilization rates, while for slower students the
system provides strong instructional supporL The school operates year-round, with no holidays,
matching the rhythm of the factory. Completers can enter the labor market throughout the year, and
intake and output can be controlled continuously in response to information on student placement and
employment opportunities.
Source: _. Oliveira and C. Castro (1988).
86.   Training funds that enable NTAs to make grants (or loans) to training
institutions in accordance with established criteria can provide an effective
mechanism for adjusting training response to meet changing needs, facilitating
flexible use of resources for curriculum adjustment, staff development, new
equipment, and on occasion renovated or new facilities.  Organizing training
interventions to facilitate economic change often requires similar support.
Experiments with new training approaches, such as by non-governmental
organizations (NGOs) for the rural or urban informal sector, may also need
government subsidies. Training funds managed by NTAs have proven useful in this
regard in such countries as Singapore, C6te d'Ivoire, Chile, Mexico, and Malawi.
Funding should be available to both public and private training providers.
Accountability can be enforced through contracts and supervision.   Broadly
representative oversight of the fund (public and private sector, workers, NGOs)
can help avoid problems in fund administration.
Diversifying finance
87.   The principal objectives of training finance policy in developing countries
should be to ensure both the stability of funding needed to develop sustainable
institutional capacity and the level of financing needed to improve public
- 24-



training.  Government budgetary financing has often been inadequate for both
objectives. The 1990 Primary Education policy paper stressed the need to increase
public funding in many countries for primary education given the significant
externalities and the important equity considerations associated with education
at that level. The case for public support for vocational education and training
is much less strong. Nonetheless, the external social benefits of training will
often justify the role for government finance of at least such central activities
as policy, planning and quality control, as well as for skills strategic to growth
strategies. This support will often be limited and Governments should seek to
diversify sources of financing for training because of budget constraints and in
the interest of efficiency.   The costs of training should be increasingly
shouldered by the employers and workers who receive its benefits. Encouraging
enterprises and private institutions to provide training would help move in this
direction. Additional options include payroll levies on enterprises and direct
cost-recovery from employers and trainees.
88.   Payroll levies. In middle-income countries, payroll levies have provided a
sheltered source of resources for training, offering a means of mobilizing funds
otherwise unavailable to the public sector. They have proved to be a particularly
useful device for building training institutions, especially national training
agencies, and they have strengthened employer involvement. With some variation,
there are basically two major types of levy schemes for financing training in
developing countries, reflecting rather different objectives. First introduced
in Brazil in the early 1940s, the Latin American model generates revenues to
finance training provided by the public sector. The alternative is the levy-
grant, or rebate, scheme that reimburses enterprises for the costs of training.
It is the preferred form of payroll levy scheme in other continents.
89.   Payroll taxes are widely believed to be borne by enterprises, but this may
not be the case in fact. While this issue has not been examined empirically for
developing countries, much of the incidence of payroll levies in industrialized
countries falls on labor in the form of lower real wages. This is likely to be the
case in developing countries as well. This fact suggests that workers finance
their own in-service training, making payroll levies a form of benefit taxation.
For younger workers, pre-employment training is financed before benefits are
received, but paid for later. Payroll levies are an equitable meaw g of financing
training to the extent that the workers who pay benefit, instead cf funds being
diverted to other purposes.
90.   While such schemes have proved popular and are largely successful, they are
not free of criticism. They tend to raise the price of labor relative to capital.
By encouraging a shift toward more capital-intensive techniques of production,
they may inhibit employment growth. Such effects are unlikely to be pronounced,
however, given the moderate tax rate levels (typically one to two percent) and the
possibility of incidence shifting.
91.   Payroll levies may constitute an over-sheltered source of funding, leading
to   unspent   surpluses,   inefficiencies,   and   top-heavy,   bureaucratic
administrations; alternatively, surpluses may lead to the use of payroll levy
funds for purposes other than training, considerably weakening the benefits of
imposing them. SENA, the Colombian national training authority, financed by a two
percent payroll levy established in l95,, has built up surpluses in recent years,
- 25-



encouraging the gradual expansion of training into other areas such as
agriculture, construction and self-employment training, only loosely tied to the
firms (and workers) that pay the levy.
92.   To insure that the people who pay the levies receive the training benefits
from them, the payroll levy system should be so designed that: (a) levies are
subject to periodic review to guard against the accumulation of surpluses; (b)
levies vary across sector and industry to reflect differing skill composition of
the labor force and training needs; (c) training authorities do not venture into
extraneous activities; (d) the training services and courses provided are broadly
based to reflect the range of the industry's need; and (e) enterprise training
is developed.
93.   The desirability of using payroll taxes to finance training, compared to the
other alternatives, is likely to be contingent upon the stage of a country's
development. Low-income developing countries may have only limited access to
broadly based taxes and tend to rely instead on trade taxes and specific excises.
Where the financing options of governments are limited, payroll taxes remain
attractive, though they may be difficult to implement.   Mechanisms for tax
collection may not be in place, and enterprises may resist imposition of the levy.
Few lower-income countries resort to payroll levies to finance training. For
countries in the lower-middle income range the payroll levy approach may be more
attractive than alternative broadly-based taxes.
94.   Cost recovery.  Payroll levies should not be seen as a permanent solution
to the problem of training finance. As national training institutions gain firmer
footing, alternative sources of finance become feasible, and enterprises will
become able to meet more of their own training needs.   In this changing
environment, reduction in the levy rate is appropriate. To the extent that public
sector provision of training remains necessary, the training authority can be
required to compete for budgetary resources with other government departments and
agencies. Or to the extent that charging for its services becomes feasible, the
authority could be required to operate on a cost-recovery basis.
95.   Charging fees to trainees is another option.  However, as noted before, in
countries where secondary schooling is free, imposin fees for secondary
vocational schooling would raise significant equity questions. It is less clear
that this is the case for training provided outside of the formal school system.
The flourishing market in proprietary training courses indicates that many
individuals are investing in training themselves. Moreover, high private rates
of return on training investment indicate that many individuals who receive
subsidized training may be in a position to bear a larger share of the costs.
These facts justify charging fees for training even though to do so would raise
questions of parity with privileged secondary school students.  Where market
imperfections inhibit worker self-finance of training, exemption from fees for
needy students is justified. More innovative measures to enable poor workers to
meet training costs, such as state-backed loan schemes, should be examined, but
these will rarely be administratively feasible.
96.   Direct  income generation is another source of revenue  for training
authorities and individual training centers. In Latin America, the broadening of
the activities of vocational training institutes to include the sale of
- 26 -



* sconsultancy and training services to public and private enterprises has provided
an additional source of funding. The sale of goods produced by training centers
offers a limited revenue source, as well as a useful market test of training
quality.  Though currently under-exploited, this source can be encouraged by
relaxing government restrictions on the ability of public training institutions
to retain earned income.   In a number of countries,  income generation is
facilitated by the availability of "revolving funds" from which training centers
can finance the purchase of materials used in production. A balance must be
struck, however, between providing training and producing goods for sale.
5. TRAINING AS A COMPLEMENT IN EQUITY STRATEGIES
97.   Most of the poor in developing countries are found in rural areas and in the
urban informal sector. Their principal asset is their labor, and improving their
productivity and earnings is the main road out of poverty. Reform of policies
that discourage economic and employment growth, not training, is the first step
along this road for the poor, as well as for women and minorities. Improving
levels of general education helps.  Training in the rural and urban informal
sectors can improve the productivity of the poor if it is used as a complementary
input in broader income generation strategies, but training alone h.is not been
very effective. Improved access for women to higher productivity and earnings
requires reduction of discrimination in employment and carefully targeted training
that heavily involves employers.
98.   Public pre-employment vocational schooling has not been an effective measure
to reach the poor, who can ill-afford to be out of employment for several years.
Moreover, in most developing countries secondary schools enroll a small proportion
.      of the age group: in such circumstances, vocational schools become second-best
options for academically well-qualified students who are not necessarily poor.
In Thailand in 1979, for example, farmers and laborers comprised 88 percent of the
labor force, but their children held less than 20 percent of the places in
secondary vocational schools, the balance being occupied by the children of
businessmen and government officials.
Improving levels of education
99.   For the poor and disadvantaged, general education is the foundation of
improved productivity and earnings. Extending and improving a country's general
education increases the probability that workers will receive training from their
employers.    Access  to  pre-employment  vocational  education  and  training
opportunities requires at least completion of the primary school curriculum, and
more often completion of lower secondary school. Without competitive levels of
education, individuals find it difficult to move out of marginal self-employment
into wage jobs.  Ensuring completion of the primary curriculum and expanding
access to secondary education for women and the poor are high priorities.
Nonformal basic education and literacy programs also provide steps towards further
training.
*                                              - 27 -



