Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD888 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 65.7 MILLION (US$101.5 MILLION EQUIVALENT) TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A SKILLS DEVELOPMENT PROJECT May 27, 2014 Human Development Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: PAD888
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 65.7 MILLION (US$101.5 MILLION EQUIVALENT)
TO THE
DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
FOR A
SKILLS DEVELOPMENT PROJECT
May 27, 2014
Human Development Unit South Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective March 31, 2014)
Currency Unit = SR Rs SR Rs 130.3 = US$1
US$ 1.54563 = SDR 1
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank IDA International Development Association Addl Sec Additional Secretary IMSCC Inter-Ministerial Sector Coordination
Committee AG Auditor General ISSC Industry Sector Skills Council BP Business Plan IUFR Interim Unaudited Financial Report CGTTI Ceylon-German Technical Training
Institute LFS Labor Force Survey
CIGAS Comprehensive Integrated Government Accounting and Reporting Software
LMI Labor Market Information
CoT College of Technology M&E Monitoring and Evaluation CPS Country partnership strategy MC Mahinda Chintana, Sri Lanka’s
economic development plan DA Designated Account MIS Management information system DCS Department of Census and Statistics MoFP Ministry of Finance and Planning DLI Disbursement-linked indicator MPP Master Procurement Plan DTET Department of Technical Education and
Training MTBEF Medium Term Budget and Expenditure
Framework EEP Eligible Expenditure Program MYASD Ministry of Youth Affairs and Skills
Development EDDG Environmental Due Diligence
Guidelines NAITA National Apprentice and Industrial
Training Authority EMIS Education Management Information
Systems NCB National Competitive Bidding
ETA Employment-linked Training Agreement NCS National Competency Standards FM Financial management NITAC National Industry Training Advisory
Committee FY Fiscal Year NGO Non-governmental Organization GDP Gross domestic product NHREP National Human Resources and
Employment Policy GCE General Certificate of Education NIFNE National Institute of Fisheries and
Nautical Engineering HR Human resource NIBM National Institute of Business
Management HRD Human resource development NVQ National Vocational Qualification IBRD International Bank for Reconstruction
and Development NYC National Youth Corps
ICB International competitive bidding NYSC National Youth Services Council ICT Information and communication
technology OJT On-the-job training
IFC International Finance Corporation PBF Performance-based funding PDO Project Development Objective
PIA Project Implementing Agencies SLPSAS Sri Lanka Public Sector Accounting Standards
POM Project Operation Manual SSDP Skills Sector Development Program PP Procurement Plan STEP Skills Toward Employment and
Productivity PSC Program Steering Committee TEC Technical Evaluation Committee PTS Procurement Time Schedule TP Training providers QAS Quality assurance system TPV Third-party validation QMS Quality management system TVEC Tertiary and Vocational Education
Commission RBF Results-based financing TVET Technical and vocational education and
training RPL Recognition of prior learning UNIVOTEC University of Vocational Technology SDD Skills Development Division VTA Vocational Training Authority of Sri
Lanka SDP Skills Development Project
Regional Vice President: Philippe H. Le Houerou Country Director: Francoise Clottes
Acting Sector Director: Pablo Gottret Sector Manager: Amit Dar
Task Team Leader: Halil Dundar
SRI LANKA
Skills Development Project
TableofContents
I. STRATEGIC CONTEXT .................................................................................................1
A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 1 C. Higher Level Objectives to which the Project Contributes .......................................... 6
II. PROJECT DEVELOPMENT OBJECTIVE ..................................................................6
A. PDO............................................................................................................................... 6 B. Project Beneficiaries ..................................................................................................... 6 C. PDO Level Results Indicators ....................................................................................... 7
III. PROJECT DESCRIPTION ..............................................................................................7
A. Project Components ...................................................................................................... 7 B. Project Financing .......................................................................................................... 9 C. Lessons Learned and Reflected in the Project Design ................................................ 10
IV. IMPLEMENTATION .....................................................................................................11
A. Institutional and Implementation Arrangements ........................................................ 11 B. Results Monitoring and Evaluation ............................................................................ 12 C. Sustainability............................................................................................................... 13
V. KEY RISKS AND MITIGATION MEASURES ..........................................................13
A. Risk Ratings Summary Table ..................................................................................... 13 B. Overall Risk Rating Explanation ................................................................................ 13
VI. APPRAISAL SUMMARY ..............................................................................................14
A. Economic and Financial Analysis ............................................................................... 14 B. Technical ..................................................................................................................... 14 C. Financial Management ................................................................................................ 15 D. Procurement ................................................................................................................ 16 E. Social (including Safeguards) ..................................................................................... 16 F. Environment (including Safeguards) .......................................................................... 17 G. Other Safeguards Policies Triggered .......................................................................... 17
Annex 1: Results Framework and Monitoring .........................................................................18
Total Project Cost: 650.00 Total Bank Financing: 101.5
Financing Gap: 0.00 .
Financing Source Amount
BORROWER/RECIPIENT 405.50
International Development Association (IDA) New (SDR 54,118,457) Recommitted (SDR 11,581,543)
101.50 83.60 17.90
Asian Development Bank 100.00
KOREA, Govt. of 26.00
GERMANY German Technical Assistance Corporation (GTZ)
17.00
Total 650.00 .
Expected Disbursements (in USD Million)
Fiscal Year (FY) 2015 2016 2017 2018 2019 2020 2021
Annual 10.0 23.3 23.4 23.4 20.5 0.9 0.00
Cumulative 10.0 33.3 56.7 80.1 100.6 101.5 0.00 .
Proposed Development Objective(s)
The objective of the Project is to expand the supply of skilled and employable workers by increasing access to quality and labor market relevant training programs. .
Components
Component Name Cost (USD Million)
Program Support to the Skills Sector Development Program 93.6
Innovation, Results Monitoring, and Capacity Building 7.9.
Institutional Data
Sector Board
Education .
Sectors / Climate Change
Sector (Maximum 5 and total % must equal 100)
Major Sector Sector % Adaptation Co-benefits %
Mitigation Co-benefits %
Education Vocational training 70
Education Tertiary education 30
Total 100
I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to
this project. .
Themes
Theme (Maximum 5 and total % must equal 100)
Major theme Theme %
Human development Education for the knowledge economy 70
Social protection and risk management Improving labor markets 20
Social protection and risk management Social safety nets 10
Total 100 .
Compliance
Policy
Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ].
Does the project require any waivers of Bank policies? Yes [ ] No [ X ]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Legal Covenants
Name Recurrent Due Date Frequency
Inter-Ministerial Sector Coordination Committee
X CONTINUOUS
Description of Covenant
Preparation and adoption, by no later than 3 months after the Effectiveness Date, of a Project Operational Manual Establishment, by no later than 3 months after the Effectiveness Date, of an Inter-Ministerial Sector Coordination Committee, which shall be maintained throughout the implementation of the Project
Name Recurrent Due Date Frequency
Program Steering Committee X CONTINUOUS
Description of Covenant
Establishment, by no later than 3 months after the Effectiveness Date, of a Program Steering Committee, which shall be maintained throughout the implementation of the Project
Name Recurrent Due Date Frequency
Skills Development Division X CONTINUOUS
Description of Covenant
Maintenance, throughout the implementation of the Project, of a Skills Development Division within MYASD
Name Recurrent Due Date Frequency
Skills Sector Development Program X CONTINUOUS
Description of Covenant
Preparation and adoption, by no later than 3 months after the Effectiveness Date, of a Skills Sector Development Program
Name Recurrent Due Date Frequency
Internal Audit Arrangements X CONTINUOUS
Description of Covenant
Maintenance, throughout the implementation of the Project, of adequate internal audit arrangements
Name Recurrent Due Date Frequency
Safeguards X CONTINUOUS
Description of Covenant
Implementation of the Project in accordance with the Environmental Due Diligence Guidelines.
Name Recurrent Due Date Frequency
Disbursement Linked Results Verification X Yearly
Description of Covenant
Undertaking of an annual DLR verification process, including through independent third party entities, where required under the Project Operational Manual. .
Conditions
Name Type
Disbursement Conditions Disbursement
Description of Condition
Disbursement of the proceeds of the Credit for Component 1 of the Project will be processed annually based on fulfillment of the Disbursement Linked Indicators (DLIs) as defined in Annex 1 to the PAD (Schedule 2 to the Financing Agreement).
Team Composition
Bank Staff
Name Title Specialization Unit
Hiran Herat Consultant Implementation SASDC
Michelle Riboud Consultant Economist SASED
Halil Dundar Lead Education Specialist Team Leader SASED
Harsha Aturupane Lead Education Specialist Education SASED
Scherezad Joya Monami Latif
Senior Education Specialist Education SASED
Alejandro Welch Information Assistant Information Assistant SASHD
Mohamed Ghani Razaak Senior Social Development Specialist
Social Development SASDS
H. Shalika Subasinghe Consultant Social Protection SASSP
G. W. Anjali U. Perera Vitharanage
Procurement Analyst Procurement SARPS
Anita Lakshmi Fernando Team Assistant Team Assistant SASHD
Darshani De Silva Environmental Specialist Environment SASDI
Bernadeen Enoka Wijegunawardene
Financial Management Specialist
Financial Management SARFM
Tara Beteille Economist Economist SASED
Ayesha Khan Operations Analyst Economist SASED
Dae Bong Kwon Consultant TVET SASED
Mokshana Nerandika Wijeyeratne
E T Consultant Environment SASDI
Non-Bank Staff
Name Title Office Phone City
.
Locations
Country First Administrative Division
Location Planned Actual Comments
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I. STRATEGIC CONTEXT
A. Country Context
1. Sri Lanka is a lower-middle-income country with a Gross Domestic Product (GDP) per capita of US$2,923 in 2012 – above that of the South Asia region as a whole but considerably below the average for middle-income countries. Over the past decade, the country has enjoyed a relatively healthy 5.3 percent economic growth rate. When conflict ended in 2009, growth accelerated to an average of 8 percent through 2011. The economy is now transitioning from a predominantly rural, agriculture-based economy to an urban economy centered on services and manufacturing. Between 1977 and 2012, the agriculture share of GDP declined from about 31 percent to 11 percent, the industry share rose from about 29 percent to 31 percent, and the services share rose from about 41 percent to 58 percent.
2. For the past three decades, Sri Lanka has been making significant progress on its human development indicators. Sri Lanka’s workforce is the most educated in South Asia: about 96 percent of its citizens complete primary school and 87 percent secondary school, and there is gender parity in school completion. Despite a large number of educated young workers, Sri Lanka’s labor market is characterized by high youth unemployment, high underemployment, and considerable informality. Although the overall unemployment rate declined from 9 percent in 2000 to 4 percent in 2012, about 20 percent of 15–24 year-olds were still unemployed in 2012. Both underemployment and informal sector employment are of concerns to the Government, since in 2012, 18 percent of employed Sri Lankans were underemployed and 62 percent worked in the informal sector. Emigration has been one way to reduce tensions in the labor market: it is estimated that more than one million Sri Lankans are employed abroad and while in the past most were housemaids or unskilled workers, today an increasing number of skilled workers are looking for job opportunities overseas.
3. The Sri Lankan Government’s economic development plan, the Mahinda Chintana (MC), has the ambitious aim of transitioning Sri Lanka to middle-income status by 2016,1 with a goal of per capita income of US$4,000. The Government’s vision rests on diversifying the economy by taking advantage of the country’s location, to become a hub in Asia in five strategic areas: maritime, aviation, commerce, energy, and knowledge. To accomplish this, infrastructure development, improvement in the business environment, especially firm competitiveness, and enhancement of workforce quality are now government priorities. Although Sri Lanka’s education attainment rates are higher than those in neighboring countries, employers are questioning the quality and relevance of education and training, and major skills shortages and mismatches are undermining productivity and thus economic growth.
B. Sectoral and Institutional Context
4. Skills development is a life–long process that proceeds in stages, each building on the previous one. The foundation comprises the basic cognitive skills, such as literacy and numeracy, that children typically acquire in primary school and that are honed in adolescence.
1 Ministry of Finance and Planning. Mahinda Chintana: Vision for A New Sri Lanka – A Ten year Horizon Development Framework 2006-2016. Department of National Planning, Colombo.
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Job-specific skills are usually acquired in technical and vocational education and training (TVET) or higher education institutions or through apprenticeships and on-the-job training (OJT). Certain soft skills may be acquired at any point, not only in the education and training system but also in interactions with family members, peers, or colleagues. An efficient skills development system embraces the entire spectrum and provides opportunities for lifelong learning.
5. In recent decades, Sri Lanka has made impressive progress in improving access to primary and secondary education, although more needs to be done to improve access to secondary education. By 2000 more than 80 percent of the population had already completed either primary or secondary education. Today, with a primary net enrollment rate of 99 percent and gender parity in both primary and secondary education, the focus of policy attention has now shifted from access to learning outcomes. The government is also directing efforts to building more complex skills, especially cognitive and soft skills, among primary and secondary education students and improving the job–specific skills of youth through pre–employment skills development.
6. With regard to job–specific skills, the TVET sector is the major provider of pre–employment training. In 2012, about 150,000 students, 43 percent of them female, enrolled in TVET courses in a vast network of public and private training institutes. In 2013, 2,575 institutes were registered with the Tertiary and Vocational Education Commission (TVEC), of which 1,081 (519 public, 562 private and nongovernmental organizations [NGOs]) were actively providing services and together offering approximately 1,600 accredited programs. The duration of training varies according to the requirements of each institute.
7. Sri Lanka’s highly fragmented public skills development system comprises 33 statutory boards and 15 ministries. The Ministry of Youth Affairs and Skills Development (MYASD) is responsible for providing more than 70 percent of public training. It is charged with formulating skills development and youth development policies; coordinating and facilitating the institutions within its purview; and managing their administration and the monitoring and evaluation (M&E) of their programs. Within the MYASD, numerous support agencies and departments have different modes of operation and degrees of autonomy. Specialized training (the other 30 percent of public training) is also offered by a number of other ministries and agencies.
8. The government already has introduced several reforms in the skills development sector. For the past 15 years, with support from the Asian Development Bank (ADB), the Government has been building a skills development system by: (a) upgrading the apprenticeship program; (b) expanding skills development programs throughout the country to meet employer demand for entry–level skills; (c) introducing competency-based training and establishing the National Vocational Qualification (NVQ) framework to provide diversified pathways for skills acquisition and qualification upgrading; (d) setting up a ministry dedicated to skills development and reorganizing the sector to bring most public training under its purview; and (e) developing a quality assurance mechanism.
9. Nevertheless, Sri Lanka faces serious TVET challenges that jeopardize its goal of becoming a competitive middle–income economy. Among these are (a) weak management and
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governance, including poor sector coordination, planning, and M&E; (b) poor quality and relevance of skills development programs; (c) limited access, especially to middle–level skills training programs in priority sectors; and (d) inadequate resources and internal inefficiency.
Sector Management and Governance
10. The complexity of Sri Lanka’s skills development system demands more effective coordination and management. However, a lack of institutional capacity for coordination and management undermines sector performance and thus the potential to meet the skills needs of the economy. The following are major challenges for the system: (a) Sri Lanka’s skills development programs are not sufficiently aligned with national development priorities. Though in recent years Sri Lanka has made progress in realigning its workforce development strategy with its economic development plan, until recently government skills development programs were not well–integrated with the MC goals, which stress that skills are vital to economic growth. Preparation of the Government’s program through the public investment strategy is a major achievement to address this challenge. (b) Sectoral coordination is insufficient. To realize government skills development policies, inter-ministerial coordination is necessary but not yet formalized. The proposed Inter-Ministerial Sector Coordination Committee (IMSCC), together with the Government’s Skills Sector Development Program (SSDP), would be a major step toward coordinating policies and programs at the national level. (c) There is a lack of both institutional autonomy and accountability for performance. Public training providers are financed mainly by the national budget, but allocations are not linked to performance. Consequently, public institutions have neither freedom nor incentives to replace obsolete training courses with new ones, change curricula, and bring the private sector into their decision making so as to become more responsive to labor market demand for skills. (d) M&E capacity is weak. The planning process does not regularly ascertain national and regional demand based on information from the labor market and from employers. Information about current demand for skills and training opportunities is neither timely nor accurate, and there are no reliable forecasts of emerging needs. Moreover, no regular studies track competencies achieved, and it is not possible to evaluate the performance of TVET institutions directly.
Quality and Relevance of Skills Development Programs
11. Major skills mismatches and shortages in the labor market undermine Sri Lanka’s competitiveness and growth prospects. As the composition of its GDP has moved from agriculture toward the higher value-added manufacturing and service sectors, there is increased demand for high-skilled workers in several sectors (e.g., tourism and health care). The government goal of turning Sri Lanka into a regional hub in five strategic areas is likely to further accelerate demand for skills in sectors such as information and communication technology and construction. In addition to skills shortages, Sri Lanka faces mismatches in skills supply and demand. Asked about barriers to their growth and productivity, firms identify the quality and availability of skilled labor third after taxes and regulation, and financing. The most serious constraints are faced by firms in modern higher–value-added industries and firms hiring for higher-skilled occupations.
12. While demand for job–specific skills has been growing, the quality of skills development programs is considered to be poor. Though employers consider the TVET
4
system to be critical for providing the educated workers they need, they question the quality and relevance of skills development programs. For example, more than 50 percent of firms state that the system does not produce skills that are relevant. Moreover, about 33 percent consider the lack of adequate skills as one of the major constraints on operating and growing their businesses. Clearly, the limited supply of adequately educated workers inhibits firm productivity and competitiveness. Several factors contribute to these poor labor outcomes:
Training standards and curricula need to be updated, taking into account changes in the economy and in labor market demand. Sri Lanka designed and introduced a qualification (NVQ) system in 2005 to help define training standards based on occupational requirements, but NVQ implementation is still problematic. The system is mandatory for public institutions but used only partially by the private sector. Its coverage is still limited and some curricula are outdated or were drafted without adequate input from employers. Nor is there mobility between TVET and tertiary education. In setting competency standards, consideration should also be given to the development of soft skills. Recent studies have demonstrated that soft skills, such as teamwork, problem solving, computer skills, and languages, are increasingly important to for the competitiveness of Sri Lanka’s workforce as it develops service and value–added manufacturing sectors.
There is a shortage of qualified teaching staff, especially instructors with industrial experience. Unattractive salaries and inadequate professional development opportunities undermine teacher motivation and make retention difficult. The situation is aggravated by the lack of performance incentives, poor conditions of service, and minimal career progression structures.
Instructional materials, equipment, and facilities, except in a few institutions, are not up to par.
Quality assurance is lacking. Although there has been progress, a large number of private providers are still neither registered nor accredited, and in public institutions there is no systematic mechanism to monitor and improve quality, such as program or institutional reviews or self–assessments.
The private sector is not involved enough in skills development. The Government has moved to make programs more relevant to the labor market by establishing the TVEC, which does have members from the private sector and by creating the NVQ system. Several institutions also cater directly to the needs of employers and have good links with industries. However, in general, the private sector is only minimally involved in delivery and management of public skills development programs, which undermines the quality and relevance of training.
Access to Skills Development
13. Skills development is assuming greater importance as Sri Lanka transitions to an efficiency–driven and more competitive middle–income economy. After completing basic education (grade 9), students may end their studies, continue on to senior secondary education,
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enroll in technical education or training, or (after grade 13) continue on to university. However, student demand for higher education is not being met because higher education institutions have limited enrollment capacity; and the successful expansion of general education in recent decades has led to many more students completing secondary education. Every year, an estimated 141,000 students join the workforce (mostly informal) without having job–related skills. Given the limited capacity of the higher education system, the Government sees skills development as having a major role in closing the skills gap.
14. Even though the Government has been expanding job-specific skills training, some of the training programs are perceived as dead–end or last–choice options, so demand for them is low; there is a perception that students are channeled into TVET because they have less academic ability. There are also negative perceptions about TVET’s financial payoff, a negative association between training and manual labor, a lack of vertical articulation, and restrictions on upward mobility.
15. There are also inequities in access to skills development programs. Individuals from wealthier households are more likely to complete TVET. Students from urban areas are on average more educated and more likely to complete pre-employment training programs than rural residents. Moreover, while there is gender parity in general education, women are less likely (16 percent) than men (18 percent) to finish TVET programs. Women also tend to enroll in traditionally female occupations and thus have low levels of participation in technology–related courses which could lead to better paying jobs. To address these challenges, the Government is working to increase awareness of the usefulness of job–related skills for upward social mobility and to promote their potential as a pathway to higher education studies and wider career options.
Financing
16. Public spending on skills development has been severely constrained by limited fiscal space. In 2012, the total financial effort for the sector only amounted to about 1.5 percent of general government expenditures; the MYASD budget itself represented 0.4 percent of total government recurrent expenditures and 0.8 percent of capital expenditures. Until recently, there was no overall skills sector development program. Inadequate investment in skills development undermines not only current efforts to improve the quality and relevance of existing programs but also the design of reforms to expand access to quality programs, especially in priority and emerging sectors.
The Government Skills Sector Development Program
17. Over the next seven years (2014-20), Sri Lanka intends to implement a comprehensive education and training plan. The government economic plan recognizes the importance of education and training if it is to achieve its ambitious development goals, transform priority sectors into state–of–the–art systems and improve labor productivity. Recognizing that skills development is much broader than just training, the plan envisions investment in human capital in an integrated manner from early childhood development through higher education. The Government is already implementing programs in both general and higher
6
education, supported by the World Bank and other development partners.2 In the area of skills development, the Government has requested technical and financial support from development partners, including the World Bank, for the design and implementation of a skills development plan that can meet the needs of a competitive middle–income country and support Sri Lanka’s transition to a knowledge-based economy. Building on the vision and strategic directions of the Mahinda Chintana, the Government has adopted a sector-wide, medium-term program (2014-2020) to transform Sri Lanka’s TVET sector into an effective skills development system and has inserted the financing plan within the country’s medium term budget and expenditure framework.
C. Higher Level Objectives to which the Project Contributes
18. The proposed Skills Development Project3 (SDP) is fully aligned with the World Bank Group’s Country Partnership Strategy (CPS FY13-FY16).4 The CPS seeks to deepen the Bank Group support as Sri Lanka addresses its emerging middle-income country agenda, as expressed in the MC’s three goals: (1) doubling per capita income through investment; (2) re–structuring the economy; and (3) improving living standards and social inclusion. The CPS explicitly recognizes the importance of investment in education, skills, and research and innovation to support structural shifts in the economy. It considers education to be important not only for direct increases in productivity but also as a prerequisite for innovation and adaptation of technology. In addition to the lending for secondary and higher education, the CPS plans to support government efforts to move Sri Lanka toward a knowledge–based, globally integrated, and competitive economy by investing in skills development and research and innovation. The proposed Project is an important contributor to achievement of the CPS objectives.
II. PROJECT DEVELOPMENT OBJECTIVE
A. PDO
19. The objective of the Project is to expand the supply of skilled and employable workers by increasing access to quality and labor market relevant training programs.
B. Project Beneficiaries
20. The Project is expected to benefit youth who wish to gain job–specific skills in order to join the labor market. An estimated 830,000 (cumulative) Sri Lankan youth will directly benefit from the Project. Adults already in the labor market would also benefit from the Project skill certification program (“recognition of prior learning [RPL]”) and through in-service training made possible through easier access to training facilities and programs. Because of the disproportionate financial burden of the cost of training, enabling the public sector to open up
2 The World Bank is currently supporting the Higher Education for Twenty–First Century Project and the Transformation of Secondary Education Project. 3 In this document, the Program refers to the Government’s Skills Sector Development Program (SSDP), which would be financed through funds from both government and development partners (including the International Development Associations (IDA); and the Project refers to the IDA– financed activities of the Government’s program. 4 World Bank. 2012. “The Country Partnership Strategy 2013–16 for the Democratic Socialist Republic of Sri Lanka.”
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access to quality skills development programs will be of particular benefit to the poor. Indirect beneficiaries include employers who will be able to recruit trained individuals.
C. PDO Level Results Indicators
21. The following results indicators will be used to measure progress towards achievement of the PDO:
Number of trainees enrolled in public and private training institutions
Completion rate of trainees enrolled in public training institutions
Average earnings of graduates in skills development programs relative to earnings of General Certificate of Education (GCE)-O level graduates
Index of employer satisfaction
III. PROJECT DESCRIPTION
22. The Government launched the Skills Sector Development Program (SSDP) as part of its Public Investment Strategy 2014–16. The Program reflects government commitment to the development of skills necessary to achieve MC goals. It provides the overarching strategic framework for building an efficient system that, by 2020, can meet local and foreign labor market demand. The SSDP focuses on the following policy areas: (a) supportive policies, systems, and structures that are responsive to domestic and overseas labor market demand; (b) improving the quality of skills development programs; (c) making programs more relevant to industry needs; (d) expanding access to TVET; and (e) improving public awareness of TVET benefits. The SSDP identifies the major challenges in the sector, policy directions, most effective actions, performance targets, indicative financing requirements, and the entities responsible. The proposed Project will support the Government’s program across its main areas, structured around two components: (a) Program Support to the SSDP; and (b) Innovation, Results Monitoring, and Capacity Building.