Training for rural and urban self-employment
100. The viability of rural self-employment depends fundamentally on the W
purchasing power of rural consumers, and thus on the productivity and incomes of
farmers.   Farming, of course, is the predominant form of self-employment in
developing  countries.    Basic  education  and  agricultural  extension  are
complementary in enabling farmers to acquire and apply new information and skills.
Together, they are the most effective way to raise farmer skills, productivity and
income, thus strengthening market opportunities for rural entrepreneurs.
101. Entrepreneurial economic activity provides a second source of income for
many farm familie-;; self-employment and very small enterprises provide the main
source of income for others. As is the case with all small businesses, access to
credit and raw materials, and the absence of restrictive regulation, are necessary
for success. Jkills are also important, and rural training programs that are
closely adjusted to local markets and technologies can be effective in providing
these skills (See Box 8).  Cooperatives that include training within broader
income-generation strategies can also be effective, especially in enabling women
to increase their earnings.
Box & Tran gfor Self-employment in Rural Are|
Training for rural self-employment succeeds when it is designed to fit with local employment
opportunities and skil needs rather than those of urban wage employment. The Legruki Vocational
Training School in Tanzania exemplifies this approach. It was established by the community with
support from the Lutheran Church of Arusha, with the objective of enabling primary school leavers
to enter self-employment. In the beginning, conventional training in carpentry and masonry was
offered to enable students to pass national trades competency tests. However, evaluations showed
that the orientation of the curricuum to modern sector wage employment did not adequately take
into account the multiple skils and technologies required for success. Following a market survey in
the local area and staff debate, the curriculum was revised to shift from sine to multiple skills 
build from local market opportunities, incorporate useful traditional skls, and increase the fleibiity
of course offerings. A tracer study which obtained information from about half of al graduates since
1980 found more than 90 percent employed. Of these, more than half were in self-employment in
villages or in both villages and urban areas.
Sources: Ishuni (1988), Fowler (1990).
102. Much urban informal sector employment is in low-skilled occupations where
entry is easy because of low capital requirements: petty trading and food
preparation are good examples. Skills are most important to productivity in small
enterprises engaged in manufacturing, repair and construction services. Again,
access to markets, raw materials, credit, and management advice are the keys to
successful businesses. Equally, removal of government regulatorv constraints
-- such as zoning and licensing regulations -- is often needed.
103.  While governments do seek to provide training interventions for the informal
sector, most skills are developed through other mechanisms. Primary education
provides a crucially important base of general skills. Traditional apprenticeship
provides most of the specific technical and business training needed in the
- 28 -                                        a



informal sector in many countries.  Where wage jobs are hard to find, graduates
of modern sector training institutions will flow to the informal sector, adapting
their skills to different conditions, though often after a long period of waiting
for higher-paying wage employment. These individuals are, of course, relatively
privileged, and their entry into the informal sector may reduce opportunities for
the very poor.   Further,  people frequently move between the formal and the
informal sector. Many informal sector entrepreneurs build up skills and capital
during wage employment.
104.   Simply providing skill training for informal sector employment has been
less effective than providing training as a complementary service in more complex
programs that give clients access to credit and market advice.   The most
successful of these programs are aimed at facilitating the establishment or
expansion of very small enterprises by carefully selected and comparatively well-
educated entrepreneurs (See Box 9). The difficulty of replicating these programs,
however, limits their overall impact on employment creation.
Box 9: Bnhq     ip Deavdopment im India
The Entrepreneurship Development Program (EDP) in the Gujarat State of Indian is one of thl
oldest and best known entrepreneurial development programs in the developing world. Since its
inception as an innovative credit scheme in 1968, the EDP has evolved into a comprehensive package
of services directed to developing entrepreneurial talent in all small-scale economic activities. Over 50
agencies in more than 20 states in India now run EDPs.
The EDP model rests on the assumption that not everybody can be an entrepreneur. Selection is
made by a combination of screening, testing, and interviewing. Successful candidates then undertake a
90-day evening program if they have work experience or a six-week, full-time residential course if they
do not. These courses cover such topics as achievement motivation, market environment, financing,
product selection, marketing, skills development, management, production, procurement, personnel,
legal system and letter writing. Trainees prepare project reports, go on field trips to selected
industries, receive any necessary technical training in a local industry and receive intensiv. one-to-one
counselling. A trainer-motivator assists graduates in applying for loans, obtaining land and facilities
and marketing their products.
In its first fourteen years of operation, nearly 8,000 new *ntrepreneurs have been trained and 3,000
new industrial enterprises, which employed three to fivt X. cople, were established. Of 40 that have
been surveyed, 80%o have been profitable after five years of operation. Roughly, 60% of the trainees
that go through the program start businesses. The cost per trainee is about $200, and the cost for
creating an enterprise in Gujarat is about $350.
Source: V.G. Patel (1986).
- 29 -



105. Delivering effective training for the informal sector requires a great deal
of expertise on the sector and those who work there. Institutions that specialize
in the sector, or that can devote a substantial amount of resources to acquiring
this expertise, have been most effective. Non-governmental organizations have
been effective, and supporting their efforts through training funds provides a
practical option that avoids further elaboration of the public training system.
Improving access to wage employment for women
106. The positive effects of economic growth on access to wage employment for
women are seen in newly industrializing countries where rapid expansion of
manufacturing and service industries a-id declining population growth rates are
combining to raise the possibility of labor shortages. Under these conditions,
training and employment opportunities for women increase.   Much of the new
employment for vamen is coming in electronics assembly industries and in services
with low skill requirements, but access to wage employment of any kind is often
a major improvement. Access to higher productivity wage employment can be further
improved by reducing discrimination in employment and reducing the opportunity
costs of training.
107.  Attacking discrimination in employment.   Legislative discrimination in
employment remains a problem for women in some countries. These policies not only
deny equitable access to earnings, but prevent a society from harnessing the
talents of much of the labor force. More perovasive are customary barriers to the.
employment of women and members of minority groups in given occupations, often
the more remunerative ones, due to an employer's mistaken belief that these
individuals cannot perform productively, or will not be stable members of the work
force. Women may also prefer certain traditional occupations. Deeply held social
attitudes change slowly, of course, but progress can be made through programs
that actively involve employers in the training and placement of such workers
(See Box 10). Success not only helps the individual worker, but may establish a
demonstration effect that counters current attitudes.
108. Reducing the opRortunitv costs of training. Few poor students can afford
to be out of the work force for three- and four-year, full-time education and
training programs needed for access to wage employment, even if the programs are
tuition-free.    Women are  further handicapped by domestic  and child-care
responsibilities. The opportunity costs of training can be reduced by offering
shorter, more intensive courses, providing training in evenings, and offering
training in convenient locations. Low levels of literacy and numeracy skills may
require compensatory general education programs.   Considerable institutional
flexibility is required, and NGOs have shown strengths in this regard. Government
subsidy of NGO training for women is justifiable on equity grounds.
- 30-



*Bo 10: Training Women in Non-taditonal Skills
In a program begun in Morocco in 1979, women were placed in industrial training programs that,
while in theory open to women, bad attracted few candidates and accepted none. Recruitment
announcements disseminated through newspapers, radio and schools explicitly called for female
applicants. Guidance counseling and informal placement arrangements were established. Female
instructors were recruited and trained. Female enrollments rose sharply and have been sustained.
Job placement rates for women are higher than for men in the same occupations.
In Jamaica, a small-scale project to train women for the construction industry led to placement rates
of more than 90 percent in such occupations as plumbing, carpentry, masonry, electrical installation
and steelworking. Women's esrnings increased, and employers were reported to be very pleased with
their performance. A key to success was a commitment from employers to hire the women on a trial
basis folowing interviews with candidates. Similar positive results were obtained in vocational schools
in Chile in a project in that trained girls in chemical technology, computer programming, mechanics
and electronics.
However, all projects have not been successful. In the Dominican Republic a program aimed at
preparing women for non-traditional trades failed due to lack of an aggressive counseling program and
low levels of staff commitment to training women for these occupations.
Sources: Lycette (1985); Kudat (1989); Borcelle (1985); White et. al. (1986).
III. IMPLICATIONS
.       6.  INTERNATIONAL SUPPORT FOR VOCATIONAL EDUCATION AND TRAINING
109. International assistance to vocational and technical education and training
in the 1980s averaged about US$ 600 million annually, of which the World Bank
provided 45 percent, bilateral agencies 30 percent, and other multilateral
agencies 25 percent. This contrasts with an average of US$ 180 million annually
provided to support primary education.  Support for vocational education and
training has been concentrated on building pre-employment training at various
levels and has served only a small share of all youth in schools or training
institutions.   The high costs of establishing vocational institutions have
contributed to the volume of aid, especially when donors equip workshops with
advanced and costly equipment. High expectations of governments and donors for
broad economic and social benefits from vocational preparation have no doubt also
played an important role, as has the visibility of building and equipping modern
training institutions.
110. The large amount of international aid has contributed to the establishment
of a base of training capacity in most countries, and to over-expansion in some.
In the future, donor assistance will be more effective if it can be mobilized to
support government programs for policy reform aimed at expansion of employer and
private training, and improved use of existing public training capacity. This
will in many countries require a very high level of coordination among donors.
*                                             - 31 -



7. IMPLICATIONS FOR THE WORLD BANK
111.  The World Ban'. has been the largest single source of international financial
support for vocational education and training. From 1963-76, about 40 percent of
total Bank education lending was for vocational and technical education at the
secondary and post-secondary levels. More than 20 percent of education lending
during this period was for vocational and diversified secondary schools.
112. By the late 1970s, evaluations conducted by the World Bank's Operations
Evaluation and Education and Training Departments began to raise doubts regarding
the cost-effectiveness of vocational schooling, especially diversified schools.
High costs, low levels of use of facilities, over-supply of graduates, and the
difficulty of forecasting demand for skills were cited as constraints.  Bank
lending began to shift away from diversified schools toward center-based training
and development of national training authorities. As a share of education sector
lending, support for vocational projects declined to 30 percent in the period
1977-88 as lending for primary education increased.   The absolute amount of
support provided, however, rose as the sector expanded overall. Most of the
decline came from the phasing out of support for diversified secondary schools.
Support for agricultural education declined from 25 percent of all vocational
lending to 13 percent over the same time period, and has fallen farther since.
These shifts reflected a growing awareness in the Bank of the need to build
institutional capacity and to find more efficient ways of providing training.
During this period the Bank provided support to some of the more effective
training systems in developing countries, among them the Vocational Training
Corporation in Jordan and SENAI in Brazil.
113. Since the mid-1980s, the Bank has begun to emphasize responsiveness and
quality in training for wage employment. Innovative projects that address the
special training needs of small modern sectors and large informal sectors in
Africa are currently being developed (See Box 11). Nevertheless, the analytical
basis of vocational lending has remained comparatively weak. A recent review of
the policy content of education sector investments shows that vocational projects
have been least effective in addressing policy issues. Notable is the lack of
attention to the economic rationales for public training and to the encouragement
of private training. The pressing need for policy reform to ensure efficient
skill development in response to economic change, calls for substantial
improvements in the analytical and policy content of investment operations.
114. Five actions are needed to improve the quality of World Bank support for
skills training. First, analysis of the economic context of training, including
labor market issues, should be improved and used in the formulation of national
macroeconomic strategies and the design of investment operations. Second, lending
for pre-vocational courses should be replaced by programs to strengthen quality
and access in academic secondary education. Third, lending should address the
policy changes needed to create a favorable economic climate for private training
as well as direct measures to stimulate and improve training in the private
sector. Fourth, lending should include measures to impreve the responsiveness and
efficiency of public training. Fifth, World Bank lending should require the
development of a longer term strategy for the evolution of the government's role
in training, and encourage broadly-based coordination of donor support. These
five actions are discussed further below.
- 32-



Box Ik Vocadona Training Policy R'frm in Togo|
In Togo, 73 percent of the labor force of 1.4 million work in agriculture, 21 percent in the urban
informal sector, and six percent (76,000) in the modern wage sector. Economic policy reforms in the
early and mid-1980s have opened the economy to international competition, reducing policy distortions
and reversing a long period of negative growthL The economy is vulnerable to rapid changes in
commodity prices, and the government is seeking to diversify the economy by expanding foreign
investment in labor-intensive light manufacturing.
The public vocational and technical education system was developed in the 1970s to meet social
objectives. Lower and upper secondary technical schools and vocational training centers managed by
the Ministry of Technical Education and Vocational Training (MEFTP) enroll about 3,800 students.
Private vocational schools and centers enroll 2,400 more. Traditional apprenticeship is well-
established in the informal sector. The public system has been rigidly administered and inadequately
financed, and both quality and efficiency have been low. Much private training is of low quality. The
government has thus launched a significant program of training policy reform and institutional
development to improve the responsiveness of public training to the economy, to improve training
quality, and to strengthen employer and private training. The reform has three main elements:
o Strengthening the capacity of the MEFrP for labor market monitoring and analysis, including the
establishment of a Training and Employment Observatory to monitor employment opportunities
and the effectiveness of traiing, and to publish the results regularly.
o Traiinig for managers and instructors using twinning' arrangements with overseas training
institutes.
o Establishing a National Training Fund (NTF) administered by a private/public management
committee to allocate financial resources to training projects and investments of employers and
public and private training institutions that meet pre-determined criteria. Traditional apprentice
masters will be eligible to apply to the NTF for skils upgrading grants.
In addition, cooperative dual training systems, using modular approaches to instruction, will be
developed to strengthen cooperation between employers and public training institutions. Lower
secondary vocational schools will be converted to Regional Training Centers (RTCs) and specialized
in local training needs. They will be open on evenings and weekends to provide theory ctasses for
informal sector masters and apprentices. The project is supported by an UDA credit from the World
Bank (Credit 2174-TO).
Improving economic analysis for training
115. First, the design of economically sound training policies and investments
requires improvements in analysis of the intricate inter-relationships between
economic policy, training efficiency, and equitable access to employment. Also,
integration of this analysis in the formulation of national macroeconomic strategies
is essential. Public investment in pre-employment vocational schooling or training,
and in higher technical education, should only be supported when sector work or
project analysis provides clear justifications in terms of market distortions, weak
private training capacity or social benefits to training. Key topics for economic
analysis include:
o    the impact of economic adjustment on employment, and the prospects for
job creation in different parts of the economy.
*                                                  - 33 -



o    the impact of policy distortions on incentives for private sector
investment in training.
o    the  feasibility  of  dismantling  economic  policies  that  constrain
employment growth and incentives for private investment in training.
o    the design of compensatory training policies where economic policies
cannot be changed in the short term.
o    identification of the strategic skills with significant externalities
based on an analysis of the demand for skills in sub-sectors or
industries in the economy.
Strengthening primary and secondary education
116. Second, Bank lending should strengthen the quality and access in academic
secondary education,  rather than pre-vocational courses.   Improving general
education will increase worker flexibility. Promoting better access to secondary
education for women and the poor will improve their chances for training and their
ability to earn higher incomes. Policies for primary education development have
been prescribed   in the 1990 Primary Education policy paper.   For secondary
education, given a poor record of performance, the diversification of curricula by
adding vocational courses should be avoided. The Bank can assist governments by:
o    financing curriculum reform and teacher training to strengthen applied
mathematics and science education.
o    eliminating barriers to access by women and the poor.
Strengthening employer and private training
117. Third, Bank lending should address the policy environment for private
training. Bank lending has only rarely and indirectly supported the development of
training capacity in private enterprises or the proprietary training sector. Its
support for the training capacity of public employers, however, has been
substantial. Improved support to the private sector can be provided by:
o    including assessments of employer and private training capacity in
investment analysis.
o    supporting appropriate systems for accreditation and inspection of
private training institutions.
o    financing technical assistance programs that build professional training
capacity in both public and private enterprises.
Improving effectiveness and efficiency of public training
118.  Fourth, vocational lending operations shouldseek to improve the effectiveness
and efficiency of public training by building institutional capacity, generating the
- 34 -