A. Project Components
Component 1: Program Support to the Skills Sector Development Program (SSDP) [total: US$648 million for 2014-2018; of which the IDA contribution is US$93.6 million]
23. Component 1 uses a results–based financing (RBF) modality. Disbursements up to a capped amount will be made against specific line items in annual MYASD’s budgets; disbursement against these eligible expenditure programs (EEPs) will be conditioned on the achievement of specified results, as measured by disbursement–linked indicators (DLIs) (see Annex 1 for the DLI matrix). Three closely related types of interventions will be supported by this Component, linked to the five SSDP policy areas: (a) strengthening governance and management (policy area 1 of the SSDP); (b) enhancing the quality and relevance of training (policy areas 2 and 3); and (c) increasing access to training opportunities (policy areas 4 and 5).
24. Pillar 1: Strengthening Sector Governance and Management. The main objective is to strengthen governance and management of the sector by a tighter and more intensive focus on results and more efficient use of resources. This pillar will support reforms to accomplish the
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following objectives: (a) ensuring adequate and predictable financing of the sector; (b) improving analysis of labor market supply and demand; (c) improving M&E of training provider performance; (d) increasing coordination within MYASD and across ministries; (e) rationalizing utilization of existing TVET resources; and (f) implementing performance–based financing to support institutions that perform well. For this pillar, the release of IDA funds will be linked to achievement of three DLIs: (a) MYASD annual budget approved and executed in line with the SSDP and its fiscal and budgetary framework (DLI1); (b) timely availability of reliable institution and agency data and periodic analysis of courses, centers, and teacher performance (DLI2); and (c) performance–based funding of public training providers designed, piloted, evaluated, and expanded (DLI3).
25. Pillar 2: Improving the Quality and Relevance of Skills Development. The objective is to improve the quality and relevance of the skills development programs offered by all institutions, public, private and NGO. This pillar will support: (a) simplifying, updating and developing the NVQ system to respond to employer needs, including increasing demand for soft skills; (b) addressing the shortage of qualified instructors by designing and putting in place a revised teacher management policy (recruitment, retention and career progression) with special allowances linked to performance; (c) designing and implementing a teacher professional development program to upgrade instructors skills; (d) establishing effective mechanisms and incentives to involve employers in training design and management of training institutions, and (e) unifying the Sri Lanka qualification framework and establishing pathways between general and technical education. For this pillar, release of IDA funds will be linked to achievement of the following DLIs: (a) more relevant training programs for students through increased employer participation (DLI4); (b) improved quality assurance mechanisms (DLI5); (c) implementation of a revised human resource policy and plan (DLI6); and (iv) upgrading of teaching staff skills in priority areas (DLI7) (see Annex 1 for details).
26. Pillar 3: Expanding Access to Quality Skills Training. Under this pillar, the Government plans to increase equitable access to quality skills development programs through priority interventions that the Project will support and monitor: (a) design and conduct of a social awareness strategy to inform the public of the benefits of skills training and reduce attached stigma; (b) adoption of a mechanism (the employment–linked training agreement, ETA) to increase the number of trainees in key growth sectors by purchasing training services from private or public providers; (c) design and launch of a targeted stipend program to remove financial obstacles for meritorious low–income students and workers; and (d) expansion of market–driven middle–level technician training programs by setting up university colleges. For this pillar, the release of IDA funds will be linked to the following DLIs: (i) implementation of the Employment-linked Training Agreement (ETA) model (DLI8) and (ii) improved use and dissemination of system information (DLI9).
Component 2: Innovation, Results Monitoring, and Capacity Building [IDA contribution is US$7.9 million]
27. This component aims to strengthen the capacity of MYASD and its participating agencies and help them to achieve the SSDP objectives. It will provide support in the areas of: M&E, coordination, planning, communication, financial management, procurement, and safeguards. It will also help MYASD to design and realize policy reforms, such as piloting and
9
evaluating innovative approaches and facilitate regular dialogue between the public and the private sector on skills. It will finance training; recruitment of short and long-term technical experts; studies, surveys and evaluations; and procurement of goods for specific activities.
B. Project Financing
Lending Instrument
28. The proposed SDP will use an Investment Project Financing (IFP) instrument based on an RBF modality. Under Component 1, the result–based funding component, project funds will be disbursed against selected line items in MYASD annual budgets (EEPs) up to capped amounts and conditioned on achievement of the agreed set of DLIs. Component 2 aims to strengthen MYASD implementation, coordination, and M&E capacity and finance specific expertise and training activities so that MYASD can meet the agreed DLIs. This component will use the traditional investment project approach, which will not only enable continuation of the reforms initiated through the SSDP, but will also deepen the focus on results rather than inputs and outputs.
29. Eligible Expenditure Programs (EEPs). The World Bank, in consultation with the Government, has appraised the full sector program and selected EEPs comprised of non–procurable items from both the development and recurrent budgets. Some EEPs were selected because they would most directly impact the desired outcomes of the program, such as (i) personal emoluments, including performance allowances; (ii) transport; (iii) postal, communication and basic utilities; (iv) purchase of training services from Training Providers (e.g., ETA); and (v) expenditures for industry sector skills. The 2015 budget will have new codes for spending on: (a) teacher performance allowances; (b) purchase of training services; and (c) industry sector skills councils (or the equivalent) (see Annex 3 for the complete list of EEPs).
30. The DLIs for this Project reflect government priorities for reforms as outlined in the SSDP and include intermediate results, implementation performance targets, or institutional change indicators that build incrementally over the life of the Project to improve the quality and relevance of skills development programs. Some DLIs are expected to improve the efficiency and effectiveness of training institutions. Others constitute incremental development changes that will have results beyond the life of the Project by improving the quality and relevance of skills development programs. The results represented in the DLIs are critical to achieving the Project’s development outcomes. From a disbursement point of view, the DLIs are independent of each other; non–compliance with a DLI in a period means that disbursement of the funds associated with that DLI will be withheld, but disbursement associated with other DLIs will not be affected. Finally, each disbursement target value is weighted equally (see Annex 3).
31. Bank financial management (FM) guidelines will apply to the entire Project; Bank procurement guidelines will apply only to Component 2.
Project Cost and Financing
32. In 2012, total government spending on skills development (excluding spending on National Youth Corps and training provided by specialized ministries) was about Rs 6.5 billion (US$53 million). Maintaining these activities for the next five years will cost about
10
US$265 million. Implementing the additional activities envisaged in the SSDP will require an additional estimated US$383 million (converted at the current exchange rate). The total cost of activities for the five year period thus amounts to about US$650 million. Of this, IDA will finance US$101.5 million, and the rest will be financed by the ADB (US$100 million), bilateral development partners, and the Government. For bilateral development partners, Germany and South Korea plan to provide support in the amounts of US$26 million and US$17 million, respectively, to finance specific activities of the Government’s SSDP.
Table 1. SSDP 2014–18 Cost and Financing Plan
Source Amount (US$ Million) Share (%) Program cost 650.0
Program financing 650.0 100.0 Government 405.5 62.4 Development Partners (Confirmed)
IDA (2014–18) 101.5 15.6 ADBa (2014–16) 100.0 15.4 German Government 17.0 2.6 Exim Bank (South Korea) 26.0 4.0
Financing gap 0.0 0.0 Source: World Bank and ADB estimates based on the information provided by the Ministry of Finance and Planning (MoFP). Note: a ADB’s current support will be parallel financing for the period of 2014-2016. ADB plans to provide further support for the implementation of Government’s program following the completion of the current Project in 2016.
33. The IDA credit of US$101.5 million will be complemented by a US$100 million loan from the ADB. The ADB operation uses a performance for results (PFR) lending instrument to finance the implementation of the Government’s program. Both operations will rely on common institutional and implementation arrangements, including a set of similar DLIs and M&E arrangements, to ensure close harmonization. IDA financing of US$101.5 million will consist of (a) US$79.8 million on IDA blend term and (b) US$21.7 million on IDA hard term.
C. Lessons Learned and Reflected in the Project Design
34. The design of the Project has benefited from lessons learned from previous IDA-financed projects in Sri Lanka and skills development operations in other countries. The proposed operation also has drawn lessons from the long history of ADB–financed skills development projects in Sri Lanka. Specific lessons and their application to the project design are as follows:
Sustained leadership and commitment are critical in raising awareness of skills development and making it a priority in the country’s economic development plan. Strong commitment and leadership are in place for the design and implementation of the Government’s SSDP. The MC stresses the importance of, and the Government’s commitment to, skills development. The President explicitly stated this commitment, operationalized through the SSDP, in his 2013 budget speech.
Coordination and monitoring are essential to reducing inefficiencies in the delivery of skills programs and meeting labor market skills demand. Although the MYASD is mainly responsible for skills development in Sri Lanka, a number of other
11
ministries also provide specialized training. The proposed Inter-Ministerial Sector Coordination Committee (IMSCC) would be a major step toward coordinating policies and programs at the national level. Establishment of a Program Steering Committee (PSC) within MYASD and the ministry’s new Skills Development Division (SDD) will further strengthen coordination and closely monitor the performance of the Government’s Program and provide support as needed.
A market-driven, responsive skills development system is critical to the relevance of public training programs and to enabling diversity and excellence in training provision through private sector participation. The Project will support close links between training institutions and industry to increase private sector participation both in training design and delivery and in providing feedback on skills demand.
Policy interventions to incentivize training providers are essential for enhancing diversity and excellence in training and improving accountability for training results. The Project will focus on results by using DLIs; introducing incentives for public and private training providers (e.g., the ETA model); piloting a performance-based funding mechanism; and strengthening M&E to improve design of policies and system improvements based on reliable data from surveys and impact evaluations.
Adequate and predictable short- and medium-term financing is essential for rational planning. When resource availability is uncertain or constrained, financial sustainability has to be factored into the program design early on. These considerations have influenced the nature and scope of the proposed intervention and the instruments it is using.
A robust M&E system is critical to achieving results. As demonstrated by other RBF projects, a robust M&E system is critical for measuring performance and refining interventions through better-informed decision making. To ensure the quality of data and verify the DLI achievement, results are to be validated through third-party validations (TPVs).
Donor activities will be coordinated. Use of the RBF approach, close coordination of development partners, and use of the country systems for the Project will help to harmonize activities and joint planning to achieve the SSDP objectives.
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
35. The implementation arrangements have been designed to take into account the complex organizational nature of the sector, the capacity inadequacies, and the coordination challenges (see Annex 3). They rely on the existing institutional set–up, but will be further strengthened by establishing several coordination committees and the new SDD within the MYASD.
36. Sector Coordination. The SSDP will be overseen by the Inter-Ministerial Sector Coordination Committee (IMSCC). The IMSCC will be the highest body for dialogue between
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the government, its partners, and broader stakeholders on skills policy and reform issues. The IMSCC will be chaired by the Ministry of Finance and Planning (MoFP Secretary and will have members from MYASD, MoFP and Secretaries of all relevant ministries and agencies.
37. Program Implementation. The overall responsibility for the implementation of the proposed Program lies with the MYASD. The focal person for the Program will be the Secretary of the MYASD. A Program Steering Committee (PSC), chaired by the Secretary to the MYASD, will be established before the Project becomes effective. It will consist of representatives of MYASD and its participating agencies (see Annex 3 for the list the participating agencies). It will review progress, approve annual work plans and budgets, and make timely decisions relating to Project implementation and M&E. Training institutions and other public and private entities might also participate through the implementation of the ETA program or by providing funding through MYASD based on the SSDP. To strengthen implementation and monitoring capacity, the SDD, led by an Additional Secretary, has been established to coordinate and monitor Program activities, working closely with implementing departments and agencies.
38. Partnership arrangements. The World Bank and the ADB plan to support the SSDP through similar financing mechanisms. World Bank and ADB teams worked closely on Project preparation and agreed to coordinate and integrate efforts to support government priorities as articulated in the SSDP to the extent possible by harmonizing DLIs, results frameworks, reporting requirements, and implementation arrangements. To ensure close collaboration, joint implementation support missions will be carried out. The World Bank has also been collaborating with the International Finance Corporation (IFC) to increase the involvement of employers in the provision of skills training. The IFC plans to provide further support for skills gap analysis in selected sectors and establishment of the Industry Sector Skills Councils (ISSCs) during project implementation.
B. Results Monitoring and Evaluation
39. M&E across MYASD agencies is characterized by multiple management information systems (MIS) with varying degrees of functionality, uneven capacity, and most critically, by a lack of information on the labor market outcomes of TVET graduates and labor market demand for skills. Internal needs for information collection and monitoring motivated agencies (National Apprentice and Industrial Training Authority [NAITA] and Vocational Training Authority [VTA]) to put in place their own MIS using in-house resources. Other agencies are either using education management information systems (EMIS) developed by ADB-funded projects (Department of Technical Education and Training [DTET]) or relying on the paper-based information collection [National Youth Services Council [NYSC]). The fragmentation of the system makes it difficult to consolidate the data from different agencies and obtain timely information of consistent quality. The Project will support strengthening of the M&E capacity, bringing the MIS systems of all agencies to a similar standard building on their current capacity, streamlining information flows across agencies, and strengthening the labor market information system.
40. The SSDP has numerous indicators to measure sector outcomes, outputs, processes, and inputs. For areas where World Bank engagement is focused, a results framework with a subset of these indicators is presented in Annex 1. Surveys and evaluations will also be carried out on
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sector performance and its determinants; The SDD will be responsible for reporting the data necessary to monitor the Results Framework Indicators and the achievement of DLIs.
C. Sustainability
41. The sustainability of the proposed Project will be enhanced by several factors: (a) the use of country systems and processes; (b) the high level of government ownership and commitment to the SSDP; (c) the inclusion of SSDP financing in a Medium-Term Budget and Expenditure Framework (MTBEF) to ensure sustained funding; (d) the relatively small contribution (less than 15 percent) of IDA to the sector budget; (e) the significant financial savings that a more efficient system should bring; and (f) the possibility for the sector to mobilize additional resources through the growth of private sector provision, which would promote diversity and excellence (Annex 6).
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
42. A detailed list of risks and mitigating measures is provided in Annex 4. Table 2 below summarizes the risk ratings for the proposed Project.
Table 2. Risk Ratings for the Sri Lanka Skills Development Project
Project Risk - Design Substantial - Social and environmental Moderate - Program and donor Moderate - Delivery monitoring and sustainability Substantial
Overall Implementation Risk Substantial
B. Overall Risk Rating Explanation
43. The Overall Implementation Risk is substantial. Specific risks affecting the overall risk rating are: (a) limited implementation and absorptive capacity, which is likely to affect Project implementation; (b) the fragmentation of responsibilities between ministries and agencies and a lack of coordination that makes accurate identification of development needs difficult; (c) budget shortfall and unavailability of resources on a timely basis; and (d) limited involvement of the private sector. Several risks have already been addressed during preparation, while others will be addressed during implementation. These risks will be mitigated through the project design, in particular, through the focus on results in delivery of quality training, increased links with the private sector, and close monitoring of budget allocations, as well as through Component 2 which is specifically designed to enhance implementation and monitoring capacity and coordination (Annex 4).
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VI. APPRAISAL SUMMARY
A. Economic and Financial Analysis
44. Expected Development Impact. The Project will contribute to increasing the availability of skilled and employable workers which is critical for achieving the MC goals, in particular, sustained economic growth and a move toward an efficiency-driven competitive middle-income economy. The Project is expected to help make skills training more efficient and responsive by building up management and coordination, improving the M&E system, and enhancing the performance of training providers. The Project will also work on ensuring that students learn market-relevant skills by enhancing the quality of teaching and encouraging direct participation of employers in design, development, implementation, and evaluation of training programs. It will also encourage broader access to the skills development system through a more attractive and efficient TVET sector. As a result, more trainees with appropriate job-specific skills should enter the labor market and be more productive and more flexible to adjust to labor market and technological changes. Premiums for completing TVET are high (17 percent in 2012); and that can be expected to translate into increases in worker living standards and the income of Sri Lanka as a whole (Annex 6).
45. Rationale for Public Sector Provision and Financing. The benefits of improved skills and education accrue not only to individuals in terms of better labor market outcomes, but also to the society as a whole. A skilled labor force contributes to national growth and competitiveness; it also increases firm productivity and helps reduce poverty, and can bring about positive changes in the role of women in society. Even though the private sector participates in providing skills for the labor force in Sri Lanka, it does not have the capacity to provide skills for all, as outlined in the MC. Therefore, public financing is needed to ensure that investments in skills building allow Sri Lanka to meet its development goals.
46. World Bank Value-Added. World Bank involvement in skills development adds value through (a) global and local technical and operational experience in education and training that can bring useful lessons as Sri Lankan policy makers attempt to skills development reforms. A review of Sri Lanka’s skills sector has already contributed to the diagnosis of sectoral issues and to the preparation of the Government’s Program; and (b) the World Bank’s current engagement in general and higher education in Sri Lanka. Greater synergies between the skills development and education sectors would pave the way to life-long learning and better labor market outcomes.
B. Technical
47. Sri Lanka has reached the education Millennium Development Goals, with almost universal basic enrollment rates, though there are problems related to education quality. The main challenges the Government now faces are the employability and skill sets of young people emerging from secondary education, since post-secondary education and training opportunities are limited; and currently available training opportunities are of a poor quality. The technical design of the Project is based on the Government’s reform priorities as articulated in its SSDP; it
15
builds on the findings of the Bank’s skills development study5, the lessons learned from ADB-financed skills development projects,6 and the Bank’s experience with skills development across the region and the globe.
C. Financial Management
48. The FM arrangements designed for the SDP will rely on the country FM systems to the extent possible. An assessment of current FM arrangements was carried out for MYASD and participating agencies. The proposed FM procedures and practices for the Project are satisfactory for meeting the requirements of OP/BP 10.00. However, several areas requiring improvement were noted in current FM arrangements, primarily due to gaps in practice that will affect SDP FM arrangements, mainly in terms of predictability of fund flows and external audit. Mitigating measures to improve those areas within the scope of the SDP have been agreed with the Auditor General (AG) of Sri Lanka and MYASD. Within MYASD, improvements are also required in internal audit and FM capacity. Mitigating measures to improve the above mentioned areas under MYASD have been agreed (see Annex 3).
49. Annex 3 contains details of the assessment and proposed FM arrangements. At this stage of Project development, the overall FM risk is rated as High primarily due to areas that require improvement in relevant FM systems. Based on positive progress already made in adopting mitigating measures, consideration will be given to reduce the risk rating once the Project is under implementation. The capacity of MYASD and participating agencies to carry out program-related FM arrangements will be further strengthened. Responsibility for coordinating FM activities for Component 1 will rest with the SDD, including compliance with the Financing Agreement. The SDD would also manage FM arrangements of Component 2. The division will have an FM specialist and other necessary FM staff recruited per government guidelines with qualifications and Terms of References (TORs), satisfactory to the IDA.
50. The internal audit of SDP will be carried out by internal auditors attached to MYASD and its participating agencies. The AG will perform the external audit. The AG will issue two separate audit reports for Components 1 and 2. As agreed with the AG, audit reports must be submitted to IDA within six months of the end of the Government’s financial year. There are no overdue audit reports or ineligible expenditures for the MYASD–the Project’s principal implementing agency. According to the Bank’s Access to Information Policy, both audit reports will be accessible to the public on the World Bank website.
51. IDA funds will be disbursed to the Consolidated Fund Account in US Dollars for Component 1 on the basis of achievement of DLIs and submission of IUFRs (Interim Unaudited Financial Reports). Disbursement of funds for Component 2 will be through a Designated Account (DA) against cash forecasts provided in IUFRs (see Annex 3).
5 World Bank. 2013. Building the Skills for Economic Growth and Competitiveness in Sri Lanka. Human Development Unit, South Asia Region, Washington DC. 6 ADB. 2012. Completion Report: Technical Education Development Project in Sri Lanka. Manila. It includes recommendations for (a) fundamental institutional reform; (b) rationalizing teacher recruitment and compensation; (c) more autonomy for college heads; (d) improvement in the management information and labor market information systems; (e) gender and social equity; and (f) rationalization of training facilities.
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D. Procurement
52. As part of project preparation, procurement capacity was assessed. The assessment concluded that given the Project’s size and scope, the MYASD has limited capacity to carry out procurement activities. The assessment identified a few areas that require attention and remedial measures: (a) overall procurement capacity; (b) works procurements and contract management; (c) technical skills and motivation of Technical Evaluation Committee (TEC) members; (d) procurement related M&E; (e) coordination of procurement planning and implementation between MYASD and its agencies; and (f) grievance handling. Because of the combination of areas identified as needing attention, the overall procurement risk is rated as High. The Project will support development of a stronger system for procurement and compliance monitoring, including setting up a project-specific website and grievance handling system. The procurement risk rating will be revisited during implementation and be adjusted accordingly.
53. Because funds for Component 1 will be disbursed against evidence of expenditures on eligible budget items (EEPs), all of which are non-procurable, Bank procurement guidelines will not apply to this component. All procurement of goods, works, consulting services and non-consulting services under Component 2 will be carried out with SDD supervision, in accordance with the World Bank “Guidelines: Procurement of Goods, Works, and Non-consulting Services under International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits and Grants for World Bank Borrowers” (dated January 2011), “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” (dated January 2011), and the provisions of the Financing Agreement.
54. A procurement specialist in SDD will help implementing agencies to strengthen their procurement management capacity and design a procurement performance and compliance monitoring system that should include, among others indicators, a project- specific website and a grievance handling system. The SDD procurement staff will also be responsible for reinforcing procurement systems and delivering training programs to enhance the capacity of staff responsible for procurement at MYASD and its relevant agencies. Dedicated full-time procurement staff will be placed at each of the project implementing agencies throughout the project period. They will be responsible for procurement monitoring and reporting, training, and guidance.
55. A procurement plan will not be required for Component 1 since selected EEPs relate to non-procurable expenditures, which will be based on the annual plans of MYASD and its agencies. However, the MYASD and other participating agencies will prepare a Master Procurement Plan (MPP) and the Procurement Time Schedule (PTS) in accordance with the National Procurement Guidelines. For Component 2, a procurement plan is required in accordance with the World Bank Procurement Guidelines. The SDD has drafted the initial procurement plan for the first 18 months of the Project. It was finalized at negotiations and will be updated at least annually and as required.
E. Social (including Safeguards)
56. The Project is expected to have substantial positive social impacts across the population. These will be enhanced by the Project’s focus on promoting equity and social inclusion and
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contributing to Sri Lanka’s poverty reduction goals. SSDP equity impacts will be monitored by gathering data on training and labor market outcomes, disaggregated where possible by geographical area, gender, and socio-economic groups.
57. The Project is designed to prevent negative social impacts, and will not trigger World Bank policies on social safeguards (OP 4.10 and OP 4.12). Overall, it will have positive impacts by promoting job-related skills for upward social mobility and wider career options for all social categories to make this a socially inclusive intervention. To ensure this, selected skills training facilities will be upgraded and new facilities built under the government program. The construction and/or renovation work will take place mostly at existing sites; any new land would be allocated from existing state land or purchased through a market transaction. There will be no involuntary resettlement or displacement of people due to the need for new land and sites selected for the program will be free of squatters or illegal occupants and will not be used by individuals for earning income or other livelihood activities.
F. Environment (including Safeguards)
58. Under Component 1, the Project will help finance implementation of the Government’s SSDP. This program will include construction and upgrading of selected TVET physical facilities. New construction, upgrading and rehabilitation activities, under the Government’s program, may potentially cause environmental impacts, but the potential impacts are not likely to be large-scale, highly significant, or irreversible. Thus they can be addressed through appropriate mitigation measures and due diligence. The Bank will not be directly financing renovation or construction of these facilities, but will be monitoring its relevance and adequacy under business development plans to be prepared. Therefore, the Project is categorized as Environmental Category B and triggers the safeguard policy on Environmental Assessment (OP/BP 4:01).
59. To ensure environmental due diligence for Component 1 physical interventions, since the Bank will monitor the implementation of the Program as a whole, the Government has prepared Environmental Due Diligence Guidelines (EDDG) outlining standards to be followed during proposed physical interventions and monitored by the MYASD. All standards in the EDDG are aligned with national environmental policies and procedures that require infrastructure development to be conducted in an environmentally sound manner.
PDO: The objective of the Project is to expand the supply of skilled and employable workers by increasing access to quality and labor market relevant training programs.
PDO Level Results Indicators* C
ore Unit of
Measure Baseline
2013
Target Values** Frequency Data Source/ Methodology
Responsibility for Data Collection
YR 1 2014
YR 2 2015
YR 3 2016
YR 4 2017
YR 5 2018
Cumulative Targets by the End of the Project
(1) Number of trainees enrolled in public and private training institutions
Number Total: 148,131 Male: 81,047 Female: 67,084
T:150,131M:82,141 F:67,990
T: 153,192 M:83,816F
: 69,376
T: 163,916 M:89,683 F:74,233
T: 174,639
M: 95,550
F:79,089
T: 185,363 M:101,418 F:83,945
T: 827,241 M:452,609
F:374,632
Annual Labor Market Bulletin/ Skills report
MYASD/ TVEC
(2) Completion rate of trainees enrolled in public institutions
Percent All: 77 Male: 74 Female: 81
All: 77 Male: 74 Female: 81
All: 78 Male: 75 Female: 82
All: 79 Male: 76 Female: 83
All: 80 Male: 77 Female:
84
All: 81 Male: 78
Female: 84
All: 81 Male: 78 Female: 84
Annual Labor Market Bulletin/ Skills report
MYASD/ TVEC
(3) Average earnings of TVET graduates relative to earnings of GCE O-level graduates
Intermediate Results (Component One: Program Support) Pillar 1. Strengthening Sector Governance and Management
Recurrent and capital budget releases spent in accordance with the imprest plan
% Recurrent 98%
Capital 75%
Recurrent 98%
Capital 70%
Recurrent 98%
Capital 70%
Recurrent 98%
Capital 75%
Recurrent 98%
Capital 80%
Recurrent 98%
Capital 85%
Annual Administrative Data
SDD
Timely availability of reliable data on institutional and sector performance [DLI 2]
Text None 1 2 4 at least 5 at least 5 at least 5 Annual MIS report, MYASD/ TVEC
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Number of public institutions covered by performance based funding [DLI 3]
Number 0 0 10 20 40 80 80 Annual Business plans approved and implemented, SDD monitoring reports
SDD, Agency chairman
Timely submission (by June 30th) of entity audit reports of MYASD and participating agencies
Text Only 3 of 9 entities had timely audit reports by June 30
All 9 entities by
Sept 30
All 9 entities by
Sept 30
All 9 entities by Aug 31
All 9 entities by July 31
All 9 entities by June 30
45 Annual Published audit reports
SDD
Pillar 2. Improving Quality and Labor Market Relevance
Employment rate7
Percent Total: 86 Male: 88
Female: 82
T: 86 M: 88 F: 82
T: 86.5 M: 88.5 F: 82.5
T: 87 M: 89
F: 83
T: 87.5 M: 89.5
F: 83.5
T: 88 M: 90
F: 84
T: 88 M: 90
F: 84
Annual Tracer studies and agency records, Labor Force Survey (LFS) after 2016
TVEC, other implementing agencies
Industry Sector Skills Councils (ISSCs) functional in priority sectors [DLI 4]
Number 0 0 1 2 3 4 4 Annual board approval, Minutes signed
MYASD
Number of providers with NVQ 1-6 with a quality management system (QMS)
Number Only 8 training
providers with NVQ 5-6 have QMSs
8 28 85 170 340 340 Annual TVEC registration records
TVEC
Number of active registered institutions
Number 1,081 1,281
1,581 1,881 2,181 2,481 2,481 Annual TVEC registration records
TVEC
Number of courses accredited
Number 1,601 2,001
2,401 2,801 3,201 3,601 3,601 Annual TVEC accreditation records
TVEC
Teacher vacancy ratio
% 32.5 32.5 31 30 20 10 10 Annual SDD/ agencies appointments and acceptance records
Agencies and SDD
Number of staff participating in professional development programs [DLI 7]
Number Teachers: (T): 0
Assessor (A): 0
Management of Industrial
Training
At least T: 0 A: 0
MIT: 0
At least T: 530 A: 250
MIT: 120
At least T: 530 A: 250
MIT: 120
At least T: 530 A: 250
MIT: 120
At least T: 530 A: 250
MIT: 120
At least T: 2,640 A: 1,000 MIT: 480
Annual University of Vocational Technology (UNIVOTEC) examination records and TVEC/
UNIVOTEC, MYASD, TVEC agencies
7 A credible baseline for employment rate of TVET graduates within 6 months after graduation does not exist, it will be collected during the Project implementation. Therefore, the baseline is proxied by the employment rate of 15-29 year old TVET graduates based on the STEP household survey in 2012. Intermediate results for this indicator are based on the proxy, they will be amended once a baseline is established during project implementation.
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(MIT): 0
UNIVOTEC NAITA/ industry certificates
Pillar 3. Expanding Access to Quality Skills Development Programs.
Number of students receiving NVQ certification/ diploma
Number Total:18,399 Male: 11,254 Female: 7,145
T:25,000 M: 15,291
F:9,799
T: 30,000 M:18,350 F: 11,650
T: 35,000 M: 21,408 F: 13,592
T: 40,000 M: 24,467 F: 15,533
T: 50,000 M:
30,583 F: 19,417
T: 180,000 M: 110,100 F: 69,900
Annual TVEC records TVEC Administration Division
Number of students benefiting from the ETA model [DLI 8]
Number 0 0 500
1500
2500 3500 3500 Annual Annual Performance Report
MYASD/ TVEC
Number of students receiving NVQ 5-6 diplomas
Number Total: 162 Male: 99
Female: 63
T: 250 M: 153 F: 97
T: 400 M: 245 F: 155
T: 1000 M: 612 F: 388
T: 2000 M: 1,223
F: 777
T: 4000 M: 2,447 F: 1,553
T: 7,650 M: 4,679
F: 2,971
Annual Annual Performance Report
UNIVOTEC / TVEC / Higher
*Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators **Target values should be entered for the years data will be available, not necessarily annually
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Table A1.2. Definitions and Description of Monitoring Indictors
(1) Number of trainees enrolled in public and private training institutions Baseline numbers are based on LM Information Bulletin Dec 2012 and compiled by TVEC with agency inputs. Private enrollments are based on information from registered private providers.
(2) Completion rate of trainees enrolled in public institutions
Baseline numbers are based on LM Information Bulletin Dec 2012 and compiled by TVEC with agency inputs. They are calculated based on the ratio of number completed to number enrolled.
(3) Average earnings of TVET graduates relative to earnings of GCE O-level graduates
The baseline data is WB Skills Toward Employment and Productivity (STEP) household survey 2012. Weekly earnings are for TVET graduates ages 15-29 who are employed. The information on earnings of TVET graduates will be obtained from the LFS surveys starting from 2013.
(4) Employer satisfaction index
The baseline is based on WB STEP employer survey 2012 and calculated as an average of 3 questions (where 1= employer does not agree with the statement, 0- employer agrees) 1. Does not produce enough people with the LEVEL of skills needed by employers 2. Does not produce enough people with the KINDS of skills needed by employers 3. Does not produce enough people with UP-TO-DATE knowledge of methods, materials, and technology). Information on employer satisfaction will be obtained from the establishment survey carried out by Department of Census and Statistics
Pillar 1. Strengthening Sector Governance and Management
Recurrent and capital budget releases spent in accordance with the imprest plan Baseline is calculated based on 2012 and 2013 first 10 months spending.
Timely availability of reliable data on institutional and sector performance [DLI 2]
The report should include information (sector wide and at agency level) on enrollment, completion rates, and certification by courses ,centers, teachers and employment outcomes of TVET graduates and should gradually cover an increasing number of agencies.
Number of public institutions covered by performance based funding [DLI 3] Business plans are developed by training centers to analyze their business environment, set performance targets (related to quality, relevance to labor market, efficiency and equity in delivery) and specify implementation plan and resource requirements
Timely submission (by June 30th) of entity audit reports of MYASD and participating agencies
Each participating entity will work on the audit submission and the process will be monitored and reported by SDD
Pillar 2. Improving Quality and Labor Market Relevance
Employment rate
Employment rate would be calculated for the 15-29 age group and measured 6-9 months after graduation from TVET. Data collection mechanism and sources will be developed during the lifetime of the project. Since a credible baseline for employment rate of TVET graduates within 6-9 months after graduation does not exist, it will be collected during the project implementation. Therefore, the baseline is proxied by the employment rate of 15-29 year old TVET graduates based on the STEP household survey in 2012. Intermediate results for this
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indicator are based on the proxy. They will be amended once a baseline is established during project implementation.
Industry Sector Skills Councils (ISSCs) functional in priority sectors [DLI 4] ISSCs could be strengthened National Industry Training Advisory Committees (NITACs) (or have other form of organization if decided by the government) with expanded functions and increased representation of private sectors.
Number of providers with NVQ 1-6 with QMS Currently 556 institutions offer NVQ courses
Number of active registered institutions Baseline (December 2013) from TVEC records. Number of registered institutions includes all active institutions registered with TVEC, public and private
Number of courses accredited Baseline (December 2013), covers registered public and private and NGO institutions.
Teacher vacancy ratio Baseline, based on numbers given by UNIVOTEC, is subject to MYASD confirmation.
Number of staff participating in professional development programs [DLI 7]
Baseline numbers refer to training to be conducted under the new Human Resource Development (HRD) policy and plan. Teacher training includes NVQ 5 certificates and industry-based skills upgrading. The main data sources are:
i) TVEC certificate records for NVQ 5 for teachers and examination records of UNIVOTEC
ii) Certificates issued jointly by UNIVOTEC and TVEC for assessors iii) NAITA records for management of industrial training iv) Certificates issued jointly by industry and UNIVOTEC for industry-based skills
upgrading for teachers. Targets as set by UNIVOTEC and the MYASD plan. 2017-18 targets may be revised based on the evaluation at the end of the 2015-2016 academic year
Pillar 3. Expanding Access to Quality Skills Development Programs.
Number of students receiving NVQ certification Baseline is as of December 2013 provided by TVEC.
Number of students benefiting from the ETA model [DLI 8] The numbers will be revised based on the results of the skills gaps analysis.
Number of students who have received NVQ 5-6 diplomas
Baseline is December 2013 for the year 2013 provided by TVEC. Programs delivered by UNIVOTEC, Colleges of Technology (CoTs), University Colleges and NAITA institutes.
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Table A1.3 List of Disbursement Linked Indicators
Disbursement Link Indicator (DLI)
Baseline (FY 2014)
Target Values for
October 2014
Target Values for June 2015
Target Values for June 2016
Target Values for June 2017
Target Values for June 2018
1. STRENGTHENING SECTOR MANAGEMENT
DLI 1: Implementation of MYASD budget in line with the government’s Skills Sector Development Program (SSDP) and medium term budgetary framework
Approval, release and utilization of medium term budget provisions for MYASD are consistent with SSDP Approved budgetary allocations for FY 2014 are in line with the SSDP
(a) MoFP has ensured funding allocations for FY 2015 are in line with SSDP; and (b) MYASD has spent at least 98% of its recurrent expenditure and 70% of its capital releases accordance with the imprest request for January to December 2014
(a) MoFP has ensured funding allocations for FY 2016 are in line with SSDP; and (b) MYASD has spent at least 98% of its recurrent expenditure and 75% of its capital releases accordance with the imprest request for January to December 2015
(a) MoFP has ensured funding allocations for FY 2017 are in line with SSDP; and (b) MYASD has spent at least 98% of its recurrent expenditure and 80% of its capital releases accordance with the imprest request for January to December 2016
(a) MoFP has ensured funding allocations for FY 2018 are in line with SSDP; and (b) MYASD has spent at least 98% of its recurrent expenditure and 85% of its capital releases accordance with the imprest request for January to December 2017
DLI 2: Timely availability of reliable institution and agency-level data and periodical analysis of courses, centers and teacher’ performance
Limited information and weak capacity for monitoring performance of agencies, courses, and teachers
MYASD has: (a) developed a plan for strengthening M&E capacity; and (b) completed analysis of courses, centers, and teacher performance completed in at least VTA
MYASD has: (a) strengthened M&E capacity in at least 2 Project Implementing Agencies (PIAs) in accordance with its M&E plan; and (b) completed analysis of courses, centers, and
MYASD has: (b) strengthened M&E capacity in at least 4 PIAs (cumulative) in accordance with its M&E plan; and (b) completed analysis of courses, centers, and teacher performance in at least VTA, NAITA, DTET, and an additional PIA
MYASD has: (a) fully developed and operationalized M&E systems in at least 5 PIAs (cumulative), and has updated the M&E system based on lessons learned; and (b) completed: (i) analysis of courses, centers, and teacher performance in at least 5 PIAs; and (ii) analysis of employment and earnings outcomes of
MYASD has completed : (a) analysis of courses, centers, and teacher performance in all PIAs and at least 3 non-MYASD training agencies; and (b) analysis of employment and earnings outcomes of TVET graduates
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Disbursement Link Indicator (DLI)
Baseline (FY 2014)
Target Values for
October 2014
Target Values for June 2015
Target Values for June 2016
Target Values for June 2017
Target Values for June 2018
teacher performance in at least VTA and NAITA
TVET graduates
DLI 3: Introducing a performance based funding (PBF) model for public training providers
Allocation of funding is not based on performance. Lack of incentives for quality improvements and efficient use of resources
MYASD has: (a) developed and approved a PBF model; and (b) piloted the PBF model in at least 10 public training providers
MYASD has: (a) assessed the PBF pilot model; (b) incorporated the results of assessment into the PBF model; and (c) implemented the revised PBF model in at least 20 public training centers (cumulative)
MYASD has : (a) implemented the PBF pilot model in at least 40 public training centers (cumulative); and (b) made budgetary allocations to selected public training providers in line with their performance results.
MYASD has : (a) implemented the pilot PBF implemented in at least 80 public training centers (cumulative); and (b) made the budgetary allocations to selected public training providers in line with their performance results.
2: IMPROVING QUALITY AND RELEVANCE
DLI 4: Improving the relevance of training programs for students through increased participation by employers
Limited industry involvement in the design and delivery of training programs.
MYASD has established industry sector skill councils (ISSCs) in at least 1 priority sector as pilot
(a) MYASD has (i) conducted evaluation of the ISSC pilot; (ii) established an ISSC in at least one additional priority sector using lessons learned from pilot evaluation and; (b) ISSCs have validated skills gaps analysis
(a) MYASD has established an ISSC in at least 1 additional priority sector; (b) ISSCs have: (i) completed skills gap analysis in at least one additional priority sector; and (ii) validated competency standards and training packages that have been revised in at least 2 priority sectors in accordance with skills gaps analysis.
(a) MYASD has established ISSC in at least 1 additional priority sectors (at least 4 cumulative) (b) ISSCs have: (i) completed skills gap analysis in at least one additional priority sector (at least 4 cumulative); and; (i) validated competency standards and training packages that have been revised in at least 3 priority sectors (cumulative) in accordance with skills gaps analysis.
(a) ISSCs have: (i) identified priority training needs; and (ii) validated competency standards and training packages that have been revised in at least 4 priority sectors (cumulative) in accordance with skills gaps analysis. (b) MYASD has: (i) evaluated the results of ISSCs functioning; and (ii) approved expansion plan to other sectors based on results of ISSCs evaluation
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Disbursement Link Indicator (DLI)
Baseline (FY 2014)
Target Values for
October 2014
Target Values for June 2015
Target Values for June 2016
Target Values for June 2017
Target Values for June 2018
in at least 2 priority sectors
DLI 5: Improving quality assurance mechanism
Inadequate quality assurance mechanism. Currently only 8 training providers of NVQ 5-6 have established QMS. QMS procedures to cover NVQ 1-6 training providers are under revision.
(a) MYASD has adopted revised quality management system (QMS) procedures; and; (b) 5% of training providers of national vocational qualifications (NVQ) 1-6 have established revised QMS
15% of training providers (cumulative) of NVQ 1-6 have establish revised QMS
30% of training providers (cumulative) of NVQ 1-6 have established revised QMS
60% of training providers (cumulative) of NVQ 1-6 have established revised QMS
DLI 6: Increasing availability of effective teaching staff in priority areas
The remuneration structure is not competitive to attract and retain qualified staff. Staff are not rewarded for superior performance Absence of reliable estimate of teachers needed in priority areas Outdated skills and lack of industry experience
MYASD has finalized and approved the Human Resource (HR) policy and professional development plan for all PIAs
MYASD has implemented: (a) new HR schemes including an allowance scheme in at least NAITA, VTA and 3 additional PIAs; and (b) an allowance scheme
MYASD has: (a) MYASD has evaluated the implementation of new HR plan; and (b) at least NAITA, VTA and 3 additional PIAs filled 70% of needed teacher positions
(a) MYASD has revised the HR plan based on evaluation results; and (b) at least NAITA, VTA and 3 additional PIAs filled 80% of needed teacher positions
At least NAITA, VTA and 3 additional PIAs have filled 90% of needed teacher positions
DLI 7: Skills upgrading of existing teaching staff in priority
Outdated skills and lack of industry experience
MYASD has: (a) prepared, adopted and implemented
MYASD has: (a) implemented professional development plan in at least DTET, VTA and
MYASD has: (a) revised the professional development plan based
MYASD has: (a) implemented revised professional development plan in all
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Disbursement Link Indicator (DLI)
Baseline (FY 2014)
Target Values for
October 2014
Target Values for June 2015
Target Values for June 2016
Target Values for June 2017
Target Values for June 2018
sectors
professional development plan in at least DTET, VTA and NAITA; and; (b) completed training of at least 530 teachers and 250 assessors in priority sectors
NAITA; (b) completed training of at least additional 530 (1060 cumulative) teachers and 250 assessors (500 cumulative) in priority sectors; and (c) conducted an evaluation of the professional development plan
on evaluation findings; (b) implemented professional development plan in at least DTET, VTA and NAITA; (c) completed training of at least additional 530 (1590 cumulative) teachers and 250 (750 cumulative) assessors in priority sectors.
TVET agencies and; (b) completed training of at least additional 530 (2120 cumulative) teachers and 250 (cumulative) assessors in priority sectors
3: IMPROVING ACCESS DLI 8: Number of students benefiting from the employment-linked training agreement (ETA) model
Inadequate supply of market-relevant skills in priority sectors
MYASD has completed and adopted the design of ETA model
MYASD has implemented the ETA model on pilot basis in at least one priority skills sector to offer training opportunities to at least 500 individuals.
MYASD has implemented a revised ETA model, based on lessons learned from pilot, in at least two priority skills sectors to offer training opportunities to at least additional 1000 (1500 cumulative) individuals targeting at least 40 percent job placement of graduates of pilot training
MYASD has implemented ETA in at least 3 priority skills sector to offer training opportunities to at least additional 1000 (2500 cumulative) individuals targeting at least50 percent job placement of year 1 and year 2 graduates
MYASD has implemented ETA in at least 4 priority skills sectors to offer training opportunities to at least additional 1000 (3500 cumulative) individuals and targeting at least 60 percent job placement of year 1, 2 and 3 graduates
DLI 9: Improving use and dissemination of aggregate skills sector information
TVEC has published annual publication on skills demand and supply with additional labor market information (LMI) analysis using labor force surveys (LFS),
TVEC has published annual publication on skills demand and supply with additional LMI analysis using LFS, enterprise surveys, tracer studies, and administrative data
TVEC has published annual publication on skills demand and supply with additional LMI analysis using LFS, enterprise surveys, tracer studies, and administrative data
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Disbursement Link Indicator (DLI)
Baseline (FY 2014)
Target Values for
October 2014
Target Values for June 2015
Target Values for June 2016
Target Values for June 2017
Target Values for June 2018
enterprise surveys, tracer studies and other administrative data
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Table A2.2 Disbursement Verification Protocols DLI Description of Achievement and Date of Achievement Protocol to Evaluate Achievement of DLIs and Data/Results Verification
Procedure Verification Source Responsible
Entity Definitions/Procedure
DLI 1: Implementation of MYASD budget in line with the government’s Skills Sector Development Program (SSDP) and medium-term budgetary framework
The DLI will be satisfied when: By June 2015: Approved funding allocations for FY 2015 are in line with
the SSDP At least 98% of recurrent and 70% of capital releases have
been spent in accordance with the imprest request for Jan-Dec 2014
By June 2016: Approved funding allocations for FY 2016 are in line with
the SSDP At least 98% of recurrent and 75% of capital releases have
been spent in accordance with the imprest request for Jan-Dec 2015
By June 2017: Approved funding allocations for FY 2017 are in line with
the SSDP At least 98% of recurrent and 80% of capital releases have
been spent in accordance with the imprest request for Jan-Dec 2016
By June 2018: Approved funding allocations for FY 2018 are in line with
the SSDP At least 98% of recurrent and 85% of capital releases have
been spent in accordance with the imprest request for Jan-Dec 2017
Budget circulars, detailed MTBEF approved by the Parliament, Imprest request submitted by MYASD and approved by MoFP; budget execution reports, and other administrative data
MoFP/Department of National Planning , MYASD/SDD, other MYASD agencies
MoFP adopted the Skills Sector Development Plan (SSDP). Financing of the SSDP is aligned with the MTBEF prepared by the MoFP. Parliament approves annual MYASD Budget Imprest request, submitted by MYASD and approved by MoFP, is a detailed monthly expenditure schedule for fund releases.
DLI 2: Timely availability of reliable institution and agency-level data and periodic analysis of courses, centers, and teacher performance
The DLI will be satisfied when: By October 2014: Plan for strengthening M&E capacity developed Analysis of courses, centers, and teacher performance
completed in at least VTA By June 2015:
M&E capacity strengthening plan signed by the Secretary of MYASD Analysis of courses, centers, and teacher performance completed
SDD/ TVEC/ implementing agencies
M&E capacity strengthening plan covers VTA, NAITA, DTET, and NYSC and will gradually expand to other agencies, including those outside MYASD. The M&E capacity strengthening plan will include:
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M&E capacity in at least 2 PIAs in accordance with the M&E plan
Analysis of courses, centers, and teachers performance completed in at least VTA and NAITA
By June 2016: M&E capacity in at least 4PIAs (cumulative) in
accordance with the M&E plan Analysis of courses, centers, and teacher performance
completed in at least VTA, NAITA, DTET, and an additional PIA
By June 2017: M&E system fully developed and operational in at least 5
PIAs (cumulative) and M&E system is updated based on lessons learned
Analysis of courses, centers, and teacher performance in at least 5 PIAs and analysis of employment and earnings outcomes of TVET graduates
By June 2018: Analysis of courses, centers, and teacher performance in
all PIAs and at least 3 non-MYASD training agencies and analysis of employment and earnings outcomes of TVET graduates
by TVEC with agency inputs TORs for tracer studies, tracer studies reports
a) Minimum common indicators and other indicators, reporting mechanisms, and data collection time schedule for sector monitoring.
b) Organization and institutional arrangements for implementing the plan;
c) Protocols and specification of mandates of TVEC, MYASD and the M&E units of implementing agencies.
d) Employment and wage data collection plan with time schedule (tracer studies) – to be included in M&E analysis.
e) Schedule for data validation exercises
Validation exercise, to be carried out by TVEC, will include random checks of institutional data provided by implementing agencies. The schedule for the validation exercises should be included in the TVEC M&E plan The analysis of courses and centers should include, at least, enrollment, completion, type of training (industry based vs. classroom), certification, employment and wages by gender and by courses and centers. The analysis of teachers should cover teacher qualifications, industry and teaching experience, student enrollments, and completion and employment rates. The implementing agencies will feed data to TVEC, which will use them to produce the analytical report on courses, centers, and teacher performance.
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The report with timely analysis of all centers, courses, and teacher performance within an agency will serve as evidence of M&E capacity, strengthening within that particular agency.
DLI 3: Introducing the Performance based funding of public training providers
The DLI will be satisfied when: By June 2015: PBF model developed and approved by MYASD PBF model piloted in at least 10 public training providers By June 2016: Pilot model assessed and results incorporated into PBF
model, and revised PBF model implemented in at least 20 public training centers (cumulative)
By June 2017: PBF implemented in at least 40 public training providers
(cumulative). Budget allocations to particular public training providers
in line with performance results. By June 2018: PBF implemented in at least 80 public training providers
(cumulative) Budget allocations to particular public providers track
performance results.
PBF guidelines approved by the Secretary of MYASD; Approved business plans and implementation reports submitted annually by participating providers to the MYASD per PBF guidelines Institutional budget and expenditure reports of participating training centers Pilot evaluation report
SDD The PBF Guidelines would include, at least,
(a) Description of the PBF model
(b) Selection and evaluation criteria
(c) Implementation arrangements, including funding modalities
(d) Monitoring arrangements (e) Business plan template,
including information on employer participation in the management of institutions
(f) Implementation progress report template
The PBF Guidelines must be satisfactory to the Association. Business Plans are 3-year rolling plans prepared by participating providers according to the template set out in the PBF Guidelines. They will set targets for institutional improvement, define performance indicators, explain how each institution will help graduates to obtain employment, and detail annual financial requirements Implementation progress reports will provide details on business plan implementation progress against targets set for that particular year.