resources needed to improve outcomes,  and improving instructional practices.
Options to be considered are:
o    establishing or strengthening national training authorities by financing
programs of staff development, the dev^lopment of labor market and
training monitoring and information syst%As.
O    establishing training funds as a source of targeted grant and loan
assistance to employers and private and public training agencies to
increase flexibility in responding to periodic training needs, such as
to facilitate economic change.
o    consolidating small and under-used training facilities, financing the
costs of conversion and staff re-training and re-deployment,
rehabilitating smaller systems and supporting government efforts to
turn over excess institutions to NGOs or the private training sector.
O    promoting quasi private sector management practices combining autonomy
and accountability for the management of public training institutions.
o    giving priority to center-based training modes for skilled worker
training, and supporting curriculum reforms that reduce training time and
increase facilities use.
o    seeking government agreement to pay salaries adequate to attract and
retain technically qualified instructors and to provide adequate
financing for recurrent cost.
O       Providing long-term support
119. Fifth, Bank lending for vocational education and training has been most
successful through long-term partnerships with governments that have lasted a decade
or more.   Such relationships permit the incremental development of policy and
institutional capacity, and will be especially important in supporting government
efforts to build a better balance of private and public training, and in encouraging
coordinated support from donors. Bank operations should generally:
o    finance part of a longer-term investment and institutional development
program that is supports a clear strategy for an evolving government role
in training.
o    seek to mobilize support from other international donors within an
accepted policy framework.
120. Significant policy reforms may be supported by sub-sector loans that address
key policy issues where institutions are reasonably well developed and can take on
the task of policy formulation and implementation. Traditional investment loans
and sector investment loans will be appropriate to support consolidation and
restructuring where high levels of policy consensus exist, or for well-justified
expansion of effective training systems.
d                                             - 35-



SUMKARY OF OED FINDINGS
While a separate study evaluating World Bank supported vocational
education and training projects has not been formally undertaken, cursory
attempts at evaluation have been made by the World Bank's Operations
Evaluation Department in their publication Annual Review of Project
Performance Results. Annual Reviews from 1975 to 1989 were examined in order
to determine general trends and outcomes of VET projects. During this time,
almost all approved education projects contained a vocational or technical
component.
The Annual Reviews show that since 1975 the World Bank's interest in
education began a gradual shift away from financing education hardware towards
financing education software. Most approved loans in the earlier reports
generally supported hardware for existing schools, expanding institutions, or
for providing additional institutions of a particular type with a proven track
record.
Of the four education projects evaluated in the 1975 Annual Review three
included technical components and all suffered from severe problems: high
capital and operating costs, an insufficient number of qualified teachers,
under-enrollment, and low government priority. Additionally, curricula were
poorly designed and few, if any, links existed with the local labor market.
Beginning in the 1980's while some projects continued to focus on
establishing or upgrading vocational and technical training, agricultural
.       training and teacher training the bulk of the projects focused on curriculum
reform and innovation, as well as the production of manpower.
Vocational and technical education were most common in countries at the
mid level of development. The most successful projects had at least some of
the following elements (Annual Review, 1987): a strong and continued demand
among students and employers for the skills being taught, the presence of an
existing and successful institution that was being expanded or upgraded, close
integration between the schools and the communities being served, and the
provision of equipment and facilities which were appropriate and could be
maintained cost-effectively.
Evidence suggests that graduates of Bank financed technical training
institutions have had problems finding employment after graduation for several
reasons (Annual Review, 1988): shortcomings in the training system, temporary
fluctuations in the demand for certain skills, a chronic oversupply of certain
types of graduates, and inaccurate or incomplete initial manpower needs
assessments. Evidence also suggests that while meant to be a terminal
education, many VET graduates pursue some form of post-secondary education.
Non-formal education projects had the hardest time enrolling students.
This was due to their non-formal status and because funding of these
institutions does not fall under the responsibility of a particular Ministry.
Non-formal education projects have demonstrated that the further removed a
-36 -



project is from a "typical school" the greater the amount of preparation which
must go into the design of the component.
Most of the projects reviewed during this time period included the
introduction of a diversified curriculum. Courses such as woodwork,
metalwork, home economics, and electronics were added to the traditional
secondary education curriculum. These practical courses were meant to be pre-
vocational and to make school more relevant to country needs. It was hoped
that diversified schools would supply the labor market with readily employable
manpower and provide graduates with the background necessary to acquire
further advanced training either on the job or at school.
Several problems emerged with the thrust to diversity the curriculum:
difficulties in recruiting qualified teachers due to poor salaries, under-
enrollment in courses due to cultural biases against technical subjects, large
proportions of graduates from technical schools and diversified schools
continuing on to some form of tertiary education rather than entering the
labor market, the offering of vocational options that were incompatible with
the needs of the community, inappropriate and often non-existing links between
the business community and the schools, and high recurrent costs per student.
While the objectives of diversifying the curriculum seemed to be
justified, the Bank underestimated the cultural biases against this type of
education as well as the difficulties involved in modifying curricula. It is
becoming increasingly clear that the results of diversification have not been
as positive as anticipated.
The Bank has learned two lessons: first, curriculum reform is a long
term process best undertaken as a series of projects rather than as one large
project, and second, the introduction of a diversified curriculum increasps
recurrent costs because courses are usually taught to half-full classrooms,
have higher teacher salary costs, and have higher expenditures on consumable
materials than general secondary schools.
- 37-



Research Base
This report draws heavily on background papers, country studies, regional
reviews and evaluations commissioned by the World Bank or carried out by World
Bank staff. The research program benefited substantially from professional
and financial support provided by the Deutsche Gesellschaft fur Technische
Zusammenarbeit, the Inter-American Development Bank, the International Labor
Office, the International Development Research Centre, ard the OECD
Development Centre.
Background Papers
Adams, Arvil and Antoine Schwartz. 1988. Vocational Education and Economic
Environments: Conflict or Convergence?. Policy, Planning and Research
Working Paper 70. World Bank, Population and Human Resources Department,
Washington, D.C.
Benson, Charles. 1989. Taxonomies of Skill Development: A Search for
Criteria to Define the Relative Efficiency of Alternative Program of
Occupational Training. World Bank, Population and Human Resources
Department, Washington, D.C. Processed.
Carnoy, Martin. 1989. The New Information Technology: International Diffusion
and its Impact on Employment and Skills: A Review of the Literature. World
Bank, Population and Human Resources Department, Washington, D.C.
Processed.
Delaney, Jean. 1990.  Agricultural Education and Training: A Review.  World
Bank, Population and Human Resources Department, Washington, D.C.
Processed.
Dougherty, Christopher. 1987. The Cost-Effectiveness of National Training
Systems in Developing Countries. Policy, Planning and Research Working
Paper 171. World Bank, Population and Human Resources Department,
Washington, D.C.
Dougherty, Christopher and Jee-Peng Tan. 1990. Financing Training: Issues and
Options. World Bank, Population and Human Resources Department,
Washington, D.C. Processed.
Fields, Gary. 1989. Urban Labor Market Modeling and the Informal Sector.
World Bank and the OECD Development Centre. Education and Employment
Background Paper 89/08. World Bank, Population and Human Resources
Department, Washington, D.C.
Godfrey, Martin. 1990. Planning for Vocational Education, Training and
Employment: A Minimalist Approach. World Bank, Population and Human
Resources Department, Washington, D.C. Processed.
Grieg, Frederick. 1989. Enterprise Training in Developed and Developing
Countries. Education and Employment Background Paper 89/21. World Bank,
Population and Human Resources Department, Washington, D.C.
*                                             - 38 -