DLI 4: Improving the relevance of training programs for students through increased
The DLI will be satisfied when: By October 2014: ISSCs are established in at least 1 priority sector as pilot
Approval of ISSC functions and membership in priority sectors by a relevant
SDD/NAITA/ MYASD/ TVEC
Priority sectors as defined in the Mahinda Chintana are information and communication technology (ICT), tourism, construction, light
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employers participation
By June 2015: ISSCs established in at least 1 additional priority sector
using lessons from the pilot evaluation Skills gap analysis completed in at least 2 priority sectors,
validated by the ISSCs, and endorsed by MYASD By June 2016: ISSCs established in at least 1 additional priority sector Skills gap analysis completed in at least one additional
priority sector. Competency standards and training packages revised and
validated by at least 2 ISSCs. By June 2017: ISSCs established in in at least 1 additional priority sector
(at least 4 cumulative) Skills gap analysis completed in at least one additional
priority sector. Competency standards and training packages revised and
validated by at least 3 ISSCs (cumulative).
By June 2018: Priority training needs identified, revised competency
standards and training packages validated by at least 4 ISSCs (cumulative).
Expansion plan to other sectors approved based on results of ISSC evaluations
agency (NAITA board approval of changes in NITAC if ISSCs are established based on NITACs) Skills gap analysis reports Records of ISSCs meeting with validation of skills gap analysis, training packages Impact evaluation reports of ISSCs
engineering, and manufacturing. ISSCs are strengthened NITACs in priority sectors with expanded functions and increased representation of the private sector subject to approval by the NAITA board. Alternatively, ISSCs would be established under other relevant agencies and their functions and membership should be satisfactory to the Association Impact evaluation of ISSCs will include assessment of reduction of skills gaps and improvement in quality of training.
DLI 5: Improving quality assurance mechanism
The DLI will be satisfied when: By June 2015: 5% of training providers of NVQ 1-6 training will establish
QMS based on the revised procedures By June 2016: 15% of providers of NVQ 1-6 training will establish QMS
based on the revised procedures By June 2017: 30% of providers of NVQ 1-6 training will establish QMS
based on the revised procedures By June 2018: 60% of providers of NVQ 1-6 training will establish QMS
based on the revised procedures
TVEC approval, revised QMS procedures manual, TVEC registration, accreditation and QMS records, Random visits to training providers (TPV) to confirm the credibility of the quality assurance system.
TVEC
Quality assurance mechanism consists of registration, accreditation and quality management system (QMS). QMS is a procedure based on ISO 9001:2008. The current QMS includes 23 procedures. The revised QMS procedures should be approved by the TVEC Board and the MYASD by October 2014 and be acceptable to IDA. Revised QMS procedure should include at least six compulsory processes as per ISO 9001: 2008, namely
1. Control of documents 2. Control of quality records
DLI 6: Increasing availability of effective teaching staff in priority areas
The DLI will be satisfied when: By October 2014: HR policy and professional development plan finalized and
approved by MYASD for all PIAs with revised recruitment criteria, streamlined recruitment procedures, deployment and retention, career pathways, mechanisms for providing performance allowances to teachers and professional development plans.
By June 2015: Implementation of new schemes of the HR plan, including
allowance scheme in at least NAITA, VTA, and 3 additional PIAs
By June 2016: 70% of needed teacher positions filled in at least NAITA,
VTA and 3 additional PIAs Effectiveness of new HR policies evaluated By June 2017: 80% of needed teacher positions filled in at least NAITA,
VTA, and 3 additional PIAs HR policies and procedures revised based on evaluation
results
By June 2018: 90% of needed teacher positions filled in at least NAITA,
VTA, and 3 additional PIAs
Circular by MYASD Secretary to agencies to adopt new HR policy and plan Recruitment and professional development plans for each PIA Agency appointments and acceptances records cadre provisions in 2015-18 Reports from agencies on implementation of allowance scheme Evaluation report based on agreed TORs
UNIVOTEC, SDD, TVEC, implementing agencies
The HR plan will include revised recruitment criteria and streamlined recruitment procedures, career pathways and mechanisms for providing performance allowances for teachers and professional development plans. Revised recruitment criteria will give greater weight to work experience and industrial expertise than academic qualifications. New recruitment procedures will minimize the time between job advertisements and hiring (maximum 3 months). Professional development plan will include (a) pedagogic and industry exposure programs for instructors and assessors, (b) in-service training for current teachers and induction and (c) mentoring for new teachers. Revision of the plan after 2016 could provide for pre-service training. Professional development plan will provide for releasing staff from agencies to attend training programs. Staff positions include full-time and part-time academic staff (e.g., lecturer, instructor, trainer, and teacher) and assessors. Performance allowance scheme will define professional competencies and standards for teachers and define how teacher performance will be evaluated and allowances awarded.
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The HR policy and plan will set targets to be achieved and implementation arrangements and should prioritize achievement of HR goals in priority areas. Evaluation to be contracted by MYASD should include feedback from students and employers in priority sectors.
DLI 7: Skills upgrading of current teaching staff in priority sectors
The DLI will be satisfied when: By June 2015: Professional development plan implemented in at least
DTET, VTA, and NAITA and training completed by at least 530 teachers and 250 assessors in priority sectors
By June 2016: Professional development plan implemented in at least
DTET, VTA, and NAITA and training completed by at least additional 530 teachers and 250 assessors in priority sectors
By June 2017: Professional development plan implemented in at least
DTET, VTA, and NAITA and training completed by at least additional 530 teachers and 250 assessors in priority sectors
Professional development plan revised based on evaluation findings
By June 2018: Revised professional development plan implemented in
TVET agencies and training completed by at least additional 530 teachers and 250 assessors in priority sectors
TVEC records on number of NVQ 5 certificates issued to teachers Records of certificates issued jointly by UNIVOTEC and industry on Industry Based Skills Upgrading (IBSU) Professional development evaluation report Revised professional development plan endorsed by the MYASD Secretary
UNIVOTEC, SDD, TVEC
Professional development plan will include (a) pedagogic and industry exposure programs for instructors and assessors, (b) in-service training for current teachers and induction and (c) mentoring for new teachers. Revision of the plan after 2016 could provide for pre-service training. Professional development plan will provide for releasing staff from agencies to attend training programs.
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DLI 8: Implementation of the employment-linked training agreement (ETA) model
The DLI will be satisfied when: By October 2014: Design of the ETA model completed and model adopted By June 2015: The ETA model piloted in at least 1 priority skills area to
offer training opportunities to at least 500 individuals. By June 2016: The ETA model implemented in at least one additional
priority skills area to offer training opportunities for at least additional 1,000 individuals targeting at least 40 percent job placement of graduates of pilot training.
By June 2017: The ETA model implemented in at least 3 priority skills
areas to offer training opportunities for at least additional 1,000 individuals targeting at least 50 percent job placement of years 1 and 2 graduates.
By June 2018: The ETA model implemented in at least 4 priority skills areas
to offer training opportunities for at least additional 1,000 individuals targeting at least 60 percent job placement of years 1, 2 and, 3 graduates
ETA model handbook developed satisfactory to the Association and approved by Secretary of the MYASD
Signed contract with training providers; monitoring reports from SDD; third-party verification
SDD , TVEC The ETA model relies on purchasing services from training providers, public and private, based on technical and financial proposals that would be competitively selected based on set eligibility criteria. Design of this mechanism will be detailed in the ETA model handbook (satisfactory to the Association) which would include the following: Eligibility criteria for training
providers Selection mechanism Evaluation criteria and
methodology Composition of technical
evaluation committee Sample performance-based
contract with targets on training delivery and job placement strategy
Monitoring arrangements Financing arrangements Agreed training delivery targets are derived from conclusions of the skills gaps analysis. For the first year, a rapid training needs assessment would be carried out in 1 priority sector. Training providers will supply job placement evidence to the SDD and the data will be independently verified by third-party validation.
DLI 9: Improving use and dissemination of system information
The DLI will be satisfied when: By June 2015: Annual publication by TVEC on skills demand and supply
with additional LMI analysis using LFS and Enterprise surveys, tracer studies or other administrative data
By June 2016:
Annual publication on skills supply and demand
TVEC Annual publication by TVEC on skills demand and supply will include at least: Report on the performance of
different agencies and centers,
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Annual publication by TVEC on skills demand and supply with additional LMI analysis using LFS and enterprise surveys or administrative data
By June 2017: Annual publication by TVEC on skills demand and supply
with additional LMI analysis using LFS and enterprise surveys, or administrative data
including enrollment, completion, and certification by courses and gender whenever possible. The data would come from administrative sources including management information systems of agencies. This report could also include (if decided by SDD/TVEC) information on TVET expenditure, number of staff and other administrative data.
Annual analysis of labor market outcomes (earnings, employment, etc.) of TVET graduates based on new LFS data and tracer studies
Analysis of employer skills needs based on establishment surveys carried out by the Department of Census and Statistics and skills gaps analysis conducted in specific sectors
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Arrangements for Results Monitoring
A. Institutional Arrangements
1. The Results Framework is designed to represent the underlying logical strategy to achieve the PDO. All project outcome indicators are directly related to the PDO. DLIs and intermediate outcome indicators are directly linked to the results and consistent with the project outcome indicators. All indicators are specific, measurable, realistic, and time-bound. Their achievement is within the control of the government.
2. At the national level, the SDD will be responsible for the Project’s M&E activities. These activities, led by the SDD Program Manager, will include: (a) periodic review of Program and Project progress; (b) preparing and disseminating periodic progress review reports on monitoring indicators; (c) preparing and communicating progress on DLIs; and (d) preparing and disseminating Annual Performance Reports on the National Skills Sector Development Program and any other report requested by the MYASD. Moreover, the SDD Program Manager, with the assistance of TVEC and agency M&E persons, will consolidate information provided by implementing agencies to track progress toward the PDO based on the agreed Results Framework. The reporting formats for progress reports, as described in the Project Operational Manual (POM), will be used for this purpose.
3. At the institution level, M&E capacity is uneven and data collection is not streamlined. One of the DLIs is explicitly related to building up and streamlining information collection mechanisms and bringing the M&E capacity of all implementing agencies up to par. The Project will build on current capacity. Each agency M&E capacity will be strengthened to improve the flows of information from agencies to TVEC using a common minimum set of indicators supplemented by additional information if necessary. TVEC will be responsible for (a) streamlining data collection from MYASD agencies and private institutions; (b) aggregating data; (c) providing data required by the SDD M&E unit; and (d) publishing updated Labor Market Bulletins with information on skills supply and demand.
B. Reporting Requirements
4. Implementation Progress Reports. SDD will prepare Annual Performance Reports for the SSDP according to the government reporting cycle. Each agency through its point person will be responsible for providing information to be consolidated in a Skills Sector Annual Performance report. The first report will cover January-December 2014. In addition to providing evidence on achievement of DLIs and intermediate outcomes, the report will summarize financial performance.
5. The Annual SSDP Performance Report will focus on the extent to which objectives and outcomes have been achieved rather than monitoring the progress of individual activities and accounting for inputs. It will assess progress toward meeting targets and will spell out lessons learned and recommendations as a basis for annual review meetings. The review meetings will assess progress against the Results Framework, including how SDP targets are reached, and monitor progress related to specific strategies and the allocation and deployment of resources.
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6. Financial Reports. SDD will submit SDP financial reports on the basis of institutional FM reports. These reports will detail disbursements using government financial reporting systems. The reports will be summarized in the semiannual reports described above. SDP report formats are provided in the POM.
7. Policy Studies and Third-Party Validation. Specific policy and thematic evaluation studies, and third-party validations will be undertaken as required. These may be discussed during implementation reviews as appropriate. The reporting and review schedules are summarized in Table A1.5 below.
Table A1.4. Reporting Schedule
Reports Period Submission Review Process
Semi-Annual Performance Report
Annual Performance Report
January-June
January-December
August 15
February 15
Semi-Annual Review Meeting in October/November
Annual Review Meeting in May/June
Consolidated IUFRs (Component 1)
Consolidated IUFRs (Component 2)
January-June
July-December
Quarterly
August 15
February 15
Within 45 days of the end of each quarter
Implementation review missions will assess summary financial performance as part of the SDD progress report
Thematic policy studies, tracer studies, third- party validations, and evaluations
Based on the agreed schedule
TBD The results will be shared with key stakeholders
C. Sources of Data for Monitoring Outcomes and Outputs
8. The use of timely data and information to support and monitor progress has increasingly been embedded in the planning and decision-making practices of MYASD and its agencies. MYASD, through SDD and TVEC, will operate a comprehensive monitoring system, focusing on set of performance indicators. Currently, data collection, validation, compilation, and analysis are uneven across MYASD, and indicators and protocols for collecting data are not uniform. The availability and the quality of certain indicators still need improvement so that decision making on system governance, planning, and monitoring of the skills development program can rely more fully on evidence. The Project focus will be on streamlining data collection, bringing all agency data collection procedures up to par, and improving the use of information in decision making and planning.
9. The majority of results indicators, including DLIs, have been selected from the agreed performance indicators. A range of M&E tools will be used to assess progress toward achievement of the PDO on the basis of the agreed results indicators.
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10. Sector M&E. Information on skills development in Sri Lanka is disseminated on the TVEC website and through the bi-annual Labor Market Bulletin. Under the Project, MYASD plans to build up its capacity to collect, analyze, and report on its own performance and that of its agencies. The main objective is to bring the capacity of all agencies to the same level, streamline data collection protocols, and set minimum indicators to be collected. MYASD also plans to build up the sector EMIS at TVEC. Data collected will be used to monitor performance over time, including enrollments, dropouts, and employment of graduates, and to analyze the performance of courses, centers, and teachers. Component 2 will provide technical assistance and training to build the capacity of MYASD and its agencies for data collection, analysis and reporting, and preparation of skills demand and supply data for publication.
11. Third-Party Validations (TPVs). SDD will commission third-party studies to validate performance data (e.g., implementation of business plans, establishment of QMS); and assess implementation activities (e.g., effectiveness of the teacher allowance scheme and professional development programs). These studies will be important external checks to supplement internal monitoring.
12. Project Monitoring. As part of its standard monitoring, SDD will regularly gather information and report on implementation of Project components. Monitoring will also be conducted by tracking sector expenditures, progress on program interventions, and overall sector progress. SDD will establish a system to monitor expenditures at the national and institutional levels and generate quarterly expenditure reports. Financial monitoring, audit reports, and procurement monitoring reports will provide the basis for assessing progress on fiduciary aspects.
13. Surveys and Studies. Surveys and evaluations will be carried out on sector performance and its determinants; these may include tracer studies, skills measurement surveys, employer surveys, and sector training needs assessments. Impact evaluations will be carried out for innovative interventions such as the ETA model; performance-based funding; and industry sector skills councils. Such surveys and evaluations will be conducted by independent firms contracted by MYASD based on TORs agreed with the World Bank, and financed by the Innovation Component.
D. Capacity Development
14. Component 1 of the SDP will support MYASD and its agencies in building up their M&E systems. The focus will be on bringing their MIS systems up to standard, streamlining data collection procedures, strengthening computerization, and building capacity at all levels.
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Annex 2: Detailed Project Description
Sri Lanka: Skills Development Project
Sri Lanka’s National Skills Sector Development Plan (SSDP) and World Bank Support
1. The Government’s Economic Development Plan, the Mahinda Chintana (MC), has set out a vision of Sri Lanka increasing per capita income to US$4,000, reaching middle-income status by 2016, and becoming a regional hub in strategic economic sectors. The MC stresses the importance of education and training to achieve these ambitious goals, transforming these sectors into modern and efficient systems, and improving labor productivity by enhancing its people’s skills. The SSDP (2014–20) is an instrument to achieve this vision (see Figure A2.1). Its objectives are to improve governance and management of the training sector, improve the quality and relevance of training programs, and expand access to quality skills development programs. It stresses the importance of engaging employers to play an active role in managing the sector, leveling the playing field between the private and public sector in providing training, enhancing the productivity of informal workers, and making wider use of monitoring and evaluation (M&E) to improve training quality and efficacy.
Figure A2.1. Skills Development Framework for Economic Growth and Competitiveness
Pillar II. Improving Quality and Labor Market Relevance Simplification of the NVQ
system
Building an effective teacher cadre through the implementation of teacher management and development programs
Strengthening quality assurance mechanism system
Increasing employer participation in training programs design and delivery
Involving employers in the design and delivery of skills program (though the establishment of ISSCs)
Pillar III. Improving Access Dissemination of labor market
information, career guidance and social marketing
Improving pathways between general education and TVET
Introducing employment-linked training agreement (ETA) model
Expanding middle level technician programs
Removing barriers to training for informal workers and disadvantaged groups
Strengthening the RPL system
Pillar I. Strengthening Sector Governance and Management Improving governance and
management of the sector through better sector coordination
Adequate and predictable financing
Improvements in sector monitoring and evaluation
Introduction of performance-based financing
Optimizing the use of human and physical resources
Skilled and employable workforce
An efficient skills education system to meet the local and foreign labor market demand by 2020
Achievement of Mahinda Chintana Goals: Reaching middle-income status by 2016 Becoming a regional hub in five strategic areas Becoming a knowledge-based economy
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2. The Bank has provided technical inputs into the preparation of the SSDP through data collection and a study8 that offered insightful analysis of skills demand and supply in Sri Lanka, identified strengths and shortcomings, and suggested how the skills development system could be improved to better achieve Sri Lanka’s development goals. The proposed Skills Development Project (SDP) supports the implementation phase of the SSDP, with a focus on performance results.
3. This annex provides a detailed description of the project. The SDP has two components: (i) Support to the SSDP; and (ii) Innovation, Results Monitoring and Capacity Building. The Program Support component would provide US$93.6 million to finance key elements of SSDP, with disbursements tied to pre-specified results. The Innovation, Results Monitoring, and Capacity Building component (US$7.9 million) would complement the first component by financing specific expertise and training needs for program implementation and M&E and for evaluation and piloting of new initiatives.
4. Disbursements under Component 1 will be made against a set of eligible expenditure programs (EEPs) selected from the MYASD budget and will be linked to achievement of pre-specified results called disbursements-linked indicators (DLIs) (see annex 1).
5. A matrix of indicators covering the full scope of the SSDP has been developed to annually measure program performance and results, as reflected in the results framework in Annex 1. A subset of results framework interventions constitutes the DLI matrix for the project (Annex 1 Table A1.2). Figure A2.2 shows the results chain of how the DLI actions, as well as other initiatives supported under the government’s program, will contribute to the PDO and ultimately to the achievement of Mahinda Chintana goals. For example, the three DLIs under Pillar 1 (e.g., adequate and predictable financing, M&E system, performance based funding) will contribute to the achievement of intermediate results, focusing on improved sector coordination and management; the four DLIs under Pillar 2 (participation of employers in the design and delivery of training programs; quality assurance mechanism, teacher management and professional development) will directly contribute to the intermediate results indicators, focusing on enhancing the quality and labor relevance of skills programs; and the two DLIs under Pillar 3 (improved use and dissemination of information; employment-linked training agreements) will help increase access to skills training programs. Additional interventions under the SSDP will further increase the effects of the DLI related interventions to assist the government in achieving the PDO.
6. The DLIs reflect intermediate outcomes or indicators for sub-programs or interventions that are critical to achieving the Project’s development objectives. These DLIs were determined in partnership with the government, based on the following criteria: (a) They target programs that have the potential for significant development impact in the medium to long term; (b) the results are achievable, although a challenge to the government; and (c) they are largely under the control of the Government. The capped annual disbursement amount is evenly divided across all DLIs to determine the price of a DLI. Eligible disbursement amounts will be based on the sum of achieved DLIs multiplied by the unitary DLI price.
8 World Bank. 2013. Building the Skills for Economic Growth and Competitiveness in Sri Lanka. Human Development Unit, South Asia Region, Washington DC.
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Figure A2.2. Results Chain for Key Skills Initiatives Supported by the Project’s Results-Based Component
DLIs and Other Key Initiative Intermediate Results Intermediate Outcomes Outcome
Strengthening the existing M&E system (DLI 2) Reliable and timely availability of data for regular monitoring and evaluation of sector performance
Impr
oved
sec
tor
coor
dina
tion,
gov
erna
nce
and
man
agem
ent
Sk
ille
d a
nd
Em
plo
yab
le W
ork
forc
e
Establishment of Inter-Ministerial Sector Coordination Committee and Program Steering Committee
Strengthened sector coordination
Improved efficiency of skills development system management
Introduction of performance based funding model for public training providers (DLI 3)
Enhanced performance of training institutions by aligning incentives with performance
Participation of employers in the design and delivery of training programs (DLI 4)
Increased relevance of training programs
Stre
ngth
ened
qua
lity
and
rele
vanc
e of
trai
ning
pro
gram
s
Quality assurance mechanism (DLI 5)
Improved quality of training institutions
Teacher Management (DLI6). Revised recruitment criteria, career pathways and implementation of a teacher allowance scheme based on performance
Increased availability of effective teaching staff in priority areas →
Teacher Development (DLI7). Design and implementation of a professional development strategy for instructors accompanied by rigorous evaluation
Skills upgrading of existing teaching staff in priority areas to improve the quality of training
Implementation of employment-linked training agreement model (DLI 8)
Increased supply of market relevant skills in priority sectors
Impr
oved
ac
cess
to s
kill
s de
velo
pmen
t pr
ogra
ms
Use and dissemination of system information (DLI 9)
Increased awareness about impact of training and improved quality of information on demand for and supply of training
→↑ ↑
Implementation of MYASD budget in line with the SSDP and fiscal/budgetary framework (DLI 1) →
Full, timely expenditures for SDP initiatives and adequate and reliable sector financing to yield smooth implementation of reform activities
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7. Disbursements under Component 2 will be made as in traditional investment projects, following IDA procurement and financial management guidelines and procedures.
Component 1: Program Support to the Skills Sector Development Program (total: US$650 million; of which the IDA contribution will be US$93.6 million).
8. This component supports implementation of the SSDP. The SSDP encompasses three closely related strategic pillars: (a) strengthening governance and management; (b) improving quality and market relevance of skills development programs; and (c) increasing access to quality skills development programs. SSDP pillars and results targets are summarized below:
(i) Strengthening Governance and Management
9. The program will aim to improve governance and management of the sector through better sector coordination, adequate and predictable financing, improvements in labor market analysis (supply and demand for skills), monitoring the performance of training providers, and gradual introduction of performance-based financing. This will instill a greater commitment to results and more efficient use of resources.
10. Sector coordination. The TVET sector is fragmented. Although MYASD is the designated ministry for skills development, 14 other ministries also provide specialized training and operate independently. Coordination is even an issue within the ministry itself. Each of its agencies was established with a particular objective and although they are now all grouped in one ministry, duplications of functions, roles, and responsibilities and inefficient use of resources persist.
11. Sector coordination will be improved in several ways. An Inter-Ministerial Sector Coordination Committee (IMSCC) will be established, chaired by the Secretary to the Treasury, to serve as a forum for dialogue on sector policies and reform issues. Within MYASD, which is responsible for implementing close to 90 percent of the SSDP-supported activities, a Program Steering Committee (PSC), chaired by the Secretary of MYASD, will function as a technical arm of IMSCC and oversee the progress of SSDP across ministries. In addition, a new unit within MYASD, the Skills Development Division (SDD), with a new Additional Secretary, has been created. Its mandate is to support, coordinate, and monitor implementation of the SSDP across training agencies and look for efficiency gains. It will have adequate administrative authority and financial resources. One of its first tasks will be to review the roles and responsibilities of each agency and propose a rationalization of functions, resources and course offerings.
12. The Project will not only support government coordination efforts but also a more efficient use of resources. This will be done through (a) a census of human and physical resources of public institutions and a survey of private training institutions capacity, (b) redeployment of physical and human resources across public institutions to optimize their utilization; and (c) a rationalization of course offerings based on labor market needs and performance evaluation.
13. Adequate and predictable financing. Success of the SSDP will critically depend on ensuring adequate and predictable financing for the sector. For most planned interventions it will
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take several years for results to become apparent. Achieving the expected development impact thus requires ensuring an adequate flow of resources over time. The SSDP has been costed and its financing plan incorporated into the government’s three-year Medium-Term Budget and Expenditure Framework (MTBEF) to ensure consistency with fiscal targets and realistic implementation of the skills strategy. This medium-term perspective is critical because (a) it introduces rigorous forecasts of sector needs; (b) it brings predictability to the financing of the program; and (c) it promotes efficiency and accountability in the use of resources. In addition to predictable budgetary allocations, timeliness of the releases will be critical to achievement of results according to the agreed schedule. A budget allocation for the first year of the project (FY2014) of SL Rs. 11.2 billion—a 15 percent increase over the 2013 budget—has already been approved (see table A2.1). The MoFP has indicated its willingness to increase the budget allocation in line with the pace of implementation.
Capital 3,269,143 5,502,785 6,100,000 10,014,775 12,581,100Source: MoFP Budget Estimates 2014.
Disbursement-Linked Indicator
Implementation of the MYASD budget in line with the government’s SSDP and the fiscal/budgetary framework (DLI1)
14. Monitoring and evaluation. The Project supports the government’s efforts both to establish a functioning and sustainable M&E system and to improve the capacity of policy makers to use the information collected for decision-making.