Herschbach, Dennis. 1989. Improving Training Quality in Developing Countries:
Toward Greater Instructional Efficiency.  Education and Employment
Background Paper 89/09. World Bank, Population and Human Resources
Department, Washington, D.C.
Herschbach, Dennis. 1990. National Training Agencies. World Bank, Population
and Human Resources Department, Washington, D.C. Processed.
Katz, Eliakim and Adrian Ziderman. 1989. General Training Under Conditions of
Assymetric Information. Policy, Planning and Research Working Paper 217.
World Bank, Population and Human Resources Department, Washington, D.C.
King, Kenneth. 1989. An Evaluation of Research and Policies on Informal
Sector Employment in Developing Countries. World Bank and the OECD
Development Centre. Education and Employment Background Paper 89/12. World
Bank, Population and Human Resources Department, Washington, D.C.
McLaughlin, Stephen. 1989. Skill Training for the Informal Sector: Analyzing
the Success and Limitations of Support Programs. World Bank and the OECD
Development Centre. Education and Employment Background Paper 89/05.
World Bank, Population and Human Resources Department, Washington, D.C.
Middleton, John. 1988. Changing Patterns in Vocational Education. Policy,
Planning and Research Working Paper 26. World Bank, Population and Human
Resources Department, Washington, D.C.
Mingat, Alain and Jee-Peng Tan. 1987.  The Economic Returns to Investment in
Project-Related Training:  Some Evidence From World Bank Projects.
Discussion Paper 57. World Bank, Education and Training Department,
Washington, D.C.
Schwartz, Antoine. 1986. The Dual Vocational Training System in the Federal
Republic of Germany. Discussion Paper 36. World Bank, Education and
Training Department, Washington, D.C.
Schwartz, Antoine. 1988.  Profile of World Bank Investments in Vocational
Education and Training. World Bank, Population and Human Resources
Department, Washington, D.C. Processed.
Stahmer, Anna and others. 1988. Uses and Costs of Educational Technology for
Vocational Training: Current Research in Canada and the US with
Implications for Developing Countries. World Bank, Population and Human
Resources Department, Washington, D.C. Processed.
Tsang, Mun. 1990. The Costs of Vocational Training. World Bank, Population
and Human Resources Department, Washington, D.C. Processed.
Whalley, John and Adrian Ziderman. 1989. Payroll Taxes for Financing Training
in Developing Countries. Policy, Planning and Research Working Paper 141.
World Bank, Population and Human Resources Department, Washington, D.C.
- 39 -                                         V



.       Ziderman, Adrian. 1989(b).  Social Rates of Return to Manpower Training
Programs: The Policy Context. Education and Employment Background Paper
88/04. World Bank, Population and Human Resources Department, Washington,
D.C.
Regional, Country and Evaluation Studies
Arriagada, Ana-Maria. 1989(a). Occupational Training Among Peruvian Men.
Policy, Planning and Research Working Paper 207. World Bank, Population
and Human Resources Department, Washington, D.C.
Arriagada, Ana-Maria. 1989(b). The Effect of Job Training on Peruvian Women's
Employment and Wages. Policy, Planning and Research Working Paper 241.
World Bank, Population and Human Resources Department, Washington, D.C.
CINTERFOR. 1990.  Regional Review of Vocational Training in Latin America.  A
study supported by the World Bank, Deutsche Gesellschaft fur Technische
Zusammenarbeit, Inter-American Development Bank, International Labor
Office, and International Development Research Centre. Centro
Interamericano de Investigacion y Docmentacion sobre la Formacion
Profesional, Montevideo, Uruguay. Processed.
Demsky, Terry. 1989. Review of World Bank Investments in Vocational Education
and Training for Commerce. Education and Employment Background Paper
89/22. World Bank, Population and Human Resources Department, Washington,
D.C.
Gittinger, J. Price. 1988.  Review of World Bank Investments in Vocational
Education and Training for Agriculture. World Bank, Population and Human
Resources Department, Washington, D.C. Processed.
Grootaert, Christian. 1988. Cote d'Ivoire's Vocational and Technical
Education. Policy, Planning and Research Working Paper 19. World Bank,
Population and Human Resources Department, Washington, D.C.
Haddad, Wadi D. and Shanti Conly. 1987. Diversified Secondary Curriculum
Projects: A Review of World Bank Experience. Discussion Paper 57. World
Bank, Education and Training Department, Washington, D.C.
Haddad, Wadi, Gail Stevenson and Arvil Adams. 1987. Youth Unemployment in the
EMENA Region: An Issues Paper. Discussion Paper 76. World Bank, Education
and Training Department, Washington, D.C.
Horn, Robin and Emmanuel Jimenez. 1987. Does In-service Training Affect Self-
employed Earnings? The Colombian Case. Discussion Paper 66. World Bank,
Education and Training Department, Washington, D.C.
-40 -



King, Elizabeth M. 1989.  Does Education Pay In the Labor Market?  The Labor
Force Participation, Occupation and Earnings of Peruvian Women.  Livings
Standards Measurement Studies Working Paper 67.  World Bank, Population and
Human Resources Department, Washington, D.C.
King, Kenneth. 1989. Education, Training and the Informal Sector: What Have
We Learned in Africa?   World Bank and the OECD Development Centre.
Education and Employment Background Paper 89/10. World Bank, Population and
Human Resources Department, Washington, D.C.
King, Kenneth. 1990. In-service Training in Zimbabwe. Education and
Employment Background Paper 90/27. World Bank, Population and Human
Resources Department, Washington, D.C.
Lachaud, J.P. 1989. The Urban Informal Sector and the Labor Market in Sub-
Saharan Africa.   World Bank and the OECD Development Centre.  World Bank,
Population and Human Resources Department, Washington, D.C. Processed.
Middleton, John and Terry Demsky. 1989. Vocational Education and Training: A
Review of World Bank Investments. World Bank Discussion Paper 51,
Washington, D.C.
Middleton, John, Nipon Poapongsakorn, and others. 1989. Vocational Training
In a Changing Economy: The Case of Thailand. A study supported by the
World Bank and Deutsche Gesellschaft fur Technische Zusammenarbiet.  World
Bank, Population and Human Resources Department, Washington, D.C.
Processed.
Middleton, John, Se Ho Shin and others, 1990.  Vocational Education and
Training in Korea. A study supported by the World Bank and Deutsche
Gesellschaft fur Technische Zusammenarbiet. World Bank, Population and
Human Resources Department, Washington, D.C. Processed.
Mingat, Alain. L'Enseignement Technique Court au Niger: Une Evaluation par le
Marche. Country Department 5, Africa Region, World Bank, Washington, D.C.,
Processed.
Moock, Peter and Rosemary Bellew. 1988. Vocational and Technical Education in
Peru. Policy, Planning and Research Working Paper 87. World Bank,
Population and Human Resources Department, Washington, D.C.
Moock, Peter, Philip Musgrove, and Morton Stelcner. 1989. Education and
Earnings in Peru's Informal Nonfarm Family Enterprises. Policy, Planning
and Research Working Paper 236. World Bank, Population and Human Resources
Department, Washington, D.C.
Neuman, Shoshana and Adrian Ziderman. 1989. "Vocational Schools Can Be More
Cost-effective Than Academic Schools: The Case of Israel" Comparative
Education; 25,2: 151-163.
-41-