15. Currently, the rudimentary information system is inadequate for planning. It does not reveal trends in demand for skills and does not provide information on the performance of programs or centers and their graduates. Nor does it provide information on staffing, teacher performance, and program financing. Capacity is uneven across agencies. The information system is also not able to inform the population about labor market trends and provide career guidance. The Project will support (a) a full review of capacity and assessment of critical human, capital and software needs; (b) upgrading of the system with adequate staff and resources; (c) a revision of mandates of the different agencies and of institutional arrangements for data collection and analysis; (d) establishment of common indicators (including performance indicators) and clear reporting mechanisms; (e) systematic collection of employment and wage data on TVET graduates; and (f) an extensive analysis of labor market data from all available sources (labor force and enterprise surveys conducted by the Department of Census and Statistics, tracer studies, other special surveys, and administrative data). A new skills
44
measurement survey, similar to the STEP survey conducted in 2012, would be financed by the Project to monitor changes in the acquisition of cognitive, soft, and technical skills.
Disbursement-Linked Indicator
Timely availability of reliable institutional and labor market data and periodic analysis and monitoring of courses, centers, and teacher performance (DLI2)
16. Efficiency of resource use. Current budgetary allocation mechanisms are not conducive to quality improvements and efficiency of resource use. Allocations are largely based on past allocations and unrelated to performance and innovative practices. To promote a more efficient use of financial resources, the SSDP supports gradual introduction of performance-based financing in the TVET sector. This will be achieved through the preparation of 3- year rolling business plans (BPs) at the institutional level that will define long-term goals for each institution, spell out challenges to be faced and strategies for dealing with them, and set targets for institutional expansion, improvement and outcomes. The BPs will address issues related to teachers, training methods, physical facilities and equipment, time management, resource utilization, linkages with the employer sector for which training is being provided, professional counseling and orientation, and follow-up of graduates. The core objectives of the BPs are to strengthen public training providers (TPs) to offer relevant quality training in key occupations and selected growth sectors; and institutionalize performance based funding for TPs.
17. The PBF model will be implemented in phases. The first will consist of development of the model, which will be tested with a small number of the TPs. Guidelines will map out selection criteria for TPs, the BP template, the criteria for ministry evaluation of BPs, the process for monitoring and annual review of implementation, and the criteria for funding allocations based on the annual assessment of progress. Institutions will be selected based on: (a) existing institutional capacity (such as leadership and demonstrated past performance), (b) sufficient capacity for increasing enrollment to ensure a visible short-term effect, and (c) alignment of the training provided with key occupations in strategic sectors of the economy. Achievement of annual BP targets will result in increased funding allocation to the TP for that fiscal year; failure to meet annual targets could result in cessation of funding for lagging activities until remedial actions have been taken and progress is back on track.
18. Once tested, piloted, and evaluated with 10 TPs, the scheme will be gradually extended to a larger number of TPs.
Disbursement-Linked Indicator
Performance-based funding of public sector training providers designed, piloted, evaluated, and expanded (DLI3)
(ii) Improving the Quality and Relevance of Skills Development Programs
19. To improve the quality and relevance of training programs, the SSDP seeks to (a) simplify and update the NVQ system to respond to changes in the economy and industry requirements; (b) establish effective mechanisms to involve employers in design and delivery of
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training; (c) implement an effective quality assurance system; and (d) reform teacher policies to build an effective teaching cadre able to improve the quality of training.
20. Simplification and updating of the NVQ system. There has already been progress toward elaboration of the Sri Lanka National Vocational Qualifications (NVQ) Framework. The 1990 Technical and Vocational Education (TVE) act mandated the Tertiary and Vocational Education Commission (TVEC) to set up a nationally and internationally recognized system to award qualification certificates to those seeking employment. TVEC fulfilled that mandate by introducing the NVQ framework in 2005. Its aim is to set competency standards and curricula that address industry needs and to unify course offerings across training institutions. The ultimate objective is to facilitate accreditation of training institutions and provide employers with easily accessible information about the qualifications of potential employees. Although it was introduced nine years ago, coverage of the NVQ system is still limited: not all occupations are covered [only (114) out of about 400, the majority of them at NVQ levels 1–4] and not all courses have been brought into the NVQ framework. A large proportion9 of TVET graduates–even those taking NVQ courses–do not seek certification. Furthermore, the competency standards and curricula in place may no longer meet industry standards and there is increasing realization that the NVQ system is now too rigid.
21. To make the NVQ system both relevant and current, the Project would support (a) review of NVQ and non-NVQ courses in priority sectors and elimination of courses that are not market-driven and offer low probability of employment; (b) updating, with industry inputs, of competency standards and curricula for active NVQ courses; and (c) development, with inputs from industry of training packages for jobs not currently covered in priority sectors. The primary focus of the Project will be on priority sectors and on NVQ levels 3–4 to address the needs of a large proportion of the population working without any qualification and often in the informal sector. Jobs subject to very rapid technological changes and in need of constant updating would be left out of the NVQ system.
22. The NAITA currently functions as the national competency standards (NCS) agency and UNIVOTEC as the curriculum development agency. One critical element of the SSDP is to ensure that employers will be active participants in the design, development, implementation, and evaluation of NVQ programs. This will be encouraged through creation of ISSCs (see below) and other incentives.
23. Involvement of employers in training design and delivery. Sri Lanka’s public skills sector has been largely supply-driven. Projections of skills needs have been based on ad hoc growth targets with seldom industry involvement. The switch to a demand-driven training sector is now a pressing necessity for Sri Lanka. In principle, there is already employer participation in policy making and planning: 7 of the 10 members of the TVEC are prominent representatives of industry, governing boards of training institutions include members of industry, and employers participate in validation of NCSs through National Industrial Training Advisory Committees (NITACs). Nevertheless, their participation remains very limited and representatives of the private sector often express frustrations.
9 In 2013, only 18,000 youth obtained NVQ certificates out of about 150,000 trained in accredited public or private institutes.
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24. The Government now realizes that a demand-driven approach requires much more than token membership of industry representatives in governing boards or policy councils and has decided, based on international experience, to set up Industry Sector Skill Councils (ISSCs). ISSCs will be independent employer-led organizations working with trade unions, professional bodies, and chambers of commerce and responsible for developing the skills of all those employed in their specific sector. Their role would be to (a) undertake or validate skills gaps analysis and identify priority training needs for the sector; (b) develop a program of interventions to close the gaps, including revision, formulation, and validation of competency standards, training packages, and quality assurance mechanisms; and (c) provide assistance for skills certification and job placement. This initiative will be implemented gradually, starting with a pilot in one of the priority sectors (tourism and hospitality) before being extended to other priority sectors with lessons learned from the pilot incorporated into the design. The pilot could be initiated building on the NITAC experience. The functions of those committees would be expanded; the membership composition would be changed to enlarge the participation of the private sector (majority of members and representation of companies of different size, chambers of commerce and associations); and some funding would be provided to support their activities.
25. To ensure more relevant programs that are better aligned with industry needs, the SSDP also envisages increasing industry exposure and introducing an on-the-job training (OJT) component in all NVQ courses. NAITA, which already operates an apprenticeship program, will be asked to manage this intervention, coordinating with training centers and the industries concerned and monitoring quality.
Disbursement-Linked Indicator
Steps in the establishment of ISSCs in four priority sectors and skills gaps analysis and training packages revised with inputs from ISSCs (DLI4)
26. Setting up an effective quality assurance system. Quality assurance is an essential element of a strategy for improving the quality and relevance of training programs. A quality assurance system (QAS) comprises institutional registration, course accreditation, and establishment of a quality management system (QMS) within each training institution. A QMS ensures that institutions have the capacity to maintain an environment fit for delivering training that meets certain standards.
27. Sri Lanka has already taken steps to establish a QAS. Registration and accreditation requirements have been formulated and a unit has been set up within TVEC to apply them. However, a significant number of private institutions and courses are not yet registered, much less accredited; TVEC has limited capacity to verify information given or enforce the procedures; and implementation of a QMS within training centers is either tentative or has faced difficulties due to procedures that are too complicated.
28. The Project will support (a) review and simplification of registration, accreditation, and QMS procedures; (b) assessment of gaps in terms of unregistered institutions and unaccredited courses; and (c) design and implementation of QMS, starting in priority sectors. The Government is also committed to developing a QAS for the new university colleges (NVQ 5–6 programs) and to extend the QMS to all training institutions regardless of qualification level
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(NVQ 1–6). It is expected that by the end of the Project, at least 60 percent of providers of NVQ 1–6 training will have a QMS in place.
Disbursement-Linked indicator
Gradual implementation of QMS in all registered training institutions (DLI6)
29. Building an effective teaching cadre. The Government recognizes that building an effective teaching cadre is critical to improving the quality of the skills students acquire. Currently, cumbersome and lengthy recruitment processes, lack of pre-service training and opportunities to upgrade skills, weak career progression structures and low salaries have led to a large number of vacancies, high turnover, and trainers who lack practical industrial experience. The average agency vacancy rate is currently 32.5 percent and in some agencies, such as DTET and NAITA the rate is nearly 50 percent. The turnover problem is exacerbated by differences in remuneration and benefits across agencies (departments vs. statutory boards), which often lead to staff leaving low-paying government agencies for better-paying ones.
30. The SSDP foresees significant changes in teacher policy to ensure that there is an adequate number of well-trained teachers. The Government intends to implement a comprehensive human resource (HR) policy and plan for TVET personnel, including teacher management (cadre revision, selection criteria, career pathways, and performance management) and professional development (pre-service and in-service training). The HR management policy and plan envisage (a) revising recruitment criteria to give more weight to industrial expertise than academic qualifications and streamlining the process to ensure that recruitment takes less time; (b) estimating faculty needs beginning with priority areas; (c) career progression and structure; (d) licensing; and (e) setting up a scheme of allowances based on objective criteria such as market demand and performance.
31. The second part of the HR policy and plan for professional development envisages (a) upgrading the skills of the current teaching cadre (estimated at about 2,500) by offering a range of courses, including NVQ certificates (levels 5–7), and making industry exposure compulsory; (b) developing regular in-service training programs for teachers focusing on pedagogic skills and industry exposure; (c) introducing programs for managing industrial training center management and career guidance; (d) training assessors on a regular basis; (e) building the capacity of UNIVOTEC to offer B. Ed. and B. Ed. Technology programs and train master trainers; (f) seeking agreements with overseas organization for training in emerging areas; (g) strategies for new teachers; and (h) facilitating access of industry workers to training facilities. UNIVOTEC will conduct training in coordination with university colleges and other agencies and universities. Introducing online training modules will be explored with a help of an external collaborator, such as Commonwealth of Learning.
Disbursement-Linked Indicators
Increased availability of effective teaching staff in priority areas (DLI6)
Skills upgrading of current staff in priority sectors (DLI7)
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(iii) Increasing Access to Quality Skills Development Programs
32. The objective of this pillar is to foster both social demand for and supply of training. To improve access to quality programs, the SSDP seeks to (a) collect and disseminate information about training offerings and career opportunities; (b) establish pathways between general and technical education and vocational training; (c) use funding mechanisms to increase provision of training, conditioned on private and public providers meeting certain strategic criteria; (d) expand market-driven middle-level technician training programs by establishing university colleges; and (e) remove barriers to training for informal workers and disadvantaged groups.
33. Dissemination of labor market information, career guidance, and social marketing. Lack of awareness of training opportunities and their potential salary and employment benefits and the stigma attached to certain occupations, limit expansion of training. To address this issue, the Project will support wide dissemination of labor market data and easier access to information about training opportunities and outcomes. The government, in particular, will expand and integrate the content of its biannual Labor Market Information Bulletin into an annual publication on skills supply and demand with fuller analysis of labor market and enterprise surveys, newspaper information about job vacancies, tracer studies, and other special surveys; it will also put in place a social marketing and communication strategy, incorporating TV programs, leaflets distributed across the school system, and other information campaigns. It will also keep current the TVEC website launched in 2013 to provide easy access to information about training offerings and career opportunities.
Disbursement-Linked Indicator
Dissemination of detailed labor market and training sector information (DLI9)
34. Pathways between general education and TVET. Although the Sri Lankan economy clearly lacks skilled workers, less than 7 percent of GCE O-level secondary students enroll in TVET courses, and less than 25 percent of GCE A-level students choose a science stream. This is as much due to lack of demand for quality programs as to lack of supply. The public in general views TVET as inferior to general education, in part because a TVET degree does not allow lateral transfer to academic streams and therefore closes the door to higher education. To address this problem, the government has recently introduced a new secondary education technology stream that opens the way to admission to colleges of technology. It will also implement a system of credit transfers to make the transition from general education to TVET more attractive and, inversely, to allow NVQ qualifications holders to continue their education in conventional higher education. The new Sri Lanka Qualifications Framework (SLQF) of the Ministry of Higher Education already provides for lateral transfers and vertical pathways between general education qualifications and technical and vocational qualifications and can be the basis for discussions. The ultimate goal is to have a single qualifications framework that applies to all study programs and a single national qualification agency.
35. Employment-linked training agreement (ETA) model. To increase the supply of trained individuals in priority sectors where a skills gap has been identified, the Project will support implementation of an ETA model that relies on the ‘purchase’ of training services from individual TPs, both public other than MYASD and private. The SDD will be the primary
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implementing agency for the scheme. TPs would be competitively selected after meeting eligibility and selection criteria.
36. Eligible TPs would be those registered and accredited by TVEC that can demonstrate their capacity to deliver training additional to what they already deliver. TPs not yet registered (private or public under a different ministry) will become eligible if they can demonstrate that the registration process is underway and that their courses are in the process of being accredited (many private TPs have affiliations with a foreign qualifications framework that is comparable to the Sri Lankan one). It is envisaged that these TPs would not need more than 3 months to register and be accredited. Moreover, as part of this new scheme TVEC will prioritize registration and accreditation of TPs in priority sectors in order to foster their participation in the ETA.
37. Eligible TPs will be invited to prepare and submit financial and technical proposals, which will be assessed and selected by a technical evaluation committee based on such criteria as (a) type of management in place; (b) adequate FM controls; (c) agreement to provide baseline data; (d) plans for disseminating information to potential trainees; (e) capacity utilization rate; (f) pass rates; (g) location; and (h) an established job placement department. When training contracts are in place, the SDD will conduct onsite visits to monitor and validate expenditure and progress reports submitted by participating TPs. All these elements will be described in details in an ETA Handbook (ETAH) prepared by the MYASD with technical support from the World Bank and the Asian Development Bank. The handbook would detail: (a) the eligibility criteria for TPs; (b) the selection mechanism; (c) evaluation criteria and methodology; (d) composition of the technical evaluation committee; (e) sample ETA contracts; and (f) monitoring arrangements.
38. The ETA model will focus on the priority sectors identified in the MC: construction, IT, tourism, and light engineering, with emerging areas added if need arises. The ETA scheme will be first piloted in the tourism sector, facilitated by a rapid training needs assessment to be conducted by the MYASD with the support of industry and IFC. This assessment will be part of a larger skills gaps assessment to be conducted in all sectors. It is envisaged that the lessons learned from the pilot will be incorporated into the design of the ETA scheme for the subsequent years. A more thorough evaluation of the scheme and its impact could be conducted at a later stage of the SSDP.
Disbursement-Linked Indicator
Gradual implementation of the ETA model (DLI8)
39. Expansion of mid-level technician training programs. In his 2013 budget speech, the president announced that university colleges would be established to deliver technology degrees and expand the supply of mid-level technicians. Their creation is an attempt to provide career opportunities to GCE A-level graduates who face entry barriers to the university (only the top 25,000 students are admitted every year) and respond to unmet domestic and foreign demand for mid-level technicians. Currently, very few institutions produce mid-level technicians and their quality standards vary greatly. The university colleges are designed to deliver NVQ 5–6 technology programs that meet industry requirements. They are expected to seek private sector
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participation and generate income through fees. The original plan is to establish 25 colleges within the next five years, 5 of them as public-private partnerships.
40. Removing barriers to training for informal workers and disadvantaged groups. A number of groups have little access to training because of mobility constraints or geographic or socioeconomic marginalization; among them are disadvantaged women, disabled people, rural youth, and ex-combatants. Informal workers, who constitute about 60 percent of the labor force, also benefit less than workers in the formal sector from training opportunities that could increase their productivity and raise their earning capacity.
41. To provide an entry point into TVET and promote participation, the government has introduced the Recognition of Prior Learning (RPL) program. It consists of assessing the skills of individuals already working and giving them a certificate that specifies the corresponding level of qualification. Unemployed workers can also be assessed. Recognition and certification of skills are vital to improve participation in TVET and support up-skilling and multiskilling. Because the certificates can also provide useful information to a potential employer, they also facilitate job mobility. Such certificates can be particularly important for the self-employed, informal workers, and the unemployed.
42. Under the SSDP, the government intends to raise the numbers of RPL certificates granted, in particular to workers in the informal sector. TVEC will license 25 Assessment Centers within TPs and industry associations to provide RPL services and coordinate assessment cost-effectively. By 2018 it is expected that 25,000 workers will be certified. The government also intends to use its social marketing and communication campaigns to raise awareness of training and career opportunities among the groups targeted, and expand the network of TPs. The social marketing and communication campaigns might also make the TVET sector more attractive for girls as they explain possible career paths and potential earnings and inform them about skills in demand in the labor market.
Component 2: Innovation, Results Monitoring and Capacity Development (IDA: US$7.9 million)
43. The objective of this component is to build up MYASD implementation capacity and help the government to achieve SSDP objectives. This component finances surveys, short-term international or local experts to carry out specific activities, and evaluations of innovative approaches. It can also support formulation of strategies in areas where little technical work has yet been undertaken and will finance training for MYASD and its agency staff, particularly those with fiduciary and M&E responsibilities. All activities are being carefully sequenced with the steps in Component 1 to address capacity or monitoring constraints, and will be adjusted as experience demands. Any unused funds will be reallocated to the final disbursement under Component 1.
44. Among the TVET-related activities to be financed are:
A comprehensive survey of private TPs; A comprehensive census of training resources (physical infrastructure, equipment,
and human);
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Local and international expertise to draft the operational manual for the ETA model and introduce performance-based financing;
Local and international expertise to support implementation and evaluation of the ETA model and the BP schemes;
Support for pilots and design of monitoring tools; Skills gaps analysis, third-party evaluations and tracer studies; Design and implementation of a communication strategy; and Support for building up M&E, procurement, and FM capacity.
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Annex 3: Implementation Arrangements
Sri Lanka: Skills Development Project
A. Project Institutional and Implementation Arrangements
1. Institutional and implementation arrangements for the Project will rely on the current institutional set up of the sector, but will be further strengthened by establishing several coordination committees and a new Skills Development Division (SDD) within the MYASD – the main executing ministry. The following describes the institutional arrangements, including roles and responsibilities of the various institutions.
2. Skills Sector Development Coordination. The Skills Sector Development Program (SSDP) will be overseen by a national Inter-Ministerial Sector Coordination Committee (IMSCC). The IMSCC is the highest body for dialogue policy and reform issues between the government, its partners and stakeholders generally. The IMSCC will be chaired by the Secretary of the Treasury and will comprise members from MYASD, MoFP, and all ministries involved in the government’s program and from industry associations (e.g., Chamber of Commerce, Federation of Employers). The committee will meet at least twice a year to review SSDP progress across ministries, provide policy guidance, and discuss skills-related policy. The main responsibilities of the IMSCC will be to:
Meet semi-annually (unless exceptional circumstances demand otherwise) to review and coordinate project implementation to ensure that it meets its objectives;
Guide the SSDP program implementation; Provide oversight, policy guidance and approve the project’s annual work plan and
budget; Facilitate inter-ministerial coordination so as to ensure compliance and adherence to
the project development objectives; Resolve disputes or conflicts related to the project if any; Endorse all changes in the project implementation arrangements; and Review and endorse any policy, and regulatory institutional recommendations from
the project.
3. Program Coordination. A Program Steering Committee (PSC) chaired by the Secretary of MYASD will oversee management of the Project and function as the technical arm of the IMSCC. It will review progress, approve annual work plans and budgets, take timely policy and practice decisions and endorse DLI verification reports. The PSC will have representatives from all implementing agencies, skills councils (or equivalent), and MoFP. The SDD Additional Secretary (Addl Sec) will act as PSC secretary (see figure A3.1). The responsibilities of the Program Steering Committee (PSC) will be to:
Review implementation progress including submission of the required reports on a timely basis;
Approve annual work plans and budgets for the SDD and agencies of the MYASD;
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Based on directions from the IMSCC take timely decisions relating to policy and implementation matters;
Ensure timely budget releases and disbursement of funds; Ensure that agreed targets, including DLIs and timelines for activities under the sector
plan are met and advise on remedial actions in case the targets are not met or unlikely to be met;
Approval of all reports, including DLI monitoring; Ensure compliance with fiduciary oversight arrangements; and Any other matters affecting project implementation.
Figure A3.1. Program Management Structure of MYASD and Implementing Agencies
4. The MYASD, its agencies, and other participating agencies and ministries will be responsible for implementing the SSDP. The focal person of the IDA-supported project will be the MYASD Secretary. Current ministry divisions (Vocational Training, Youth Development and Finance and Administration) will handle day-to-day activities (see Table A3.1).
MYASD Secretary Program Steering Committee (PSC)
Addl Sec, Youth Affairs Division
Addl Sec, Admin & Finance Division
Addl Sec, Vocational
Training Division
Addl Sec, SDD
Implementing Agencies TVEC VTA
NAITA DTET NIFNE NYSC CGTTI
UNIVOTEC Other participating ministries and agencies
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Table A3.1: Major Project Responsibilities of MYASD Divisions
Vocational Training Division
Preparation and implementation island-wide of policies, programs, and projects relating to vocational training
Effective island-wide implementation of the National Vocational Qualification (NVQ) framework Rationalization of training courses for optimal utilization of resources Design and conduct of career guidance and social marketing programs International cooperation on skills development matters Monitoring and evaluation of the programs and projects of the ministry and all institutions within its
purview Preparation and implementation of policies, programs, and projects relating to skills development Coordination of quality assurance Facilitation of industry links Design and conduct of social marketing programs Coordination of private training programs Monitoring and evaluation of all skills development programs and projects
Youth Development Division
Preparation and implementation of policies, programs, and projects related to youth development; Design and conduct of career guidance and social marketing program for youth development Effective implementation of the National Action Plan for Youth Employment Conduct of aesthetic and cultural programs for promoting youth morality International cooperation on youth development matters Monitoring and evaluation of programs and projects of institutions listed under the Youth Development
Division Finance and Administration Division
General financial management of the ministry and related institutions Preparation of the annual budget for the ministry and institutions within its purview Disbursement of funds and collection of revenues on behalf of the Treasury Preparation of accounts for the Treasury and other agencies Preparation of appropriations accounts Financial management of foreign-funded ministry projects Preparation of TVET strategic plans and annual action plans Preparation of project proposals, screening, and submission of proposal to the Division of External
Resources for funding Preparation of the MYASD annual performance report Coordination and monitoring of the progress of development projects and programs undertaken by
MYASD institutions Coordination and guidance in planning MYASD infrastructure development Provision of technical support to the chief accountant in procurement of goods and services. Preparation, implementation and coordination of Master Procurement Plan (MPP) the Procurement Time
Schedule (PTS) and the Procurement Plan (PP) of the Ministry and Institutions under the Ministry;
5. Implementing Agencies. The following MYASD departments and agencies are expected to participate in the project: MYASD (including DTET), TVEC, VTA, NAITA, National Institute of Fisheries and Nautical Engineering (NIFNE), NYSC, Ceylon German Technical Training Institute (CGTTI), and UNIVOTEC. Each agency will appoint a point person to
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coordinate SDP-related activities (see table A3.2). The general responsibilities of these agencies will be to:
Ensure that the activities listed in the sector plan are included in yearly budgets and the resources secured.
Prepare the Master Procurement Plan (MPP), the annual Procurement Time Schedule (PTS) and the Procurement Plan (PP) based on the activities agreed in the SSDP.
Conduct the activities listed in the sector plan in order to meet plan objectives.
Monitor achievement of targeted results.
Report regularly to the SDD on project progress.
Submit quarterly and semi-annual financial reports to the SDD for MYASD consolidation.
Table A3.2: Specific Mandates of Units within MYASD
Agency Mandate Tertiary and Vocational Education Commission (TVEC)
Policy development, planning, coordination and development of TVET at all levels, in keeping with human resource needs of the economy
Department of Technical Education and Training (DTET)
Technical education
Vocational Training Authority (VTA) Vocational training to youth to attain national and international skills standards.