.lli    Noah, Harold and John Middleton.  China's Vocational and Technical Training.
Policy, Planning and Research Working Paper 18.  World Bank, Populatlon and
Human Resources Department, Washington, D.C.
Paul, Jean-Jacques. 1989. Technical Secondary Education in Togo and Cameroon:
An Evaluation from the Labor Market Perspective. World Bank, Population
and Human Resources Department, Washington, D.C. Processed.
Rasera, Jean Bernard. 1989. Post-Primary Education and Employment in Benin.
World Bank, Population and Human Resources Department, Washington, D.C.
Processed.
World Bank. 1986. Regional Review of Alternative Modes of Vocational Training
and Technical Education. Education and Manpower Development Division,
Europe, Middle East and North Africa Region. Discussion Paper 36. World
Bank, Education and Training Department, Washington, D.C.
---------. 1990. Bangladesh Vocational and Technical Education Review. A
World Bank Country Study. World Bank, Washington, D.C.
Ziderman, Adrian. 1988. Israel's Vocational Training. Policy, Planning and
Research Working Paper 25. World Bank, Population and Human Resources
Department, Washington, D.C.
---------------. 1989(a). Vocational Secondary Schooling in Israel: A Study
of Labor Market Outcomes. Policy, Planning and Research Working Paper 142.
World Bank, Population and Human Resources Department, Washington, D.C.
----------------  1989(b).  Social Rates of Return to Manpower Training
Programs: The Policy Context. Education and Employment Background Paper
88/04. World Bank, Population and Human Resources Department, Washington,
D.C.
*                                             - 42 -



Bibliography
Adler, P. 1983. Rethinking the Skill Requirements of New Technologies.
Working Paper HBS 84-27. Graduate School of Business Administration.
Cambridge, Massachusetts: Harvard University.
Aizenman, J. 1987. Labor Markets and Choice of Technology in an Open
Developing Economy. Report DRD 232. World Bank, Washington, D.C.
Alfthan, T. 1986. Training for Technological Change: Some Policy Issues in
Vocational Training for Advanced Technology. Islamabad: International
Labour Office, Asian and Pacific Skill Development Program.
Arrigazzi, L. "Chile: Evaluating the expansion of a vocational training
program." Educational Cost Analysis in Action: Case Studies for Planners
1. Paris: UNESCO, International Institute for Educational Planning.
Auerhan, J., S. Ramakrishnan, R. Romain, C. Stoikov, L. Tibarcio and P.
Torres. 1985. Institutional Development in Education and Training in
Sub-Saharan African Countries. Discussion Paper 22. World Bank,
Education and Training Department, Washington, D.C.
Barber, E. 1981. "General education versus special education for rural
development." Comparative Education Review 25, 2:216-231.
Behrman, J. and H. Wallender. 1976. Transfers of Manufacturing Technology
Within Multinational Enterprises. Cambridge, Massachusetts: Ballinger
Publishing.
Bertrand, 0. and T. Noyelle. 1986. Changing Technology, Skills and Skill
Formation in French, German, Japanese, Swedish and U.S. Financial
Service Firms. A Report to the Center for Educational Research and
Innovation, Paris: OECD.
Bishop, J. 1989. "Occupational training in high school: When does it pay off?"
Economics of Education Review 8, 1:1-15.
Bloom, E. and R. B. Freeman. 1986. "The effects of rapid growth on labor
supply and employment in developing countries." Population and
Development Review 12, 3:381-414.
Blumenthal, I. and C. Benson. 1978. Education Reform in the Soviet Union:
Implications for Developing Countries. Staff Working Paper 288. World
Bank, Washington, D.C.
Boomgard, J. J. 1989. A.I.D. Microenterprise Stock-Taking: Synthesis Report.
Washington, D.C.: U.S. Agency for International Development, Center for
Development Information and Evaluation, Bureau for Program and Policy
Coordination.
- 43 -
0



Borcelle, G. 1985. Jobs for Women: A Plea for Equality of Opportunity,
Technical Education, Vocational Training and Employment. Paris: UNESCO. W
Borus, M. B. 1977. "A cost-effectiveness comparison of vocational training for
youth in developing countries: A case study of four training modes in
israel." Comparative Education Review 21, 1:1-13.
Bowland, D. 1988. Coordination of Training Systems - Some Basic Issues.
Discussion Paper 25. Training Policies Branch. Geneva: ILO.
Buschhaus, D. 1985. Vocational Qualificat4ons and Flexible Production as
Demonstrated in the Industrial Metalworking and Electrical Engineering
Occupations. Berlin: Federal Institute for Vocational Education.
Carr, M. 1981. Developing Small-Scale Industries in India. An Integrated
Approach. London: Intermediate Technology Publications, Ltd.
Carton, M., J. Maurer, H. Sudarsono and D. Widarti. 1987. In-Service Training
in Indonesia. Indonesia: OECD Development Centre, National Institute of
Economic and Social Research.
Castro, C. 1975. "Academic education versus technical education: which is more
general?" In T. J. LaBella, ed., Educational Alternatives in Latin
America: Social Change and Social Stratification. Latin American Center
for Publication. Los Angeles: University of California.
_  1979. "Vocational education and training: Industrial labour in
Brazil." International Labour Review 118, 5:617-629.
_____   1988. "The soul of vocational schools: Training as a religious
experience." International Review of Education 34, (1988):195-206.
____. 1989a. Understanding the Mosaic of Vocational and Technical
Education Institutions? Geneva: ILO. Mimeo.
____. 1989b. Is Training Very Expensive? Geneva: ILO. Mimeo.
Chapman, D. and D. Windham. 1985. "Academic program 'failures' and the
vocational school 'fallacy': policy issues in secondary education in
Somalia." International Journal of Educational Development 5, 4:269-
281.
Charmes, J. 1987. Etude de Cas Sur la Formation en Cours d'Emploi au Burundi.
Vienna: TNIDO.
Charmes, J. and B. Salome. 1987. In-service Training and the Development of
Human Resources: Five Asian Experiences. Paris: OECD Development Centre.
Chin-Aleong, M. 1988. "Vocational secondary education in Trinidad and Tobago
and related evaluation results." In J. Lauglo and K. Lillis, eds.,
Vocationalizing Education. Oxford: Pergamon Press.
- 44 -
0



Chung, Y. P. 1989. Educated Mis-employment: Earnings Effects of Being Employed
in Unmatched Fields of Work for Vocational and Tecl'nical Education
Graduates. Hong Kong: School of Education, Chinese University of Hong
Kong.
Chung, Y. P. Forthcoming. 'Economic returns to vocational and technical
education in a fast growing economy: A case study of Hong Kong.'
Economics of Education Review.
Clark, D. 1983. How secondary graduates perform in the labor market: A study
of Indonesia. Staff Working Paper 615. World Bank, Washington, D.C.
Cohen, S. I. 1985. "A cost-benefit analysis of industrial training." Economics
of Education Review 4, 4:327-339.
Corvalan, V. 0. 1987. "Training for socially disadvantaged youth in Chile." In
E. Fortuijn and W. Hoppers, eds., Paving Pathways to Work: Comparative
Perspectives on the Transition form School to Work. CESO Paperback No.
2. The Hague: Center for the Study of Education in Developing Countries.
Cotlear, D. 1986. Farmer Education and Farm Efficiency in Peru: The Role of
Schooling, Extension Services and Migration. Discussion Paper 49. World
Bank, Education and Training Department, Washington, D.C.
Cuervo, A. 1985. Employer-based Training in Panama. Report Prepared for USAID.
Washington, D.C.: Checchi and Company.
Cumming, C. 1°olD. "The contribution of cost studies." In C. Cumming, M. Davis,
K. Lillis and B. Nyagah, eds., Practical Subjects in Kenyan Academic
Secondary Schools: Background Papers. Education Division Document No.
22. Stockholm: Swedish International Development Agency.
Cumming, C. 1988. "Curriculum costs: Vocational subjects." In J. Lauglo and K.
Lillis. Vocationalizing Education. Oxford: Pergamon Press.
de Beyer, J. Forthcoming. "Enterprise training in Kenya and Tanzania."
Economics of Education Review.
Demery, L. and T. Addison. 1987. The Alleviation of Poverty Under Structural
Adjustment. Washington, D.C.: The World Pank.
Dodd, W. A. 1969. Education for Self-Reliance in Tanzania. New York: Columbia
University.
Eng Fong, P. and B. Salome. 1987. In-Service Training and Industrial
Restructuring in Singapore. Paris: OECD Development Centre.
Fallon, P. R. and L. A. Riveros. 1986. Labor Market Institutions: An Across
Country Analysis of Wage and Non-Wage Regulations. Paper presented to
the Conference on Adjustment in Labor Markets in LDCs to External
Changes. World Bank, Development Research Department, Washington, D.C.
- 45 -
0



Fallon, P. R. and L. A. Riveros. 1988. Macroeconomic Adjustment and Labor
Market Response. Washington, D.C: World Bank. Mimeo.
Fluitman, F. 1987. Training in the Urban Informal Sector of Developing
Countries: Some Recent Findings of Local Observers. Vocational Training
Branch Discussion Paper No. 6. Geneva: International Labour Office.
Foster, P. J. 1965. "The vocational school fallacy in development planning.'
Education and Economic Development. Chicago: Aldine Publishing Company.
Fowler, A. 1990. "After vocational training, what? A tracer study of graduates
of Legruki VTS, Tanzania.' Education with Production 7, 1:14-41.
Frischtak, C. 1989. "Competition as a tool of LDC industrial policy." Finance
and Development 26, 3:27-29.
Fuller, W. F. 1976. "More evidence supporting the demise of pre-employment
vocational trade training: A case study of a factory in India.'
Comparative Education Review 20, 1:30-41.
German Foundation for International Development. 1989. Vocational Training
Strategies to Promote Employment and Self-Help in the Third World.
Mannheim.
Godfrey, M. 1977. "Education, training and productivity: A Kenyan case study.n
Comparative Education Review 21, 1:29-35.
. 1979. "Training in Kenya, Need versus effective demand."
Comparative Education 15, 2:187-195.                                          0
Haggblade, S., C. Liedholm and D. Mead. 1986. The Effect of Policy and Policy
Reforms on Non-agricultural Enterprises and Employment in Developing
Countries. Working Paper 27. Department of Agricultural Economics. East
Lansing, Michigan: Michigan State University.
Hallak, J. and F. Calloids. 1981. Education, Training and the Traditional
Sector. Fundamentals of Educational Planning 31. Paris: UNESCO.
Haveman, R. and D. Saks. 1985. "Transatlantic lessons for employment and
training policy." Industrial Relations 24, 1:20-36.
Herschbach, D. R. 1985. Linking Training and Employment: An Emerging
Perspective. A report prepared for the United States Agency for
International Development. Washington, D.C.: USAID.
Herschbach, D. R and others. 1985. Linking Training and Employment: A Case
Study of Training Systems in Jordan. A report prepared for the U.S.
Agency for In,ternational Development. Washington, D.C.: Graduate School,
U.S. Department of Agriculture.
- 46 -
0



Hinchliffe, K. Forthcoming. "The returns to vocational training in Botswana."
Economics of Education Review.
Hong Kong Productivity Council. 1986. In-service Training as a Means of
Developing Human Resources in Hong Kong. Paris: OECD Development Centre.
Inoue, K. 1985. The Education and Training of Industrial Manpower in Japan.
Staff Working Paper 729. World Bank, Washington, D.C.
International Labour Office. 1972. Employment, Incomes and Equality: A
Strategy for Increasing Productive Employment in Kenya. Geneva:
International Labour Office.
. 1984. Industrial Training. Evaluation Study 11.
New York: UNDP.
. 1988. Technological Change, Work Organization and
Pay: Lessons From Asia. Labor-Management Relations Series No. 68.
Geneva: ILO.
. 1988. Rural and Urban Training in Africa.
Geneva: ILO.
. 1990. The Promotion of Self-employment.
Geneva:ILO.
Ishumi, A. 1988. "Vocational training as ar educational and development
strategy." International Journal of Edacational Development
8, 3:163-174.
Jamison, D. and L. Lau. 1982. Farmer Education and Farm Efficiency. Baltimore:
Johns Hopkins University Press.
Jennings, Z. 1987. "The effectiveness of programs linking education with
productive work in the Commonwealth Caribbean." In E. Fortuijn and W.
Hoppers, eds., Paving Pathways to Work: Comparative Perspective on the
Transition form School to Work. CESO Paperback No. 2. The Hague: Center
for the Study of Education in Developing Countries.
Jimenez, E. and B. Kugler. 1985. Does SENA Matter? Some Preliminary Results on
the Impact of Colombia's National Training System on Earnings.
Discussion Paper EDT2. World Bank, Washington, D.C.
Jimenez, M., B. Kugler and R. Horn. 1989. "National in-service training
systems in Latin America: An economic evaluation of Colombia's SENA.'
Economic Development and Cultural Change 37, 3:595-610.
Kelly, T. F. and L. J. Kenneke. 1988. Report of the External Evaluation Team:
The Basic Skills Training Project (Jamaica). Boston: Education
Development Center.
- 47 -
0



Kim, S. K. 1987. In-service Training as an Instrument for the Development of
Human Resources in Korea. Graduate Institute of Peace Studies and the
OECD Development Centre. Seoul: Kyung Hee University.
King, E. and M. Shifferaw. 1989. Women's Participation in Vocational Education
in LDCs: What Explains Cross-Country Differences? World Bank, Education
and Employment Division, Washington, D.C. Processed.
King, K. 1977. The African Artisan: Education and the Informal Sector in
Kenya. New York: Teachers College Press.
. 1987. "Evaluating the context of diversified secondary education in
Tanzania." In J. Lauglo and K. Lillis, eds., Vocationalizing Education.
Oxford: Pergamon Press.
. 1988. "The new politics of job training and work training in Africa."
International Journal of Educational Development 8, 3:153-162.
Komenan, A. 1987. Education, Exp6rience et Salaries en C6te d'Ivoire: Une
Analyse A Partir de l'Enquete de Main d'Oeuvre de 1984. Discussion Paper
EDT99. World Bank, Washington, D.C.
Krueger, A. 1983. Trade and Employment in Developing Countries, Volume 3:
Synthesis and Conclusions. Chicago: University of Chicago Press.
Kudat, A. 1989. Women's Participation in Human Settlements Management.
Washington, D.C.: Economic Development Institute, World Bank.
Kukler, R. 1987. "A comparison between the Kenya National Youth Service and
the Botswana Brigades. In E. Fortuijn and W. Hoppers, eds., Paving
Pathways to Work: Comparative Perspective on the Transition form School
to Work. CESO Paperback No. 2. The Hague: Center for the Study of
Education in Developing Countries.
Lauglo, J. 1985. Practical Subjects in Kenyan Academic Secondary Schools:
General Report. Education Division Document No. 20. Stockholm: Swedish
International Development Agency.
_______. 1989. "Technical secondary students in Kenya: Origins, achievements
and destinations." Prospects 19, 3:409-426.
Lauglo, J. and A. Narman. 1988. "Diversified secondary education in Kenya." In
J. Lauglo and K. Lillis, eds., Vocationalizing Education. Oxford:
Pergamon Press.
Lee, C. B. 1985. Financing Technical Education in LDCs: Economic Implications
from a Survey of Training Modes in the Republic of Korea. Discussion
Paper 6. World Bank, Education and Training Department, Washington, D.C.
Lee, K. W. 1983. Human Resources Planning in the Republic of Korea. Staff
Working Paper 554. World Bank, Washington, D.C.
- 48 -



Levin, H. M. 1987. "Improving Productivity through Education and Technology."
In G. Burke and R. Rumberger, eds., The Future Impact of Technology on
Work ard Education. New York: Falmer Press.
Liedholm, C. and D. Mead. 1986. Small Scale Enterprises in Developing
Countries: A Review of the State of the Art. MSU International
Development Working Paper. East Lansing, Michigan: Michigan State
University.
Lycette, M. A. 1985. The Industrial and Commercial Job Training for Women
Project in Morocco. Washington, D.C.: USAID.
Mabawonku, A. F. 1979. An Economic Evaluation of Apprenticeship Training in
Western Nigeria Small-scale Industries. African Rural Economy Paper 17.
East Lansing, Michigan: Michigan State University.
Machado, N. H. S and A. J. Romiszowski. 1979. "Developing a large-scale
modularized training system for Brazilian telecommunications." In
Educational Technology and Developing Countries. Nicholas Publishing
Company.
Maligi, S. 1987. "SLOIC: A Case Study From Sierra Leone." In E. Fortuijn and
W. Hoppers, eds., Paving Pathways to Work: Comparative Perspective on
the Transition form School to Work. CESO Paperback No. 2. The Hague:
Center for the Study of Education in Developing Countries.
Mangum, G. 1984. On-The-Job Training in Small Business: The State of the Art.
Institute for Human Resource Management. Salt Lake City, Utah:
University of Utah.
Marsden, R. 1984. "Services for small firms: The roles of government
programmes and market networks in Thailand.' International Labour Review
123, 2:235-249.
Mazumdar, D. 1976. "The urban informal sector." World Development
4, 8:655-679.
. 1987. Rural and Urban Labor Markets in Developing Countries:
Analysis and Policy Implications. The Economic Development Institute.
Washington, D.C.: The World Bank.
McLaughlin, S. 1979. The Wayside Mechanic: An Analysis of Skill Acquisition in
Ghana. Amherst, Massachusetts: University of Massachusetts.
Metcalf, D. H. 1985. The Economics of Vocational Training: Past Evidence and
Future Considerations. Staff Working Paper 713. World Bank, Washington,
D.C.
- 49 -
0