National Apprentice and Industrial Training Authority (NAITA)
Vocational and technical training for youth, to acquire employable skills through well-formulated programs
University of Vocational Technology (UNIVOTEC) Technical education and vocational technology education, providing bachelor degrees
National Youth Service Council (NYSC) Youth development programs National Institute of Fisheries and Nautical Engineering (NIFNE)
Technical education and vocational training in fishery, marine, and other maritime sectors
Ceylon German Technical Training Institute (CGTTI) Technical education and training in the automotive sector
6. Public training institutes providing specialized training outside the purview of the MYASD will also join the program described in the SSDP. The MoFP plans to finance these specialized institutions through the MYASD. While specialized institutions will be responsible for the delivery of training activities consistent with the government program, the SDD will coordinate and report on progress with training plans.
7. The Project will make budget resources available so that agencies can hire the technical staff required to carry out their SDP activities. The point person in each agency will be responsible for ensuring that there are adequate resources (technical, M&E, finance, and procurement staff) to conduct mandated activities.
8. MYASD has established a new Skills Development Division (SDD), led by an Additional Secretary, which will be responsible for support, coordination, and monitoring of SSDP progress. The approved cadre includes technical, M&E, financial, procurement and
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support staff (see figure A3.2). The SDD will report to the Secretary of MYASD. Its responsibilities are to:
Coordinate the activities to be conducted directly by other MYASD Additional Secretaries and participating agencies.
Lead new SSDP interventions. Monitor the progress of the SSDP and ensure achievement of its targets and expected
results. Coordinate FM arrangements (reporting, external audit, internal audit, and capacity
building of FM staff of all participating agencies for Component 1). Manage the Designated Account and FM activities for Component 2. Ensure coordination of the annual plans for agencies within MYASD. Consolidate reports for documenting use of IDA funds, progress, and results. Monitor and advise MYASD procurement staff. Communicate to stakeholders the nature, progress, and outcomes of the SDP. Liaise with international partner agencies, such as the World Bank and the ADB, to
ensure that all project activities are well-coordinated.
9. The Project will make resources available to the MYASD to finance the technical staff required to carry out SDD activities. Detailed job descriptions of each position will be included in a POM.
Figure A3.2: Skills Development Division Structure
Secretary MYASD Program Steering
Committee
Addl Sec, SDD
Working Teams Program Manager and
M&E
Engineer (Civil)
Career Guidance Specialist
Procurement Specialist
Finance Analyst +Training Purchase
Program Reform
Specialist
HRD+ Industry Relations Specialist
M&E
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B. Financial Management, Disbursements and Procurement
Fiduciary Assessment of the Skills Sector 10. The financial management (FM) of the skills sector, involving MYASD and its implementing agencies10, has been assessed, and the following have been identified: (a) gaps in the design and practice of the FM systems of the country that affect the sector; (b) aspects of the FM country systems that the Project can use in its FM arrangements and areas that need improvement before they can be adopted; and (c) actions that can be taken at the sector level to improve the systems.
Summary Key Findings of the Financial Management Assessment
11. Budgeting: A structured, participatory budget preparation process is in place at the sector level. The Sri Lankan budget calendar ensures that the budget is adopted before the fiscal year starts. There has been an effort to move to a more performance-based culture by establishing clear linkages between the action plans and budgets in the budget preparation process. The Project may look for opportunities to reinforce these practices. There is one budget head each for MYASD and DTET. The MYASD budget has block allocations for most MYASD agencies where the allocations are identified as recurrent and capital. From the MYASDs own allocations, there are further allocations that can be given to MYASD agencies. However, rather than identifying or approving sub-allocations to autonomous implementing agencies at the start of the year, MYASD issues them throughout the year as needed. The budget classification makes it possible to track expenditures on the following dimensions: administrative unit, program, project, economic, and financing. Program classification is confined to two programs, 01 for operational activities and 02 for development activities Areas that need to be built up are: (a) indicative budget ceilings to be made available at the start of the budget preparation process; (b) processes for approval of procurement plans and action plans for timely implementation of the capital budget and approval of sub-allocations; and (c) budget execution, to increase the predictability of funding.
12. The accounting system: The MYASD and DTET use the government accounting system, the Comprehensive Integrated Government Accounting and Reporting Software (CIGAS). This is a cash-basis accounting system that uses the same classifications as the budget so that expenditures can be tracked and monitored against budget. MYASD reporting practices could be enhanced by: (a) using the CIGAS code structure to further classify expenditure by specific types of activities that are considered critical and (b) using commitment accounting to improve the quality of forecasting and cash and budget management.
13. Rather than using CIGAS, the implementing agencies of the MYASD, which are mostly statutory bodies established by act of parliament, use accrual-basis accounting and the Sri Lanka Public Sector Accounting Standards (SLPSAS) and have independent accounting systems, some of which are automated and some manual. Their reporting practices could be enhanced by: (a) adopting a uniform system; (b) using standard classifications for expenditures; and (c) networking the systems to connect the main office to training institutions.
14. Internal control framework: Some features of a sound internal control framework are evident, such as comprehensive financial rules and an accounting system (CIGAS) with internal controls. The MYASD and each of its agencies do have internal audit units. However, the inadequacy of the number of internal audit staff was noted in several agencies. The MYASD Chief Internal Auditor reports directly to the Secretary. Similarly, the Head of Internal Audit in each agency reports to the head of the agency. This arrangement ensures that internal auditors are functionally independent. To ensure compliance with the regulations a few prerequisites were identified: (a) adequate risk-based oversight by internal and external auditors; (b) active audit and management committees to follow up on audit recommendations; (c) a mechanism to institutionalize the knowledge and maintain and build the skills of all FM/internal audit staff at MYASD and its agencies; and (d) continuation of the dialog between sector leadership and the Management Services Department to fill vacancies.
15. Appropriation accounts, budget execution reports, and annual financial statements: At the end of the fiscal year, annual appropriation accounts are prepared for each MYASD and DTET budget head, with explanations for variances between budgeted and actual expenditures. Annual financial statements are prepared by each MYASD agency according to the SLPSAS.
16. External audit MYASD and its agencies are audited and certified by the Auditor General. However, this process is carried out at different times for MYASD and its agencies. While the process is usually timely for MYASD and DTET, there have been considerable delays for most of its agencies which delayed finalization and submission of annual audit reports. The Auditor General’s detailed observations for each budget head are also submitted to Parliament in the form of Audit Paragraphs.
17. Legislative oversight: The MYASD and DTET come under the legislative scrutiny of the Parliamentary Committee on Public Accounts (COPA) and MYASD agencies are under the scrutiny of the Committee on Public Enterprises (COPE).
18. Since the FM arrangements of the MYASD and its agencies are closely aligned, most of the sector strengths and weaknesses in public finance management (PFM) are cross-cutting.
Financial Management Arrangements
19. The proposed FM procedures and practices for the Project are satisfactory to meet government and IDA fiduciary requirements as per OP/BP 10.00.
20. The overall FM responsibilities for Project activities will rest with the SDD Additional Secretary, who will have responsibility for implementing the covenants of the Financing Agreement. This entails managing funds, fund requests, and allocations efficiently, effectively, and transparently, facilitating placement of funds from the World Bank through the MoFP consolidated fund into the specified MYASD account; monitoring release of funds from MYASD and MoFP to the respective agencies; furnishing consolidated financial reports and consolidated audit reports obtained from the AG, monitoring and reporting on FM-related results indicators; facilitating training and capacity building for FM and internal audit staff; and responding to any other World Bank requests.
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21. The SDD will have a full-fledged accounting unit with adequate FM capacity (one financial management specialist and relevant support staff). This unit will maintain accounts for Component 2 and collect information from MYASD and its agencies for Component 1 expenditures for consolidation for the whole project. The SDD Addl Sec. will allocate responsibility to FM staff for smooth operation and assign a point person to deal with the Bank on FM-related activities. The FM specialist hired or seconded to the SDD will facilitate coordination and monitoring of the FM tasks described.
22. One of the main functions of the FM Unit will be to collect and consolidate the monthly financial statements of all MYASD agencies and share the information with stakeholders. This unit and other MYASD FM units will be built up to carry out the coordination needed for the Project by hiring or seconding any staff needed. The FM specialist will work closely with the MYASD and its agencies and report to the SDD Addl. Sec.
23. To strengthen MYASD’s FM systems, the Project will institutionalize the maintenance and enhancement of the knowledge and skills of all FM staff at MYASD and participating agencies. A framework for FM training, to be designed by the Additional Secretary in coordination with MYASD and its agencies, will include (a) HRD plans for capturing the training needs of FM staff; (b) training a pool of trainers; (c) working with such training institutions as the Sri Lanka Institute of Development Administration (SLIDA), and the Academy of Financial Studies (AFS) or any other relevant institution on sector-specific FM training; and (d) designating a staff member as training coordinator with duties clearly listed and working closely with the training coordinators in each participating MYASD agency. These activities will be supported and monitored throughout the Project.
24. Internal audit of the Project will be carried out by auditors attached to the MYASD and its participating agencies. As personal emoluments are a major portion of the EEPs, the skills sector as a whole is expected to adhere fully to the financial rules and regulations relating to payroll, including the establishment of administrative units keeping complete cadre control records and carrying out a monthly reconciliation of number of officers paid in each position or category and the numbers appearing in the cadre control records. The internal auditors are expected to carry out a detailed payroll audit annually in each MYASD agency. A legal covenant will ensure that acceptable internal audit arrangements will be maintained. Given the staff constraints, the capacity of internal auditors to carry out risk-based high-impact audits even in small numbers will be enhanced. The SDD together with MYASD and its agencies will jointly design a framework for training internal auditors for the Project, based on government internal audit guidelines, which meet international internal audit standards. The SDD Addl. Sec. will introduce a monitoring mechanism as part of the Project’s focus on enhancing institutional practices to ensure the adequacy of internal audit coverage and to ensure that the audit and management committees meet frequently
25. The Auditor General of Sri Lanka will perform the external audit for the Project. The AG will use a tracking system to monitor the steps in the audit process to mitigate the risk of delayed audit reports. The AG has agreed to issue two audit reports for Component 1 and 2, within 6 months of the end of the government financial year; this will be a legal covenant in the Financing Agreement and tracked in the FM portfolio monitoring system. For Component 1, a consolidated audit report, including an audit opinion and management letter on the consolidated financial
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report, will be prepared. The consolidated financial report will contain skills sector expenditures incurred by the MYASD and its participating agencies under the EEPs. As Bank funds are indistinguishable from government funds, the consolidated financial report submitted to the Bank will include all sector expenditures under EEP from all sources pertaining to MYASD and participating agencies. For Component 2, an audit report including an audit opinion and management letter on Project financial statements will be prepared
26. The proposed operation is the first World Bank-funded project in the MYASD. Currently there are no overdue audit reports or ineligible expenditures.
27. The objective of the audit report for Component 1 is to obtain assurance that the accounts present a true and fair view of expenditures identified under the EEPs and are free from material misstatements. The basis of the consolidated audit report and management letter will be the findings generated by auditing EEP expenditures in MYASD and in each MYASD agency.
28. There are considerable delays in carrying out individual audits and submission of timely audit reports in some MYASD agencies. An intermediate outcome indicator has been introduced to monitor availability of acceptable audit reports for each of the nine MYASD agencies identified for the Project within agreed time frames. This will be monitored using adopting an incremental approach. For FY 2014 and FY 2015, audit reports will be made available within 9 months after the end of the financial year. For FY 2016, FY 2017, FY 2018 audit reports will be made available within 8, 7 and 6 months, respectively, after the end of the financial year. This arrangement has been agreed with the AG. For MYASD participating agencies that have had issues in submitting annual accounts to the AG on time (e.g., NAITA, NIFNE), the SDD will direct appropriate strengthening initiatives during Project implementation.
Disbursement/Reporting Arrangements
29. Given the SDP programmatic approach, the budgeting and IDA fund flow arrangements will be fully aligned with the current government systems.
30. Component 1. IDA will disburse funds to the government’s consolidated fund, adding finances for the general government budget. The government will specify the Treasury account to be used to disburse IDA funds along with government funds; as a result, IDA funds will be comingled with government funds and there will be no dedicated designated account (DA) for this component. The SDP will be entirely funded from the consolidated fund with no requirement to separately track expenditures met from IDA finances. The SDD Addl. Sec., following the regular government fund flow mechanism, will make requests to MoFP via MYASD to release funds to MYASD and its implementing agencies. IDA disbursements for Component 1 will be report-based following a reimbursement approach. Release of IDA tranches will be based on the EEPs reported in IUFR and fulfillment of the agreed DLIs. The SDD will prepare and sign the Withdrawal Application containing the request for IDA funds and documentation of expenditure and will submit it to the World Bank for disbursements along with the consolidated IUFR.
31. Component 2. The Project will have one dedicated DA, administered by the SDD. Disbursements will be reported-based, made as advances. Replenishment of the DA will be
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based on the IUFR prepared for Component 2. Actual expenditures incurred for Component 2 will be tracked and recorded in this IUFR. The SDD will follow government guidelines for operating DAs. No funds from the DA will be withdrawn without instructions from the SDD Addl. Sec. and the proceeds of the withdrawals will go directly to a project-specific local bank account operated by SDD. WAs containing request for IDA funds and documentation of expenditure will be prepared by SDD and submitted to the World Bank for disbursements along with the IUFR related to this Component.
32. IDA funds for Component 1 will be disbursed against the following EEPs, which are non-procurable items, as reflected in MYASD and DTET budget estimates:
(i) Salaries and wages (object code 1001) (ii) Overtime and holiday payment (object code 1002) (iii) Other allowances (object code 1003) (iv) Domestic travel (object code 1101) (v) Foreign travel (object code 1102) (vi) Postal communication (object code 1402) (vii) Electricity and water (object code 1403) (viii) Personal emoluments of MYSAD agencies (obtained from MYSAD agencies )
33. The following would also form part of EEPs and will be included in the 2015 budget11:
(ix) Employment-linked training agreement (ETA) model activities; (x) Teacher performance allowances of MYASD and its implementing agencies; and (xi) Expenditures for industry sector skills councils or industry working groups.
34. MYASD agencies will have to regularly report to SDD expenditure items (currently personal emoluments) identified under EEPs. IDA funds for Component 1 will be provided as sector budget support, utilized by the MYASD and its agencies. Table A3.3 provides the IDA fund allocations for each year if all agreed targets are met. IDA funds for Component 1 will be disbursed upon achievement of two conditions: (a) DLI targets at the particular time of disbursement have been met and (b) IUFRs have been submitted with information on EEPs, where total expenditure reflected under EEP is greater than the amount of the IDA tranche to be released for the same period.
11 Object codes for these EEPs will be assigned by the MFP based on commencing from 2015 budget estimates.
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Table A3.3. Component 1: Disbursement Amounts if 100% of Each Target Is Achieved12,13 (US$ millions)
35. In a programmatic approach (Component 1), Bank funds are comingled with government funds, which means that the financial report submitted to the Bank will include the total EEP expenditure of the government skills sector for a given reporting period. A disbursement-linked indicator (DLI) on the flow of funds has been incorporated to ensure that the skills sector as a whole will receive adequate and timely funding to would be spent by the sector.
36. World Bank reporting formats will be designed to be simple, with expenditure items aligned to match with the MYASD and MYASD agencies chart of accounts to the extent possible. Formats for the IUFRs will be agreed during Project negotiations. Under Component 1, a strength of the proposed reporting arrangements is that expenditure reports are collected from MYASD and its agencies centrally and consolidated by SDD once a month. At the end of every month, the cumulative consolidated expenditure can then be captured. However, because for MYASD agencies, allocations are transferred as block grants for recurrent and capital expenditures, a detailed breakdown of expenditures identified under EEPs is not directly available in budget estimates—hence the above arrangement. The expenditure line items that constitute EEP are very limited. SDD collection and consolidation of these figures for the consolidated financial report is not expected to be complicated or time-consuming.
37. Separate IUFRs will be prepared for Components 1 and 2. For Component 1, the consolidated IUFR will be prepared for a 6-month period and will be due within 45 days of the end of period, i.e., IUFRs for the periods ending June 30 and December 31 would be due by August 15 and February 15. For Component 2, the IUFR will be prepared quarterly and will be due within 45 days of the end of each quarter. 12 See Annex 1 for DLI targets. 13 Component 1 will be financed by IDA blend credit, except for amounts with an asterisk which will be financed by IDA hard term credit. IDA blend credit, referred to as portion A in the Financing Agreement, is a part of a credit amount for which one and a quarter percent (1.25%) per annum will be payable by the recipient. IDA hard credit, referred to as portion B in the Financing Agreement, is a part of a credit amount for which one and four tenths percent (1.4%) per annum will be payable by the recipient.
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Methodology for Determining Disbursements against DLI Performance
38. Of the total IDA credit of US$101.5 million equivalent, US$7.9 million would be for Innovation, Results Monitoring, and Capacity Building (Component 2) and US$93.6 million for Program Financing based on achievement of the DLIs. The credit will be financed under IDA blend and hard credit terms in the following manner: for Component 1, blend IDA terms will apply to US$79.2 million and hard IDA terms – to US$14.4 million; and for Component 2, blend IDA terms will apply to US$0.6 million and hard IDA terms – to US$7.3 million. IDA blend credit, referred to as portion A in the Financing Agreement, is a part of a credit amount for which one and a quarter percent (1.25%) per annum will be payable by the recipient. IDA hard credit, referred to as portion B in the Financing Agreement, is a part of a credit amount for which one and four tenths percent (1.4%) per annum will be payable by the recipient.
39. Each DLI is equally weighted at US$ 2.4 million. There would be 4 DLIs for Year 1, 9 for each of the next three years, and 8 in Year 5 (see table A3.3). Therefore, the first year’s maximum IDA contribution to the EEP will US$9.6 million equivalent plus any expenses incurred for Component 2. For each of the following three years, the disbursement is expected to be US$21.6 million each, plus expenses incurred for Component 2.In the final year the disbursement is expected to be US$19.2 million, plus expenses incurred for Component 2
40. IDA funds for Component 1 will be provided on a re-imbursement basis and for Component 2 on an advance basis. Retroactive financing will be made available for payments made before the date of the Financing Agreement, but on or after January 1, 2014, for Component 1 eligible expenditures up to an aggregate amount not to exceed US$9.6 million and for Component 2 up to an aggregate of US$0.6.million as requested by the Borrower during appraisal.
41. For Component 1, during Year 1 (2014) IDA funds will be provided on a re-imbursement basis (up to a maximum of US$9.6 million including retroactive financing) assuming achievement of the Year 1 DLIs, soon after the credit is declared effective. To release the US$9.6 million, two conditions must be fulfilled: (a) the EEP reflected in the IUFR prepared for January—June 2014 exceeds US$9.6 million and (b) the verification report ensures that the DLIs of Year 1 have been achieved.
42. For the second year (2015), IDA funds to a maximum of US$21.6 million will be disbursed when two conditions are fulfilled: (a) the EEP reflected in the IUFR prepared for July 2014—June 2015 exceeds US$21.6 million; and (b) the report verifies that the DLIs for Year 2 have been achieved. Fund releases for the succeeding years will meet similar criteria (see table A3.3). Delayed achievement of a DLI will delay disbursement of the corresponding funds until evidence of achievement is provided. However, because the DLI on budgetary framework and fund flow (DLI 1) will not qualify for this, if that DLI is not achieved the amount allocated for the DLI will be cancelled. Partial achievement of a specific DLI target (for DLI 2-9) will not result in corresponding proportionate disbursements. Also, there will be no award for early achievement of a DLI. For a particular DLI that has two sub-targets, both must be achieved to qualify for the allocated disbursement. Credit proceeds upon disbursement will not be tracked separately as an expenditure category for Component 1. Table A3.4 illustrates the disbursement schedule.
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43. DLI Verification. As described in the DLI verification protocol table in Annex 1.4, the World Bank team will verify the results reported by SDD, using an independent consultant (firm or individual) and will provide its recommendations related to the achievements of DLI targets by the end of June of each year. The verification report will be discussed with MYASD and final agreement on DLI performance will be agreed by both parties by September of each year. The total disbursement release for a given year will be confirmed and funds released by the end of October.
44. IDA funds for Component 2 will be used following approval of proposed activities (e.g., based on the agreed procurement and training plans) as reviewed by the World Bank every six months. Expenditures will be reported against eligible expenses—goods, consultancies, training, workshops, and incremental operating expenses. An amount up to a maximum of the 6-month cash forecast will be advanced to the MYASD based on the procurement and training plans.
Table A3.4: Illustrative Disbursement Schedule (DLI Targets 100% Achieved) Time Period Disbursements Based on DLI Achievements* On effectiveness (around July 2014)
EEP exceeds US$9.6 million and Year 1 DLIs are achieved. Based on DLI performance verification report for Year 1 and IUFR for January – June 2014.
September/October 2015
EEP exceeds US$21.6 million and Year 2 DLIs are achieved. Based on DLI performance verification report for Year 2 and IUFR prepared for July 2014 – June 2015.
September/October 2016
EEP exceeds US$ 21.6 million and Year 3 DLIs are achieved. Based on DLI performance verification report for Year 3 and IUFR prepared for July 2015 – June 2016.
September/October 2017
EEP exceeds US$21.6 million and Year 4 DLIs are achieved. Based on DLI performance verification report for Year 4 and IUFR prepared for July 2016 – June 2017.
September/October 2018
EEP exceeds US$ 19.2 million and Year 5 DLIs are achieved. Based on DLI performance verification report for Year 5 and IUFR prepared for July 2017 – June 2018.
Note: *For each disbursement cycle, actual amount will depend on DLI performance.
45. Fund flow arrangements for the Project are depicted in Figures A3.3a and A3.3b.
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Figure A3.3a. Component 1: Flow of Funds
Figure A3.3b. Component 2: Flow of Funds
……………………………………………………………………………..
MYSAD Agencies General Bank A/C
TThe World Bank
Designated General Account in the name of DST
MYSADGeneral Bank A/C
DTETGeneral Bank A/C
VTAGeneral Bank A/C
NYSCGeneral Bank A/C
TThe World Bank
SDD's Dedicated Designated Account in the name of DST MoF
SDD dedicated LKR
A/C
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46. Training institutions outside MYASD. The SSDP also covers a few identified training institutions other than those directly under MYASD. These institutions could be in different ministries and may also consist of departments and statutory bodies. Hence, there is a possibility of IDA funds that are co-mingled with government funds flowing into these institutions because they are also part of the government’s skills sector program to which IDA funds can flow in funding the sector plan. The funding to these institutions may happen in two modalities:
47. Employment-linked training agreement (ETA) model activities. Under the current arrangements agreed with the MYASD, funds for institutions outside of MYASD can be disbursed through the ETA model. These institutions would then become training service providers to meet training needs of the government. MYASD will procure training services from public and private training institutions through the ETA model as described in the Handbook. The MYASD would pay these institutions for the services provided. No funds would be transferred to these institutions directly.
48. Direct transfers. There is also a possibility of IDA funds, flowing into these institutions via the MYASD’s budget as direct transfers. However, about 87 percent of the skills development interventions in the SSDP would still be carried out by the institutions under MYASD, with interventions carried out by outside institutions constituting only a small proportion. Under the current arrangements, a subset constituting only the institutions directly under MYASD has been identified for FM purposes. This is mainly because collectively they incur the largest proportion of expenditure in the sector and EEP pertaining to these agencies appear to be adequate to absorb IDA financing, so it was deemed that there is no need for a FM assessment for those institutions outside MYASD. In addition, their expenditure and statutory audits also will not form part of the EEP and audit arrangements defined for the Project.
C. Procurement Management Assessment Country Procurement Environment
49. Public procurement in Sri Lanka is governed by the Procurement Guidelines of 2006 (as amended), supplemented by a procurement manual and standard bidding documents. Procurement of consultancy services is regulated by the Guidelines on the Selection and Employment of Consultants dated August 2007. The Guidelines, manuals, and standard bidding documents constitute the comprehensive public procurement regulatory framework. They include a menu of procurement methods, specify the contents of bidding documents and evaluation criteria, and adequately respond to the procurement needs of different entities. The Guidelines apply to all national procuring entities and provincial entities using national budget funds. Procurement is decentralized to entities both at the central and provincial levels. The Bank’s country procurement assessment in 2011 revealed certain areas for improvement, including updating of the National Procurement Guidelines. The Government has recently confirmed that the Guidelines are being updated and a procurement monitoring system will soon be in place.
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Assessment of the Agencies’ Capacities to Implement Procurement
50. In its comprehensive review of the MYASD and its implementing agencies (DTET, VTA, NYSC, CGTTI, NAITA, NIFNE, TVEC, and UNIVOTEC), the fiduciary team of the World Bank identified the main procurement issues and risks that might affect the Project. Areas identified as contributing to procurement risks are (a) limited experience of procurement staff and their lack of knowledge; (b) limited experience in selecting consultants; (c) lack of a system for regularly monitoring procurement performance and compliance; (d) limited experience in dealing with complaints and fraud and corruption issues; and (e) limited or no experience in managing procurement and contracts. The proposed action plan includes (i) putting in place an effective capacity-building program for the MYASD and its agencies; (ii) drafting a procurement manual or including a procurement chapter in the POM; (iii) assigning additional dedicated procurement staff to the MYASD and other project-implementing agencies; (iv) designing an effective independent complaint-handling system; (v) establishing a procurement M&E system in all relevant agencies; (vi) setting standard functional specifications for commonly used goods; (vii) introducing a procurement compliance audit system; (viii) strengthening contract administration systems of MYASD and its implementing agencies; and (ix) setting up a Project-specific website that covers all the project implementing agencies (PIAs).
51. Procurement risks and mitigating measures: Due to the combination of the above identified areas for attention, overall procurement risk is considered High. The main risk lies with the limited procurement capacity and the need to ensure public access to Project-specific information. The SDD has now hired the services of a procurement specialist who will provide support as needed to the other PIAs. Mitigating measures include (i) a centralized procurement office staffed with dedicated specialists; (ii) procurement workshops and clinics to deal with Project-specific needs; (iii) project management workshops highlighting integration, interdependence, and the need for M&E to add significant value across the board; (iv) designing an M&E system, progress reporting, and EMIS capacity building; (v) workshops addressing contract management; and (vi) information-sharing systems, such as the Project-specific website.
Procurement Arrangements for Component 1
52. IDA funds under Component 1 will be provided as sector budget support utilized by the PIAs. While the Project will monitor progress toward achieving DLIs, funds will be disbursed against reimbursement of expenditure under EEPs. The EEPs selected are for non-procurable items only. IDA will periodically review the overall procurement system in the sector to ensure that recommendations arising from the fiduciary review are being addressed. The PIAs will develop and maintain a Master Procurement Plan (MPP) and Procurement Time Schedule (PTS) in accordance with the National Procurement Guidelines.
Procurement Arrangements for Component 2
53. All goods, consulting services and non-consulting services under Component 2 will be procured in accordance with the World Bank‘s “Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loans and IDA Credits and Grants for World Bank Borrowers” (dated January 2011), and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” (dated January
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2011). Items to be procured would include consultancies and goods (e.g., office equipment), MIS, training, workshops, consumables, minor refurbishments) so that the SDD can ensure effective Project conduct, coordination, and M&E.
54. The following methods will apply for all Component 2 procurement, consistent with the Bank’s Procurement Guidelines:
55. The following methods will be applicable for all goods and non-consulting services to be procured under Component 2, consistent with the Bank’s Procurement Guidelines:
a. International Competitive Bidding (ICB); b. National Competitive Bidding (NCB); and c. Shopping (S).
56. Procurement conducted under National Competitive Bidding (NCB): To ensure economy, efficiency, transparency and consistency with the Procurement Guidelines, all goods, works, and non-consultant services procured under the NCB method will be subject to the following requirements:
a. Only the model NCB bidding documents agreed with the Bank shall be used for bidding.
b. Invitations for bids will be advertised in at least one widely circulated national daily newspaper, and bidding documents will be made available at least 21 days before, and issued up to, the deadline for submission of bids.
c. Qualification criteria will be stated in the bidding documents, and if a registration process is required, a foreign firm declared as the lowest evaluated responsive bidder shall be given a reasonable time for registering, without let or hindrance.
d. Bids will be opened in public in one location, immediately after the deadline for the submission of bids, as stipulated in the bidding document (the bidding document will indicate the date, time, and place of bid opening).
e. Except in cases of force majeure or exceptional situations beyond the control of the implementing agency, extension of bid validity will not be allowed.
f. Bids will not be rejected merely on the basis of comparison with an official estimate. g. Except with the prior concurrence of the Bank, there will be no negotiation of price
with bidders, even with the lowest evaluated bidder; h. A bid security will apply only to the specific bid, and a contractor’s performance
security will apply only to the specific contract for which they are furnished. i. Bids will not be invited on the basis of percentage premium or discount over the
estimated cost, unless agreed with the Bank.
57. Selection of consultants: Consultant services required will include: expertise in M&E, financial management, procurement, and specialized fields, such as skills development, training, and environmental and social sciences. Short lists of consultants for services estimated to cost less than US$ 300,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
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58. The following methods will apply for selection of consultants, consistent with the relevant sections of the Bank’s Consultant Guidelines:
a. Quality- and Cost- Based Selection (QCBS); b. Quality-Based Selection (QBS); c. Least Cost Selection (LCS); d. Selected under Fixed Budget (FBS); e. Selection based on Consultants’ Qualifications (CQS): for services estimated to cost
less than US$ 200,000 equivalent per contract, in accordance with the provisions of paragraph 3.7 of the Consultant Guidelines;
f. The procedures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the Selection of Individual Consultants; and
g. Selection of Particular Types of Consultants - UN Agencies
59. The Bank’s standard request for proposal (SRFP) document will be used for all consultant services. The document may be customized, as appropriate, for small value assignments (less than US$300,000).
60. Composition of procurement committees and technical evaluation committees (TEC). The appointment of procurement committees and TECs will follow government procedures.
61. Procurement information and documentation. Procurement information will be reported as follows: (i) complete procurement documentation for each contract, including bidding documents, advertisements, bids received, bid evaluations, letters of acceptance, contract agreements, securities, complaints (if any) and their resolution and related correspondence will be maintained by the implementing agency in an orderly manner, readily available for audit; (ii) contract award information will be promptly recorded and contract rosters as agreed will be maintained; and (iii) each PIA will submit semi-annual reports with (a) revised cost estimates, where applicable, for each contract; (b) status of on-going procurements, including a comparison of originally planned and actual dates of the procurement actions, preparation of bidding documents, advertising, bidding, evaluation, contract award and completion time for each contract; and (c) updated procurement plans, including any revisions in dates, for procurement actions.
Frequency of Procurement Supervision
62. The Bank will monitor the procurement performance under Component 2 on a sample basis. The capacity assessment of the implementing agencies recommended semi-annual implementation support missions to review procurement actions on a sample basis.
63. One or more dedicated procurement staff members or consultants will be assigned to procurement monitoring, reporting, training, and guidance. Semi-annual procurement progress reports to be provided to the World Bank will include status updates, procurement monitoring reports and analysis of agreed intermediate outcome indicators. The MYASD and its agencies will develop an effective monitoring mechanism during the first six months of SDP.
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Table A3.5. Thresholds for Procurement Methods and Prior Review for the Procurement to be carried out under Component 2 Expenditure Category
Contract Value(Threshold)
ProcurementMethod
Contracts/Processes Subject to Prior Review
Goods and non-Consulting Services
> US$1,000, 000 ICB All contracts
< US$1,000,000 NCB
All contracts over US$ 500,000 equivalent
< US$50,000 Shopping None
Consultant Services (firms)
> US$300,000 All competitive methods; advertise internationally
All contracts
< US$300,000 All competitive methods; advertise locally
All contracts over US$ 200,000 equivalent
< US$200,000 CQS
Selection of Particular Types of Consultants - UN Agencies
All contracts
Individual Consultants
IC (Section V of Consultant Guidelines)
All contracts over US$100,000 equivalent
64. Proposed 18-Month Procurement Plan. The SSD will maintain and update the procurement plan for Component 2, which will provide the basis for the procurement methods and prior review requirements. It will also be available in the Project database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the SSD biannually or as required to reflect actual Project needs and improvements in institutional capacity.
D. Environmental and Social (including Safeguards)
Environment
65. Under Component 1, the Project will help finance implementation of the Government’s SSDP. This program will include construction and upgrading of selected TVET physical facilities. Therefore, the Project is categorized as Environmental Category B and triggers the safeguard policy on Environmental Assessment (OP/BP 4:01). Environmental Due Diligence Guidelines (EDDG) have been prepared focusing on environmental standards for physical interventions that may be taken up during the planned interventions under the SSDP to upgrade and construct TVET facilities. All rehabilitation, renovation, physical upgrading, or new construction interventions will be implemented in accordance with the EDDG. The EDDG includes procedures aligned with national standards for infrastructure development that are typically followed when infrastructure development activities are implemented in government programs. They include standard set of environmental safeguard guidelines to be included in contracts. MYASD will delegate an Engineer or technical officer to monitor compliance with
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the EDDG standards and provide technical guidance to ensure safeguards. IDA will monitor the conformity to the EDDG during implementation and also provide technical guidance.
66. ADB is a parallel financier, funding the SSDP via an RBF modality. MYASD, in collaboration with ADB, has prepared an Environmental and Social Management Framework (ESMF) to ensure that any major construction, rehabilitation or renovation works undertaken is conducted in an environmentally sound manner that follows national environmental policies and procedures. This document has been found to be acceptable in terms of World Bank environmental safeguard operational policy 4.01 - Environmental Assessment.
Social
67. The government program will address regional inequalities associated with education and training outcomes and will support access to skills programs in disadvantaged areas and for vulnerable groups, such as rural populations and women. It will also include both supply-side interventions (e.g., expansion of skills provision in disadvantaged areas; career guidance services, and provision labor market information) and demand-side interventions (e.g., design and establishment of a stipend program for youth from disadvantaged backgrounds). Further, the Government will develop and adopt a gender and social equity framework by 2016 and provide equitable and adequate human and financial resources to support its realization.
68. The Project does not trigger World Bank social safeguard policies. It is expected to have substantial positive social impacts across the population, which will be enhanced by the Project’s focus on promoting equity and social inclusion and contributing to Sri Lanka’s poverty reduction goals. The equity impacts of the Project will be assessed by gathering data on training and labor market outcomes, disaggregated whenever possible by gender and socio-economic group.
E. Monitoring and Evaluation
69. The SSDP has numerous indicators to monitor and measure sector inputs, processes, outputs, and outcomes. Annex 1 provides a limited but critical subset of the indicators supported by the Project. MYASD will collect, compile, and report data related to subset outcomes and results indicators and will prepare quarterly progress reports of outcomes and results to monitor progress on the sector plan.
70. A dedicated unit within the SDD will be responsible for the M&E aspects of the Project, working closely with the M&E units of MYASD and its agencies. MYASD will prepare semi-annual progress reports, and semi-annual reviews of sector performance will be carried out jointly by MYASD, MoFP, and development partners (ADB and the World Bank).
71. The Project will support reinforcement of M&E capacity by building MIS in the MYASD and its participating agencies and will advise the Department of Census and Statistics on the design and operation of labor market information systems and provision of technical assistance for M&E, including TPV and evaluation studies.
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F. Role of Partners (if applicable)
72. The World Bank and the ADB plan to support the SSDP through similar financing mechanisms. World Bank and ADB teams worked closely on Project preparation and agreed to coordinate and integrate efforts to support government priorities as articulated in the SSDP to the extent possible by harmonizing DLIs, results frameworks, reporting requirements, and implementation arrangements. To ensure close collaboration, joint implementation support missions will be carried out.
73. The World Bank has also been collaborating with the International Finance Corporation (IFC) to increase the involvement of employers in the provision of skills training. With IFC support, consultations were held with industry representatives (e.g., in tourism and hospitality) to discuss design and implementation of the ETA model and increase employer involvement in Project design and delivery. The IFC plans to provide further support for skills gap analysis in selected sectors during the Project and establishment of the ISSCs.
74. The Governments of Korea and Germany plan to provide support for the sector, focusing on specific TVET institutions. The World Bank will collaborate with these partners once their support becomes effective. The MYASD will also explore possible collaboration with other development partners.
75. The role of the private sector is critical to delivery of skills development programs. ISSCs will be established and supported by the Project to improve private sector engagement in the design and delivery of programs.
Risk Description: 1.1.1. Reform resistance. Implementation of the Government's skills development program, supported by the proposed Project, requires strong commitment and support from stakeholders in the process. 1.1.2. Coordination challenges. There may be coordination and implementation issues since design of the proposed Project entails a variety of stakeholders. 1.1.3 Donor coordination. At present, the World Bank and ADB plan to support implementation of the government's skills development program. Several bilateral development partners (e.g., South Korea, Germany, Australia, and Canada) are also interested. Donor views on program priorities, initiatives, plans and timetables, and support modalities may not be fully aligned. Poor alignment could affect the design and implementation of the proposed Project, since the government may not have
Risk Management:
1.1.1 There is strong political ownership of the proposed Project. High-level policy dialogue and advocacy efforts as necessary will help to resolve challenges during Project design and implementation. The Project will use the same government framework for the flow of funds and the delivery of skills programs, which is likely to facilitate Project work. Although the MYASD has never implemented a Bank-funded project before, it has extensive experience with other donors, such as the ADB. It is also now hiring staff for its new Skills Development Division, which will manage new initiatives under the Program and coordinate and monitor Project progress.
Resp: Client Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
Risk Management:
1.1.2 Stakeholder participation will be promoted in all phases of Project preparation and implementation to ensure transparency and accountability. To institutionalize stakeholder participation and coordinate activities of stakeholders, an Inter-Ministerial Sector Coordination Committee (IMSCC), chaired by the Secretary of the Treasury, will be established to oversee the Government's program, involving both line ministries and the private sector. A Program Steering Committee (PCC) also will be established to coordinate and monitor implementation of the Project.
Resp: Client Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
Risk Management:
1.1.3. Development partners, including the World Bank and the ADB, will coordinate and integrate efforts to support the government's priorities as articulated in the SSDP to the extent possible by harmonizing reporting requirements, results frameworks, and implementation arrangements.
Resp: Both Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
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adequate capacity and experience to deliver on differing agreements with donors.
Risk Description: 3.1.1. Planning, budgeting, administration, fiduciary management, and monitoring capacity will all be critical to the success of the sector strategy and the Project. Since the MYASD has not participated in a Bank-financed project, there may be a longer learning period. 3.1.2. Lack of realistic procurement planning, implementation, and monitoring can adversely affect implementation progress and realization of PDO.
Risk Management:
3.1.1. The proposed Project will invest significant resources in strengthening the organization of planning, budgeting, administration, fiduciary management, and M&E. The Bank will work closely with the MYASD to strengthen the FM functions and procurement monitoring and oversight functions and will continue to support training and continuous professional development programs to build the skills and capacities of staff involved with the Project
Resp: Both Status: Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
Risk Management:
3.1.2. The proposed Project will have a realistic procurement plan for component 2 that is aligned with the developmental objectives.
Resp: Both Status: Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
3.2 Governance Rating Moderate
Risk Description: Risk Management:
A complex and fragmented skills development sector lacks accountability and incentives for good performance. Skills development is mainly implemented by the MYASD, but other ministries and agencies are also engaged in skills development. Within the purview of the MYASD, a number of departments and semi-autonomous agencies are responsible for the design and delivery of skills development programs. Successful implementation of the Project depends on (a) the leadership and commitment of MoFP and MYASD; and (b) effective coordination, planning, and monitoring.
The MYASD will be the main implementing agency but the ISCC will be set up to ensure coordination with other ministries that do training. Among risk-mitigating measures: (1) A Project Steering Committee will ensure inter-agency coordination. (2) Support will be provided to strengthen MYASD (including the new SDD) and TVEC capacity for strategic planning, policy implementation, and M&E. (3) Support will be provided to more closely coordinate with the private sector to ensure that the system is responsive to demand. (4) A study will be carried out to review, clarify, and streamline assignment of TVET responsibilities to national institutions.
Resp: Both Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
3.3.1 The MYASD has established the SDD, led by an Additional Secretary, to coordinate and monitor implementation of the Program. The SDD will have both procurement and FM staff to ensure that program funds are used efficiently. The Bank's anti-corruption guidelines and framework will be carefully explained and staff in MYASD and its agencies will be trained during Project preparation and implementation.
Resp: Both Status: In Progress
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
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However, the complex and fragmented skills development sector, including the poor coordination and implementation capacity of MYASD and its implementing agencies, could cause delays.
Risk Management:
3.3.2 Regular supervision, annual audits, and periodic reviews by FM and procurement specialists will ensure sound practices. Provision will also be made for further capacity development as needed.
Resp: Both Status: Not Yet Due
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
4. Project Risks
4.1 Design Rating Substantial
Risk Description: Risk Management:
Both MFNP and MYASD are committed to a sector-wide approach, but all stakeholders may not fully understand such new concepts as a sector-wide approach with disbursement-linked indicators (DLIs). If DLI results are not achieved as planned, IDA funds will be under-disbursed. Even if DLIs are achieved, due to excessive focus on those, other results could be affected.
Capacity building for the sector-wide approach and results-based Project activities will be conducted, supported by intensive consultations with participating stakeholders. Consultation will be extensive to ensure that targets are realistic; they will be reviewed and readjusted at mid-term if necessary. When the Project begins, a budget baseline will ensure that domestic funding will not be reduced as a result of supplemental Project funds.
Resp: Both Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
4.2 Social and Environmental Rating Moderate
Risk Description: Risk Management:
Social and environmental risks are expected to be minimal; most skills development programs target rural and other low-income segments in the society. Environment risk: There may be physical interventions under Component 1 that can have minor environmental impacts. However the planned infrastructure development involved will not pose major environmental impacts due to the expected nature and degree.
Access to skills development is facilitated for disadvantaged and vulnerable communities to ensure equity in service provision. To ensure that minor physical interventions under the Government’s program are environmentally sound, Environmental Due Diligence Guidelines (EDDG) have been prepared and will be implemented by MYASD.
Resp: Both Status: In Progress
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
4.3 Program and Donor Rating Moderate
Risk Description: Risk Management:
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Uncoordinated donor assistance and requirements could lead to confusion, underutilization of funds, and under-achievement of indicators.
The program approach of the proposed operation is meant to mitigate this risk. The government will maintain an effective donor coordination mechanism, led by the Department of National Planning and the MYASD. There is a healthy dialogue among development partners supporting the government's plans. The World Bank and the ADB have been working closely to harmonize M&E and other institutional arrangements for the proposed Project to the extent possible. Analytical and project preparation work conducted by donor agencies will also be shared to reach a common understanding.
Resp: Both Status: In Progress
Stage: Both Recurrent:
Due Date:
Frequency: CONTINUOUS
Delivery Monitoring and Sustainability
Rating Substantial
Risk Description: 4.4.1 Some of the work required for monitoring programs and exploring options for sustainability may be too complex for some officials, causing implementation challenges. 4.4.2 There may be pressure from the MoFP, given national resource constraints, to cut spending across the board as a result of the budget support provided by the Project. This is likely to affect the financial sustainability of the skills development program in the short to medium term.
Risk Management:
4.4.1. The Project will support building capacity for M&E and introduce tools for exploring the sustainability of various activities.
Resp: Both Status: Not Yet Due
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
Risk Management:
4.4.2. The skills sector plan, which has an adequate budget and is endorsed by the government (both MoFP and MYASD), will help to ensure that adequate resources are allocated to the skills sector. The Project supports the government program through an agreed budget and has selected DLIs that will promote the outcomes most desired by the program. The design of the Project, which links outcomes to disbursements through DLIs with the results agreed upon and linked to disbursement through EEPs, will ensure that funding for the sector is not adversely affected.
Resp: Both Status: Not Yet Due
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
4.5 Other (Optional) Rating Moderate
Risk Description: Risk Management:
Involvement of industry and private sector representatives is inadequate. Active participation of the private sector in the design and delivery of skills development programs will be essential to ensure that skills acquired are needed in the labor market.
The establishment of Industry Sector Skills Councils (ISSCs) (or equivalent) in priority sectors will be piloted and expanded during the Project.
Resp: Client Status: Not Yet Due
Stage: Implementation
Recurrent:
Due Date:
Frequency: CONTINUOUS
4.6 Other (Optional) Rating
Risk Description: Risk Management:
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Resp: Status: Stage: Recurrent:
Due Date:
Frequency:
6. Overall Risk
Overall Implementation Risk: Substantial
Risk Description: Weak MYASD project implementation capacity and lack of familiarity with Bank procedures and guidelines and DLIs/EEPs could lead to confusion and delays. Technical assistance will be provided to mitigate these issues.
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Annex 5: Implementation Support Plan
Sri Lanka: Skills Development Project
Strategy and Approach for Implementation Support
1. The strategy for implementation support has been formulated based on the nature of the Project and its risk profile. It aims to make implementation support to the client more flexible and efficient and focuses mainly on the risk mitigation measures defined in the ORAF.
2. The supervision strategy consists of mechanisms that will enhance support to the Government and timely and effective monitoring. The supervision thus comprises (a) joint review missions; (b) regular technical meetings and field visits by the Bank between formal review missions; (c) MYASD reporting based on SDP’s internal monitoring and a built-in third- party monitoring system; (d) independent third-party validation; and (e) internal audit and FM reporting.
3. Joint Review Missions. The Bank, together with MYASD and ADB, will formally review SDP progress semiannually in May/June and October/November, with more frequent missions expected at least in the first year of the Project. The May/June mission will review progress towards achievement of the DLIs and the October/November mission will assess implementation of the overall sector plan and critical interventions. These joint review missions will be complemented by visits from Bank Country Office staff and technical consultants; and continuous communication and follow-up between missions.
4. The May/June joint missions will review SDP performance against the Results Framework and agree on planned actions (including financing) in line with the sector plan and the budget; the October/November mission will verify achievement of DLI targets and implementation of Component 2 as well as review the FM reports. Progress on both Components will be reviewed during these missions. The scope of supervision will also include monitoring MYASD compliance with stipulated FM, procurement, and environmental and social safeguards guidelines. Missions will review progress and any issues related to M&E and compliance with safeguards. One month before each joint implementation review mission, MYASD will give the World Bank a comprehensive progress report on program activities and an updated plan and budget.
5. In addition to the review missions, other support missions will be carried out, especially during the first year, to help accelerate implementation. During those missions, field visits will assess reform outcomes and take corrective actions for national and institutional improvements. The Bank team will also participate in MYASD consultations with project stakeholders (e.g., TVET institutions, industry and other private sector representatives). To ensure high-quality supervision, the Bank team will comprise not only TVET and M&E specialists but also specialists in FM, procurement, safeguards, and governance and anticorruption, with the team composition for each mission determined based on supervision requirements at that time.
Procurement. Support for procurement management will focus on effective implementation of the Innovation Component in line with the Bank’s procurement
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guidelines. The following activities will be carried out by procurement staff in the Bank Country Office: (a) training as needed for staff of MYASD and its agencies on Bank Procurement Guidelines; (b) review of procurement documents prepared by SDD; and (c) monitoring progress against the Procurement Plan.
Financial management. Comprehensive review missions will be conducted at least twice a year. Supervision will review the Project’s FM system, starting with accounting, reporting, and internal controls, but also covering a random sample of subprojects. The Bank team will also work with MYASD to help improve coordination between departments and agencies on FM and reporting.
Environmental and social safeguards. Each mission will review the implementation of EDDG at sites where physical interventions have been undertaken such as the upgrading of infrastructure of TVET facilities, and preparing and implementing of business plans.
Other issues. Sector level risks will be addressed at the portfolio level through policy dialogue with MYASD. However, as sector risks are closely related to government financial viability, the team will monitor them closely throughout implementation.
Implementation Support Plan
6. Most of the Bank team members will be based in the Sri Lanka Country Office and other country offices in the region to ensure timely, efficient, and effective support to the client. Formal supervision and field visits will be semiannual, with more frequent technical support missions during the first year of the Project. Detailed inputs from the Bank team would comprise:
Technical inputs. Technical inputs are required to review preparation of proposals and bids to ensure fair competition through proper specifications and fair assessment of the technical aspects of bids. During commissioning, technical supervision is required to ensure that contractual obligations are met. The team’s TVET specialist will conduct semiannual site visits throughout the life of the Project.
Fiduciary requirements and inputs. Before the project becomes effective, training will be provided to MYASD staff by the Bank’s FM and procurement specialists based in the Country Office. The team will also help MYASD and its agencies to identify capacity-building needs in FM and procurement management. Support missions, including procurement and FM reviews, will be semiannual. Procurement and FM support will also be provided as the client requires.
Safeguards. An introductory program on safeguard polices and the implications of safeguard instruments was conducted for key MYASD staff during Project and EDDG preparation. The assigned Safeguard Officers are based in the Colombo office and can provide technical support at any stage of the project. The Bank will monitor compliance with the EDDG standards during implementation support missions, and technical guidance will be provided accordingly.
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Operation. An Operations Officer, based in the Country Office will provide day to day supervision of all operational aspects, as well as coordination with the client and among Bank team members.
7. The main implementation support is summarized in table A5.1 and A5.2.
Table A5.1. Staff Level of Effort for Project Implementation Support
Time Focus Annual Resource Estimate Partner
Role First 12 months
Technical support
TVET specialist………………..8 SWs M&E specialist 8 SWs
NA
FM training and supervision FM specialist 8 SWs
Social monitoring & reporting Social development specialist 1 SW
Institutional arrangement and project supervision coordination
Skills Needed Number of Staff Weeks Number of Trips Comments
Operations officer 24 SWs annually Fields trips as required. Country office based
TVET specialist 6 SWs annually Two HQ based
M&E specialist 2 SW annually Fields trips as required. Country office based
Procurement specialist 4 SWs annually Fields trips as required. Country office based
Social specialist 1 SWs annually Fields trips as required. Country office based
Environmental Specialist 1 SWs annually Fields trips as required. Country office based
FM specialist 8 SWs annually Fields trips as required. Country office based
Task team leader 24 SWs first year, then 12 SWs annually in the following years
Four (annually) HQ based
*SW = Staff Week.