Middleton J., A. Ziderman and A. V. Adams. Forthcoming. Skills Training for
Productivity: Vocational Education and Training in Developing Countries.
Washington, D.C.: World Bank. Processed.
Min, W. Y and M. C. Tsang. Forthcoming. "Vocational education and
productivity: A case study of the Beijing Auto Industry Company."
Economics of Education Review..
Ming, C. K. 1987. "Where are the trainees?" In E. Fortuijn and W. Hoppers,
eds., Paving Pathways to Work: Comparative Perspective on the Transition
form School to Work. CESO Paperback No. 2. The Hague: Center for the
Study of Education in Developing Countries.
Montrichard, R. 1987. "Beyond skills training. The work of servol in
Trinidad." In E. Fortuijn and W. Hoppers, eds., Paving Pathways to Work:
Comparative Perspectives on the Transition From School to Work. CESO
Paperback No. 2. The Hague: Center for the Study of Education in
Developing Countries.
Moore, R. 1988. "Performance contracting: Some evidence of effectiveness."
International Journal of Educational Development 8, 3:242-246.
Narman, A. 1988a. A Tracer Study of the Moshi Vocational Training Centre
(MVTC), Tanzania. University of Cothenburg, Sweden.
. 1988b. "Technical secondary schools and the labour market: Some
results from a tracer study in Kenya." Comparative Education
24, 1:19-35.
National Assessment of Vocational Education. 1989. Final Report. Volume 1.
Washington, D.C.: U.S. Department of Education.
Noah, H. and M. Eckstein. 1988. "Business and industry involvement with
education." In J. Lauglo and K. Lillis, eds., Vocationalizing Education.
Oxford: Pergamon Press.
Oliviera, J. and C. Castro. 1988. Individualized Learning Systems for
Vocational Technical Training: The SENAI System. Economic Development
Institute. Washington, D.C.: World Bank.
O'Regan, F. and D. A. Hellinger. 1981. "Case studies: Africa." In F. Farbman,
ed., The PISCES Studies: Assisting the Smallest Economic Activities of
the Urban Poor. Washington, D.C.: U.S. Agency for International
Development, Office of Urban Development, Bureau of Science and
Technology.
Ouh, Y. B. 1988. "An inquiry into factors affecting the behavioral patterns of
Korean enterprises." Korea Journal March, 1988.
Oxenham, J. 1988. "What Do Employers Want from Education?" In J. Lauglo and K.
Lillis, eds., Vocationalizing Education. Oxford: Pergamon Press.
- 50 -



Patel, V. G. 1986. The Indian Entrepreneurship Development Program and its
Relevance to Developing Countries. Washington, D.C.: World Bank Economic
Development Institute.
Psacharopoulos, G. and W. Loxley. 1985. Curriculum Diversification in Colombia
and Tanzania: An Evaluation. Baltimore: Johns Hopkins University Press.
Psacharopoulos, G. and A. Zabalza. 1984. The Destination and Early Career
Performance of Secondary School Graduates in Colombia: Findings form the
1987 cohort. Staff Working Paper 653. World Bank, Washington, D.C.
Psacharopoulos, G. 1987. "To vocationalize or not to vocationalize? That is
the curriculum question." International Review of Education
33, 1987:187-211.
Puryear, J. M. 1979. "Vocational training and earnings in Colombia: Does a
SENA effect exist?" Comparative Education Review 23, 2:283-292.
Salmi, J. 1987. "New hope for unemployed youth? The vocational training reform
in Morocco." In E. Fortuijn and W. Hoppers, eds., Paving Pathways to
Work: Comparative Perspectives on the Transition From School to Work.
CESO Paperback No. 2. The Hague: Center for the Study of Education in
Developing Countries.
Salmi, J. 1989. Issues in Strategic Planning for Vocational Education: Lessons
of Experience from North Africa and the Middle East. Paper presented at
the VIIth World Congress of Comparative Education.
O...a   San, G. 1986. The Status of Vocational Training in Taiwan and a Study on
Factors Which Affect a Firm's Training Effort. Washington, D.C.: World
Bank. Processed.
Schiefelbein, E. and J. Farrell. 1982. Eight Years of their Lives: Through
Schooling to the Labour Market in Chile. Ottawa: International
Development Research Centre.
Sethuraman, S. V., ed. 1981. The Urban Informal Sector in Developing
Countries: Employment, Poverty and the Environment. Geneva:
International Labour Office.
. 1988. The Informal Sector: A Review of Evidence from Selected
Asian countries. Geneva: ILO. mimeo.
Schio, F. 1987. Etude de Cas sur la Formation en Cours d'Emploi en C6te
d'Ivoire. Vienna: UNIDO.
Skills Development Fund. 1989. Singapore Skills Development Fund Annual Report
1987/88. Singapore.
- 51 -



Small Enterprise Education and Promotion Network. 1988. Technical Assistance
and Training: What Difference Does It Make? How Can It Be Done
Effectively and Affordably? New York.
Squire, L. 1981. Employment Policy in Developing Countries: A Survey of Issues
and Evidence. New York: Oxford University Press.
Thompson, A. R. 1988. Training for Teachers of Technical Subjects in Secondary
Schools in Developing Countries. Synthesis Report. Bristol: Bristol
University School of Education.
Turnham, D., B. Salome and A. Schwartz. 1990. The Informal Sector Revisited.
Paris: OECD Development Centre.
Urevbu, A. 0. 1984. "Vocational education in Nigeria: A preliminary
appraisal." International Journal of Educational Development.
4, 3: 223-229.
UNESCO. 1987. International Conference on the Development and Improvement of
Technical and Vocational Education. Final Report. Paris.
USAID. 1986. New Directions for Promoting Saall and Medium-Scale Enterprise
Development in Malawi: Constraints and Prospects for Growth. Final
Draft. Washington, D.C.: U.S. Agency for International Development.
Waite, L. and S. Berryman. 1985. Women in Nontraditional Occupations. Santa
Monica: Rand Corporation.
Weisberg, A. 1983. "What research has to say about vocational education and
the high schools." Phi Delta Kappan 64, 5:355-359.
Welch, F. 1978. "The role of investments in human capital in agriculture." In
T. W. Schultz, ed., Distortions of Agricultural Incentives.
Bloomington, Indiana: Indiana University Press.
World Bank.  1990.  Primary Education.  A World Bank Policy Paper.
Washington, D.C: World Bank.
Woodhall, M. 1972. "The use of cost-benefit analysis to compare the rates of
return at different educational levels: Colombia." Educational Cost
Analysis in Action: Case Studies for Planners II.
Wright, C. 1988. "Curriculum diversification re-examined: A case study of
Sierra Leone.n In J. Lauglo and K. Lillis, eds., Vocationalizing
Education. Oxford: Pergamon Press.
Yunus, M. 1988. Grameen Bank: Organization and Operations. Paper for the World
Bank/USAID Conference on Micro-enterprises in Development. June, 1988.
Ziderman, A. 1989. "Training alternatives for youth: Results from longitudinal
data." Comparative Educational Review 33, 2:243-255.
- 52 -



(
Zymelman, M. 1976. The Economic Evaluation of Vocational Training Programs.
0               Baltimore: The Johns Hopkins University Press.
0
- 53 -
0