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Annex 6: Economic and Financial Analysis
Sri Lanka: Skills Development Project
1. This annex, which summarizes the economic and financial analysis of the proposed Project, is organized as follows: (a) sector context; (b) public intervention rationale; (c) cost benefit and fiscal impact analysis; and (d) the World Bank value-added.
A. Skills Sector Background
2. With demand for job-specific and soft skills growing across the world, skills development has assumed greater importance for Sri Lanka as it transitions to an efficiency-driven more competitive middle-income economy. The Mahinda Chintana (MC), the government economic development plan, lays out Sri Lanka’s goals of becoming a regional hub in strategic economic areas, achieving middle-income status, and increasing per capita income to US$4,470 by 2016 (MFNP 2006, 2010). To achieve these goals the government has highlighted the importance of education, training, and knowledge systems and is committed to reforms in these areas. One MC goal is to provide skills, both technical and soft, for the whole population.
3. After completing general education, where basic cognitive and some soft skills are acquired, students may continue on to higher education, attend a technical and vocational education and training (TVET) institution to gain job-specific skills, or enter the labor force.14
The National Human Resources and Employment Policy (NHREP 2012) estimates that every year about 140,000 students in Sri Lanka leave general education without having acquired job-specific skills. Since the capacity of the higher education system is limited, the government envisions using TVET to close much of the country’s skills gap.
4. Sri Lanka’s public skills development sector is complex, with 33 statutory bodies and training institutes under 15 ministries. The MYASD is responsible for providing over 70 percent of public training programs. Specialized training is also provided by other ministries (e.g., Health, Agriculture, Construction, Higher Education) but the size of these programs is small (table A6.1). The MYASD is responsible for formulating skills development and youth development policies; coordinating and facilitating institutions within its purview; and administration and monitoring and evaluation of institutions.
14 Several World Bank projects in Sri Lanka address the challenges of primary, secondary, and higher education.
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Table A6.1: Student Enrollment and Completion in Selected Public Institutions, 2012
Institute No. Recruited No. Completed
Male Female Total Male Female Total
Vocational Training Authority (VTA) 17,526 11,598 29,124 15,290 10,550 25,840
National Apprentice and Industrial Training Authority
(NAITA) 14,013 12,239 26,252 9,949 10,278 20,227
Department of Technical Education and Training (DTET) 11,146 8,559 19,705 8,905 7,167 16,072
National Youth Service Council (NYSC) 8,995 9,038 18,033 7,827 8,496 16,323
National Institute of Business Management (NIBM) 6,235 5,227 11,462 1,847 1,484 3,331
Ceylon German Technical Training Institute (CGTTI) 3,443 3 3,446 1,873 9 1,882
Institute for Construction Training and Development
(ICTAD)* 1,662 150 1,812 1,697 150 1,847
Sri Lanka Institute of Textile and Apparel (SLITA)* 452 129 581 206 55 261
Gem and Jewelry Research & Training Institute (GJRTI)* 337 95 432 201 42 243
University of Vocational Technology (UNIVOTEC) 260 85 345 307 219 526
Export Development Board (EDB)* 213 82 295 213 82 295
Total 64,282 47,205 111,487 48,315 38,532 86,847
Source: http://www.tvec.gov.lk/lmi/labour_market_vocational_training.htm * These institutions are not within the MYASD purview.
5. Within the MYASD purview there are a number of support agencies and departments with different modes of operations and degrees of autonomy (table A6.2). The TVEC is the statutory body responsible for coordinating the TVET sector, particularly in relation to policy formulation, planning, and quality assurance (e.g., registration, accreditation, quality management systems). The major training delivery agencies, in terms of student enrollments, are DTET, NAITA, VTA, and NYSC. 15 DTET is responsible for managing, supervising, and coordinating the delivery of technical education programs, which are offered at 29 technical colleges that have NVQ level 3– 4 certificate programs, and colleges of technology (CoTs), which have NVQ level 5–6 diploma programs. The main responsibility of the National Apprenticeship and Industrial Training Authority (NAITA) is to provide training through apprenticeship placement. At the end of the training period students can take tests to obtain NVQ level 3–4 certificates. NAITA also operates three national training institutes that offer NVQ 4–6 certification. Additional responsibilities of NAITA include administering the recognition of prior learning (RPL) program, drafting national competency standards (NCS), and conducting trade tests. The VTA provides mainly craft-level skills to rural youth through a wide network of training centers that offer certification up to NVQ 4. The NYSC offers basic and semiskilled
15 The other agencies involved in skills development within the MYASD purview are the National Youth Corps (NYC), National Institute of Business Management (NIBM), Ceylon German Technical Training Institute (CGTTI), Sri Lanka Institute of Printing (SLIOP), National Institute of Fisheries and Nautical Engineering (Ocean University), and National Center for Leadership Development (NCLD).
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courses for craftspeople, both urban and rural. The University for Vocational Technology (UNIVOTEC) is in charge of teacher training and curriculum development for the entire sector. It is also the only TVET institution which offers degree-level training (NVQ 7) in vocational technology. In 2012, the government announced that it would establish 25 university colleges over the next decade to provide mid-level NVQ 6 technical education.
Table A6.2: Characteristics of Main MYASD Training Agencies
Agency Number of Students
Enrolled Number of Training Centersa NVQ Level Offered
Vocational Training Authority (VTA)
29,124
6 National Vocational Training Institutes; 218 Rural Vocational Training Centers; 21 District Vocational Training Centers
Institutes – NVQ 3-4;Rural Vocational Training Centers – NVQ 3-4; District Vocational Training Centers – NVQ 3-4
National Apprentice and Industrial Training Authority (NAITA)
26,252
3 National Training Institutes; 25 District Training Centers; 44 Rural Training Centers; 18 Affiliated Training Centers
National Training Institutes – NVQ 4-6Training Centers – NVQ 2-4
Department of Technical Education and Training (DTET)
19,705 9 Colleges of Technology 29 Technical Colleges
CoTs – NVQ 5-6 Technical colleges – NVQ 3-4
National Youth Service Council (NYSC)
18,033 43 Training Centers NVQ3-4
National Institute of Business Management (NIBM)
11,462 4 Training Centers n.a
Ceylon German Technical Training Institute (CGTTI)
3,446 1 Institute NVQ 5-6
University for Vocational Technology (UNIVOTEC)
295 1 Institute NVQ 5-6, NVQ 7
Private Sector and NGOs 45,522 1,318 Registered with TVEC Institutions n.a.
Source: http://www.tvec.gov.lk/lmi/labour_market_vocational_training.htm, Labor Market Bulletin (Dec 2012), NAITA progress report (2013) Note: a Information about the number of training centers comes from the TVEC Corporate Plan 2013–17.
6. Financing of Sri Lanka’s skills development. Public funds allocated to TVET in Sri Lanka are primarily from the central government. Most spending in the provinces is channeled through funds levied at the center. Between 2000 and 2010, primary responsibility for TVET shifted from one ministry to another (see World Bank 2013 for details), but the MYASD is now the main public funder, since TVET-related activities constitute its focal mission. MYASD spending on TVET has been steadily increasing for a decade. In current terms, total spending went up on an average of 21 percent a year, with exceptions only in 2004, 2007, and 2009 (table A6.3). However, in real terms, the growth, though vigorous, was less spectacular, averaging 10 percent annually.
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Table A6.3: Ministry of Youth Affairs and Skills Development—Total Expenditures, 2001–12 (SL Rs million)
∆ 7% 28% -5% 11% 40% -11% 33% -14% 4% 13% 8% Source: Ministry of Finance 2003–12, Budget Estimates. Note: Not included is spending in 2000–09 by the Ceylon German Technical Training Institute, Ocean University, National Youth Service Council, and National Youth Corps. Constant prices are based on World Development Indicators CPI.
7. About two-thirds of total MYASD spending is recurrent; for the past decade, development spending has been relatively stable at 31–58 percent of the total, though it has increased slightly over time. The share of donor funding has varied from 7 to 46 percent but is heading down.
Table A6.4: MYASD Total Expenditures by Agency, 2010–13 (SL Rs million)
2010 2011 2012 2013
Value (SL Rs Million)
Vocational Training Authority of Sri Lanka (VTA) 883 1,286 1,666 1,060
National Youth Services Council (NYSC) 549 710 777 1,100
National Apprenticeship & Industrial Training Authority (NAITA) 647 876 1,172 790
Ceylon German Technical Training Institute (CGTTI) 202 238 278 219
University of Vocational Technology (UNIVOTEC) 111 126 159 159 National Institute of Fisheries & Nautical Engineering (Ocean University) 86 143 206 190
Tertiary and Vocational Education Commission (TVEC) 50 76 96 67
National Human Resource Development Councils 19 31 32 30
Government contribution to the institutions 2,547 3,486 4,386 3,615
Department of Technical Education and Training (DTET) 1,092 1,362 1,516
Total MYASD Expenditure (recurrent and capital) 5,840 7,026 8,139 8,473 Domestic 6,274 7,407 6,343
8. The budget allocated to training agencies is generally proportional to the total enrollment of each. The largest budget shares are allocated to DTET, VTA, NAITA, and NYSC (table A6.4), which are responsible for more than 90 percent of all training provided by the MYASD. While MYASD funding to VTA, NAITA, and some other training agencies is expected to decrease, the decreases are expected to be compensated by additional capital investment from the ADB-financed project (MoFP, Budget Estimates, 2013).
9. Skills demand. The major drivers of skills demand in Sri Lanka—economic growth, labor migration, urbanization, the expansion of primary and secondary education, and demographic change—call increasingly for a better-educated and better -trained labor force, upgraded skills, and workers equipped with higher-order competencies so that they can use new technologies and perform complex tasks efficiently. Firms in Sri Lanka are more likely to complain about the lack of an adequately educated labor force than firms in other South Asian countries. Sri Lankan employers also point out that currently TVET is not relevant to their specific needs and question the quality and relevance of TVET curricula. There are education and training and skills supply and demand mismatches, especially in higher levels of education (GCE A-levels and above and TVET) and in job-specific and soft skills.
10. Labor market outcomes. Skills shortages in Sri Lanka coincide with high youth unemployment, which underscores the problems of the relevance and quality of the skills learned in the education and training system in terms of market demand. While Sri Lanka was successful in bringing down overall unemployment from 9 to 4 percent between 2002 and 2012, in 2012 the unemployment rate for youth (15–29-year-olds) was 13 percent. Unemployment was particularly high (almost 20 percent) for those aged 15–24. Those with TVET education were more likely to be unemployed (8 percent) than those without (6 percent). However, those with TVET training—73 percent—were considerably more likely to participate in the labor force than those who did not have TVET education as 56 percent. Despite higher unemployment rates, the average weekly earnings of those with technical and vocational education were higher than the earnings of individuals without TVET. For example, on average individuals whose highest level of education was GCE O-level earned SL Rs 4,726 weekly; while individuals who went through TVET after GCE O-levels earned SL Rs 5,186 weekly.
B. Rationale for Public Investment in Skills Development
11. Public investments in skills are warranted when private individuals fail to invest enough in skills because they do not internalize the externalities that skills create for society or because of market failures, such as imperfect financial markets. The individual benefits can be measured by returns to training and skills. The social benefits of public investment in skills can be represented by growth and productivity externalities and positive spillovers that skills could create in other sectors, such as health. Moreover, public interventions may help to create efficiency gains in the skills production sector through polity reforms and to address market failures, such as credit constraints.
12. Returns to training. For the past decade, returns to GCE A-levels, bachelor’s degrees, and above have been rising in Sri Lanka (figure A6.1) and those on primary, lower secondary and GCE O-levels have been decreasing. Between 2000 and 2012, the premium for passing GCE A-
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levels relative to GCE O-levels went up from 17 percent to 31 percent and the premium for a bachelor’s degree and above relative to GCE A-levels increased from 35 percent to 54 percent.
Figure A6.1: Returns to Education and Training in Sri Lanka (percent)
Source: LFS 2000 and 2004; STEP household survey 2012. Note: The first bar for each year reflects the wage premium for completed primary education relative to no or incomplete primary education, and the next to the last bar the premium for completing bachelor’s and above relative to passing A-levels. The last bar is the premium for TVET relative to non-TVET. The wage premiums represent differences in the coefficients of a regression of log hourly wage on basic controls (education, TVET, gender, urban, province, age, and age squared).
13. Premiums for completing TVET have been quite sizable, reflecting the high demand for skilled workers. The return on TVET went up from about 12 percent in 2000 to 21 percent in 2004 (figure A6.2) but by 2012 it had dropped slightly to 17 percent. In 2012, the TVET premium was 25 percent for the self-employed and 12 percent in the formal wage-earner sector.16 In 2012, returns to either formal or informal apprenticeship do not appear to have been statistically significant.
Figure A6.2 Returns to Technical Skills, 2012 (Percent)
Source: Sri Lanka STEP household survey. Note: Other controls included education, gender, province, rural/urban area, age, age squared, occupation, and sector.
16 The TVET premium in the informal sector was statistically significant at 12 percent. The low significance level could be explained by relatively small sample sizes.
13% 12%8%
13%13%
6%
17% 16%
‐4%
17% 20%
31%35%
22%
54%
13%
21%17%
‐10%
0%
10%
20%
30%
40%
50%
60%
2000 2004 2012
primary(grade 5)
lower secondary
passed O
passed A
bachelor and above
TVET
39%
21%25%
16%
2%
0%
10%
20%
30%
40%
50%
technology computer use mechanic English manual skills
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14. In addition to returns to education and training, there are returns to certain technical skills. For example, those who apply the following skills earn more (figure A6.2): technology (39 percent more an hour), mechanical (25 percent), computer skills (21 percent), and English (16 percent). Even after controlling for education, the returns are statistically significant, which suggests that there is a premium for technical skills that the education variable does not capture. In other words, in addition to education per se, employers value specific technical skills. Moreover, in Sri Lanka there are also returns to soft skills like openness, extraversion, and emotional stability (World Bank 2013).
15. Social benefits. The benefits of education, training, and skills not only accrue to individuals in terms of better labor market outcomes, they also benefit society as a whole. A skilled labor force helps improve a country’s growth and competitiveness; it also increases firm productivity and helps reduce poverty. To achieve the MC goals, the skills development (TVET) system in Sri Lanka needs to become demand-driven and to be expanded to provide skills for all. The following reasons warrant public skills development interventions:
Growth and productivity externalities: An educated and well-trained labor force is one of the major drivers of firm productivity and country growth. When making educational and training choices, the fact that individuals do not account for the externalities produced by education and training may lead to underinvestment in education and training. Creating incentives for individuals to invest in training, e.g., public provision of skills training, and stipends for economically and socially disadvantaged groups and for private providers to expand training provision, may help to optimize the supply of educated and trained workers.
Efficiency gains from policy reforms: System-wide and institutional reforms focused on improving efficiency and making the skills development system market-demand-driven are essential to generate the market-relevant skills required by a changing economy and help Sri Lanka achieve its development goals.
Information asymmetry: The lack of information on labor market demand, available skills development programs, and types of skills produced by the current system lead to inefficiencies in the skills market. Collection, analysis, and dissemination of skills supply and demand information represents a public good that can help to narrow skills gaps and mismatches.
Market failures: Profit-oriented non-state providers typically tailor their offerings to social rather than market demand. This contributes to skills gaps and mismatches in Sri Lanka.
16. Public interventions are crucial to address these challenges. First, private providers and individuals that make education and training choices often do not internalize the country’s development and growth objectives and firm productivity externalities, which may lead the private sector to under-provide skills and individuals to under-invest in education and training. Second, since 70 percent of students receive their training from the public sector, public sector reforms are necessary to improve system performance. Third, because providing a public good, such as information on skills supply and demand, cannot typically be internalized by the private
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sector, public sector intervention is essential. Finally, profit-oriented private institutions provide training in fields that are popular among students rather than fields in demand in the labor market. This creates shortages of skills in certain areas and oversupply in other fields, ultimately leading to higher unemployment for graduates and lower productivity for firms.
17. International experience shows that sector-wide investments in skills development can bring fruitful results. For example, investment in TVET by the Republic of Korea in the 1970s–90s was one of the factors that promoted Korea’s economic growth and development (box A6.1). The Malaysian government also sees TVET as an engine for national growth and development and supports it by creating an encouraging regulatory environment and quality assurance system, providing public financing for institutions, and establishing loan schemes for students (Abas 2012).
Box A6.1: Transformation of the TVET Sector in the Republic of Korea
The skills needs and the policies for skills development of an economy depend on a country’s current phase of economic development and its future goals. Sri Lanka is transitioning from a factor-driven labor-intensive economy to an efficiency-driven economy (Schwab and Sala-i-Martin 2012). This transition is similar to the one that the Republic of Korea underwent between the mid-1970s and the mid-1990s. In the mid-1970s the South Korean economy was characterized by labor-intensive industries with low-skilled workers, and its skills policies emphasized simple vocational training and basic on-the-job training. As the economy expanded and grew more sophisticated, moving to capital-intensive industries, the need for higher-skilled workers arose. The skills development focus shifted from providing basic vocational skills to more advanced technical skills, which led to the expansion of junior technical colleges. In addition, mandatory workplace training was instituted that emphasized upgrading skills. Since the mid-1990s the country’s economy has transitioned from being efficiency-driven and capital-intensive to being innovation-driven and knowledge-based. Skills requirements and policies have changed by shifting the focus from producing technicians to producing engineers and scientists. As a consequence, with active industry cooperation university education expanded to accommodate the more sophisticated demand for skills. At the enterprise level, the focus has shifted from upgrading skills to lifelong competency development.
Changes in the TVET Sector in South Korea, 1960-Present
University (emphasis on engineering & school- industry research)
Enterprise-based training
Emphasis on initial on-the-job training
Mandatory workplace training for firms Emphasis on upgrading skills
Emphasis on lifelong competency development
Sources: ADB 2012; Kwon 2011; Schwab and Sala-i-Martin 2012
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C. Development Impact Rationale of the Program
18. The Government of Sri Lanka has prepared a Skills Sector Development Program (SSDP) 2014–20 with the overarching goal of building an efficient system that meets local and foreign labor market demand by 2020. The proposed Project would mainly support actualization of the SSDP.
19. Program and Project costs. The total estimated cost of the SSDP, including both current and additional activities, is about US$650 million for 2014–19. Total government spending on skills development (excluding spending on National Youth Corps. and training provided by specialized ministries) was about SL Rs 6.5 billion (US$ 50 million) in 2012 (table A6.6). The estimated program cost of additional activities is US$383 million for 2014–19, converted at the current exchange rate and extrapolated to five years. In line with the proposed program, the government plans to increase its allocation to MYASD from SL Rs 6.5 billion in 2012 to Rs 18 billion in 2016, in accordance with the medium-term budgetary framework (FY14–16), taking into account the fiscal framework and available resources and the performance of the MYASD.
Table A6.6: Program Costing and Financing 2014–19 (US$ Million)
2012 2013 2014 2015 2016 2017 2018 2019
Total 2014 -19
Actual Exp.
Revised Exp. Estimate a
Fore- cast a
Fore- cast b
Fore- cast b
Fore- cast b
Fore-cast b
MYASD and agencies excluding the National Youth Corps 49.64 56.22 81.62 112.68 133.15 99.43 85.08 86.87 598.84 Other ministries and agencies c 15.30 13.60 8.70 3.70 3.60 4.00 48.90
Total 96.92 126.28 141.85 103.13 88.68 90.87 647.74
Of which: ADB and IDA funding
29.5 42.3 42.4 42.4 39.5 5.4 201.5
Government funding
67.42 83.98 99.45 60.73 49.18 85.87 446.23
Source: Budget Estimates, Skills Sector Development Program. Note: a Based on published Budget. b Based on SSDP for Additional Activities with the Actual expenditures in 2013 for MYASD Used as a Base. c Specialized skills training provided by the following Ministries and Agencies: DAPH,GJRTI,ICTAD, Ministry of Agriculture, Sri Lanka Bureau of Foreign Employment, Sri Lanka Institute of Advanced Technological Education, Sri Lanka Institute of Tourism and Hotel Management, SLITA. Exchange Rate US$1 = Rs. 130.
20. The proposed Project funding would be US$101.5 million, 15.6 percent of the total cost; and the remainder will be financed by the government and ADB. Several bilateral development partners (e.g., Germany, Korea, Australia, and Canada) are also planning to provide support but the amounts have not yet been set. The budget increase does not include spending on public institutions providing specialized training, though some will benefit from the ETA model the Project will support.
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21. Project benefits. The Project is expected to have individual, sectoral, and societal benefits, even though it will not be possible to identify Project-specific benefits because it is designed to support overall SSDP with multiple interventions.17 For individuals, the Project is expected to increase the employability and earnings of TVET graduates by improving the quality and relevance of the skills they acquire. At the sectoral level, Project-supported interventions are expected to (a) improve TVET system management and sector financing efficiency through organizational and managerial reforms and better monitoring and evaluation; (b) enhance the quality and relevance of TVET programs by increasing employer involvement in program design and delivery; and (c) expand private participation in the delivery of training programs by creating incentives and a more favorable environment. For society, Project benefits would include (a) a more productive labor force of workers with quality labor market-relevant skills; (b) strengthening firm productivity and competitiveness through the more productive labor force; (c) heightening the performance of the economy because workers and firms are more productive; and (d) potentially reducing school-work transition times for TVET graduates, which could help to address Sri Lanka’s youth unemployment problem.
22. The Economic Internal Rates of Return (EIRR) analysis shows that the SSDP (2014-20) has a rate of return in the base case of 13.9 percent and an NPV of US$ 40.1 million when a 12 percent discount rate is used. The sensitivity analysis shows that the rate of return is 9.0–17.5 percent, depending on the scenario assumptions.
D. World Bank Value-Added
23. The Government of Sri Lanka requested World Bank support for enhancing the performance of the country’s skills development sector. The Bank is actively engaged there in general education and higher education and has extensive local expertise on education and skills development. The entry point into the skills sector was through a sector analysis and a comprehensive assessment of how the skills system is performing, conducted by the Bank in collaboration with the government. The study, “Building the Skills for Economic Growth and Competitiveness in Sri Lanka,” used innovative tools developed by the World Bank: (a) household and employer surveys to analyze skills demand and supply and mismatches; (b) the System Approach for Better Education Results Framework (SABER) Workforce Development tool, which provides systematic documentation and assessment of the policy and institutional factors that influence the performance of education and training systems; and (c) detailed assessment of the performance of private training providers. Skills system costs, financing, and governance were analyzed in detail, and a South-South exchange program was organized to familiarize policy makers with skills development practices in Malaysia. The findings and policy recommendations from this assessment were used to help the government as it prepared the SSDP.
24. The Bank’s global and local technical and operational experience with education and training can bring useful lessons to Sri Lanka policy makers as they attempt to design skills development reforms. The Bank is currently engaged in a number of skills development projects in the region from which lessons can be learned, and can bring expertise from countries like
17 The key assumption of Project benefits is the availability of jobs. However, if jobs are not available, the Project benefits described would be overestimated.
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Malaysia, Korea, and Australia, whose skills sector development is of particular interest to the authorities as Sri Lanka moves to middle-income status.
References
Abas, M.G. 2012. “Skills Development in the 21st Century: Concept and Malaysia Experience”, presentation at the Skills Workshop, Colombo, Sri Lanka.
Asian Development Bank (ADB). 2008. Education and Skills. Manila: ADB.
Kwon, D-B. 2011. “TVET in Korea: History of Challenges and Responses and the Future.” Korean Research Institute for Vocational Education and Training. Presentation at the World Bank, February 24.
Ministry of Finance and Planning. 2006. “Mahinda Chintana: Vision for A New Sri Lanka – A Ten year Horizon Development Framework 2006-2016.” Discussion Paper. Department of National Planning.
Ministry of Finance and Planning. 2010. “Mahinda Chintana: Vision for the Future – Sri Lanka Emerging Wonder of Asia”. http://www.treasury.gov.lk/publications/mahindaChintanaVision-2010full-eng.pdf
Schwab, K., and X. Sala-i-Martin. 2012. Global Competitiveness Report 2012-2013. Geneva: World Economic Forum.
Secretariat for Senior Ministers. 2012. The National Human Resources and Employment Policy (NHREP) for Sri Lanka. Colombo: Secretariat.
World Bank. 2010. “Stepping Up Skills for More Jobs and Higher Productivity.” Washington, DC: World Bank.
——. 2012. “Country Partnership Strategy (FY 2013–FY 2016) for the Democratic Socialist Republic of Sri Lanka.” Report No. 66286-LK, Sri Lanka and Maldives Country Management Unit, South Asia Region, World Bank, and South Asia Region, International Finance Corporation, Washington, DC.
——. 2013. “Sri Lanka Building the Skills for Economic Growth and Competitiveness: Challenges and Opportunities.” Washington, DC: World Bank.
